Meaning
Legislative provisions in Chinese patent law define the methods for calculating monetary damages and shifting evidentiary burdens in infringement disputes. Under prc patent law article 71, damages are calculated based on actual loss, illegal profits, or licensing fees. This provision governs the financial outcome of most patent disputes.
Damage Calculation
Courts follow a strict sequence of options to determine the appropriate financial recovery for patent holders. Under prc patent law article 71, the priority is given to actual losses suffered by the plaintiff due to the infringement. If those losses cannot be calculated, the court analyzes the profits earned by the defendant.
The law also permits the use of reasonable license royalty multiples as a guide. This structured hierarchy forces parties to present detailed financial records during the trial.
Statutory Damages
When financial evidence is incomplete or unavailable, the court relies on its discretion to set an award within statutory limits. The amendment of prc patent law article 71 increased the maximum statutory damage limit to five million yuan. This high limit acts to deter willful infringement.
It gives judges the power to punish bad faith behavior without requiring absolute proof of loss. This option is frequently used because many infringers conceal their actual sales records.
Burden Shift
Evidentiary challenges often make it difficult for patent holders to prove the exact amount of profits earned by an infringer. Under the rules of prc patent law article 71, if the plaintiff has made a reasonable effort to provide evidence, the court can order the defendant to produce their account books. If the defendant refuses to comply or provides falsified data, the court will calculate damages based on the plaintiff’s claims.
This shift of the burden of proof is a powerful tool for foreign companies during litigation. It has increased the average damage awards in intellectual property cases.
