Thursday, September 8, 2016

Xu on Damages for IP Infringement in China

Xu Zhuobin, Judge of the IP Tribunal of the Shanghai Higher People's Court, has published an article titled Review & Analysis on IP Infringement Cases with High Damages Awards:  Damages Determination Method and Evidence Production in China Patents & Trademarks, No. 1, 2016, pp. 98-104.  Judge Xu notes the "prevailing conception among the general public . . . that infringement damages awarded by the Chinese courts tend to be low," but argues that this does not "represent[ ] the whole picture, as there have been actually a number of IP infringement cases in which the rightholders were awarded generous damages" (p.99).  He briefly reviews seven such cases, including four copyright, one trademark, one integrated circuit layout design, and one patent case, in which damages exceeded RMB 1 million.  (In the patent case, Netac Technology Co. v. Beijing Watertek Information Technology Co., Guangxi Zhuang Autonomous Region Nanning Intermediate People's Court's Civil Judgment No. Nanshiminanchuzi 59/2012 (2015), the damages awarded by the first instance court amounted to RMB 40 million, which at today's exchange rate would equal about $US 6 million. As of June 2015, the defendant had announced its intent to appeal.)  In some of these cases, the plaintiff was unable to prove its own actual loss or the defendant's gain from the infringement; but there was evidence from which one could estimate the defendant's overall profit on infringing goods.  Based on this evidence, rather than awarding maximum statutory damages (which are available when you can't calculate actual loss or gain, and is by far the most common remedy for patent infringement in China, see discussion here), the court in its discretion awarded damages in excess of the maximum statutory damages amount on the theory that the actual gain was surely in excess of that amount.  This might seem at least roughly analogous to the practice in Germany whereby courts will make a rough estimate of damages in their free discretion (nach freier Ɯberzeugung) when the evidence presented by the parties isn't adequate to make any more precise estimate (see my discussion in my paper Patent Damages Heuristics at p.20 & n.76).  Judge Xu also discusses recent initiatives to authorize penalties for evidence spoliation.

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