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China’s Supreme People’s Court Draft Opinions on Increasing Sanctions for Intellectual Property Infringement

The Supreme People’s Court of the People’s Republic of China released the “Opinions on Increasing Sanctions for Intellectual Property Infringement (Draft for Comment)” “关于加大知识产权侵权行为制裁力度的意见(征求意见稿)” in mid-June for comment.  The draft opinions confirm the primacy of permanent injunctions and potentially increases the amount of monetary damages typically awarded.  The opinions also cover strengthening evidence preservation and increasing criminal enforcement of the intellectual property laws.

Evidence Preservation

Articles 1 – 5 of the draft opinions cover evidence preservation and states that the “People’s Courts shall intensify the application of evidence preservation.”  Of interest is Article 5, which allows the People’s Court to infer facts alleged by the rights holder if the alleged infringer damages or transfers the alleged infringing product(s) subject to an evidence preservation order without authorization.

Injunctions

Article 6 reaffirms the primacy of injunctions in Chinese intellectual property litigation stating that People’s Courts should generally issue injunctions.

Article 8 states the the People’s Courts should support rights holders’ requests to destroy counterfeit or pirated products as well as the manufacturing equipment used to manufacture the products.

Increased Financial Compensation

Articles 10 – 19 cover increasing financial compensation for intellectual property infringement and follows the trend of using punitive damages for intellectual property infringement (see Civil Code and draft amendments to the Patent Law for example).  Article 13 specifically encourages the use of punitive damages stating that “[People’s Courts should] support intellectual property rights holders’ requests for punitive damages in accordance with the law and give full play to the deterrent effect of punitive damages on infringement.”

Further, if statutory damages are to be awarded, Article 14 states, “if the infringer deliberately infringes and the circumstances are serious, the amount of statutory compensation shall be determined by approaching or reaching the maximum limit.” The maximum statutory damages in the draft amended patent law will be 5 million RMB or about $714,100 USD (increased from 1 million RMB).

Article 15 defines “serious circumstances” as multiple infringements,  long term infringements, infringement involving a wide range of areas, infringement generating huge profits, infringement causing significant economic losses to the intellectual property right holder, and infringement that may endanger personal safety or seriously damage the public interest.

Article 12 states if the “People’s Court orders the accused infringer to provide evidence of profits from infringement and if it refuses to provide it without proper reason, the People’s Court may determine the amount of financial damages based on the claim of the intellectual property right holder and the evidence in the case.”

Criminal Enforcement of Intellectual Property Rights

The opinions state that severe penalties should be imposed for counterfeiting of goods for emergency rescue, disaster relief, and epidemic prevention.  Perhaps echoing the Economic Espionage Act-like provisions in the draft amendments to the criminal law, the opinions also state that severe penalties should be imposed for theft of trade secrets by foreign institutions, organizations and personnel.  Accordingly, I would expect prosecutions against foreigners for theft of trade secrets under the new draft provisions of the criminal law if adopted.

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.National Law Review, Volume X, Number 212

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About this Author

Aaron Wininger IP Attorney China Portfolio Development
Director of China Intellectual Property Law Practice Schwegman Lundberg & Woessner

Aaron Wininger is a Senior Attorney and Schwegman’s Director of China Intellectual Property. Aaron counsels both U.S. and Chinese companies on portfolio development and preparation of their patent applications and office action responses. He has worked with clients in the areas of software, networks (wired and wireless), lasers, medical devices, semiconductors and physics.

Aaron prosecutes both Chinese and U.S. trademarks. He has also drafted and prosecuted hundreds of U.S. and international patent applications in a broad spectrum of areas, including computer hardware and software,...

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