Patent Infringement Damages Under Chinese Law China's patent protection framework has undergone substantial reform in recent years, with damage awards increasing significantly. For patent holders e...

Patent Infringement Damages Under Chinese Law

China's patent protection framework has undergone substantial reform in recent years, with damage awards increasing significantly. For patent holders enforcing their rights in China, understanding how courts calculate damages is essential to developing an effective enforcement strategy.

Statutory Framework

Patent infringement damages in China are governed by the Patent Law of the People's Republic of China (as amended in 2020) and relevant judicial interpretations from the Supreme People's Court. The law provides for four methods of calculating damages, applied in order of preference: (1) the patent holder's actual losses; (2) the infringer's illegal profits; (3) a reasonable multiple of the patent royalty; and (4) statutory damages.

Calculation Methods

The patent holder's actual losses are calculated as the total reduction in sales volume of the patent holder's products multiplied by the reasonable profit per product. Where the sales reduction cannot be determined, the infringer's sales volume multiplied by the reasonable profit per product of the patent holder may be used as the basis.

Where neither the patent holder's losses nor the infringer's profits can be determined, Chinese courts may apply statutory damages, which were increased under the 2020 amendments to a maximum of RMB 5 million (approximately USD 700,000). For willful infringement, punitive damages of up to five times the calculated amount may be awarded.

Evidence Collection and Preservation

Effective patent enforcement requires comprehensive evidence collection. Chinese courts accept various forms of evidence, including notarized purchases of infringing products, online transaction records, customs seizure records, and preservation applications for seized evidence. The Supreme People's Court has issued guidance on the application of civil evidence preservation in intellectual property cases, making it easier for patent holders to obtain evidence held by the infringer.

Enforcement Strategies

Patent holders should consider a multi-pronged approach combining administrative enforcement through local intellectual property offices, customs recordation to intercept infringing imports and exports, and civil litigation for damages. Preliminary injunctions are available under Chinese law for cases where irreparable harm would otherwise result, though courts apply strict standards for their issuance.

• ⚖️ Record patents with China Customs for border enforcement
• 📜 Conduct pre-litigation evidence preservation through notarization
• 🛡️ Consider administrative complaints for rapid enforcement against clear infringement
• 💼 Prepare detailed damage calculations with supporting market data

Evidence Collection and Preservation in Chinese Patent Litigation

Chinese courts increasingly recognise the importance of evidence in patent infringement cases and have developed procedural mechanisms to assist patentees in gathering proof of infringement and damages. Evidence preservation orders, similar to Anton Piller orders in English law, allow the court to seize relevant documents, products, and financial records from the alleged infringer's premises before they can be concealed or destroyed. Yuki advises clients on the strategic timing of preservation applications, ensuring that the evidence needed to prove infringement and calculate damages is preserved before the infringer receives notice of the proceedings.

Strategic Considerations for International Patent Holders

Patent holders enforcing Chinese patents should consider several strategic factors before initiating proceedings. The selection of the forum is critical: China's specialised IP courts in Beijing, Shanghai, Guangzhou, and the newly established courts in Hainan and other regions have developed expertise in patent matters and issue decisions more quickly than general courts. The choice between administrative enforcement through local intellectual property offices and judicial enforcement through the courts affects the timeline, cost, and available remedies. Many patent holders pursue a combined strategy, using administrative complaints to obtain rapid injunctive relief while preparing a civil action for damages.

Punitive Damages in Chinese Patent Litigation

The 2020 amendments to the Chinese Patent Law introduced punitive damages of up to five times the calculated damage amount for wilful infringement. This marked a significant shift in Chinese IP enforcement, bringing the damages framework closer to international standards and creating stronger deterrents against intentional patent infringement. Courts consider several factors in determining whether punitive damages are appropriate, including whether the infringer knew of the patent, whether they continued infringing after receiving a cease-and-desist letter, and whether they engaged in deliberate concealment or destruction of evidence.

Cross-Border Patent Enforcement Coordination

Patent holders with rights in both Japan and China face strategic decisions about the order and timing of enforcement actions in each jurisdiction. A successful infringement finding in China may provide evidence of validity and infringement that strengthens parallel proceedings in Japan, while a Japanese court decision on claim construction may influence the interpretation of corresponding Chinese patent claims. Yuki Tanaka coordinates multi-jurisdictional enforcement strategies that take advantage of these procedural interactions while managing the risk of inconsistent outcomes and the cost of parallel litigation in two legal systems.

Post-Grant Review and Invalidation Proceedings

Patent validity may be challenged through post-grant review proceedings in both Japan and China. In China, invalidation proceedings before the China National Intellectual Property Administration offer a faster and less expensive route to challenge patent validity than raising invalidity as a defence in infringement litigation. Yuki Tanaka advises on the strategic timing of invalidation requests, the preparation of prior art evidence and technical arguments, and the management of the administrative appeal process when CNIPA decisions are challenged in the Beijing IP Court. He also coordinates parallel validity challenges across jurisdictions, ensuring that evidence and arguments developed in one proceeding can be leveraged in the other.

Patent Litigation Procedure in China

Patent infringement litigation in China follows a structured procedure that begins with the filing of a complaint in the competent court, typically a specialised IP court for patent matters. The court reviews the complaint and supporting evidence, serves the defendant, and schedules a pre-trial conference to identify the disputed issues and evidence. The trial typically involves one or two hearing sessions covering technical issues, infringement analysis, and damages calculation. Chinese courts increasingly appoint technical investigation officers or commission expert reports to assist with complex technical questions. The average duration of first-instance patent litigation is 12 to 18 months, with second-instance appeals to the Supreme People's Court taking an additional 6 to 12 months. Yuki Tanaka coordinates with Chinese counsel throughout the litigation process, ensuring that the technical arguments are presented effectively and that the evidence supports the claims for infringement and damages.

Administrative Enforcement Alternative

In addition to judicial enforcement through the courts, patent holders in China may pursue administrative enforcement through local intellectual property offices. Administrative enforcement offers a faster and less expensive route for straightforward patent infringement cases, with local IP offices empowered to order the infringer to stop manufacturing and selling the infringing products, seize and destroy infringing goods and specialised manufacturing equipment, and impose administrative fines. The administrative route does not provide damages, which must be recovered through separate civil proceedings. Yuki Tanaka advises clients on the selection between administrative and judicial enforcement, taking into account the strength of the infringement case, the urgency of the relief needed, the cost of each option, and the client's enforcement objectives.

Yuki Tanaka provides Japanese and international patent holders with a comprehensive understanding of their options for enforcing patents in China. His practice combines technical expertise in patent analysis with practical knowledge of Chinese litigation procedure to deliver enforcement strategies that balance cost, timeline, and the likelihood of success. He coordinates with Chinese counsel to ensure that the evidence, arguments, and strategy are aligned with the client's commercial objectives and IP portfolio goals.