At present, patent infringement compensation is subject to the "compensatory damages" (Article 65 of the Patent Law), that is, the compensation obtained by the right holder is used to make up for his actual losses and cannot exceed his actual losses. However, since the object of the patent right is intangible, the protection of patent rights is more costly and more difficult than the protection of tangible property. The "compensatory damages" is not enough to make up for the losses and the cost of rights protection of the patentee.

In order to effectively protect the legitimate rights and interests of the patentee, enhance the confidence of the innovation subject in patent protection, and adequately stimulate the innovation vitality of the whole society, "the Draft Amendment of the Patent Law of the People's Republic of China" (Hereinafter referred to as "the 2019 amendment") promulgated on January 4, 2019.

The 2019 amendment strengthens the protection of patents. To begin with, the patentee can obtain a higher amount of compensation due to patent infringement. The discretionary amount range in the current patent law is "not less than 10,000 CNY and not more than 1,000,000 CNY" has been raised to "not less than 100,000 CNY and not more than 5,000,000 CNY". In addition, The 2019 amendment provides that where the patent right is intentionally infringed and the circumstances are serious, the amount of compensation may be more than one time but less than five times the amount determined according to the above method. According to the provisions, there are two prerequisites for punitive liability for patent infringement. One is "the patent right is intentionally infringed", and the other is "the circumstances are serious".

The relevant amendments can be seen in Article 72, Paragraph 1 and Paragraph 2 of the 2019 Amendment.

Appendix

1)    Article 65 of the patent law of the people’s republic of China

The amount of compensation for the damage caused by the infringement of the patent right shall be assessed on the basis of the actual losses suffered by the right holder because of the infringement; where it is difficult to determine the actual losses, the amount may be assessed on the basis of the profits the infringer has earned because of the infringement. Where it is difficult to determine the losses the right holder has suffered or the profits the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of the exploitation fee of that patent under a contractual license. The amount of compensation for the damage shall also include the reasonable expenses of the right holder incurred for stopping the infringing act.

Where it is difficult to determine the losses suffered by the right holder, the profits the infringer has earned and the exploitation fee of that patent under a contractual license, the people’s court may award the damages of not less than 10,000 CNY and not more than 1,000,000 CNY in light of such factors, as the type of the patent right, the nature and the circumstances of the infringing act.  

2)    Article 72 of the draft amendment of the patent law of people’s republic of China

Article 72.1 The amount of compensation for the damage caused by the infringement of the patent right shall be assessed on the basis of the actual losses suffered by the right holder because of the infringement; where it is difficult to determine the actual losses, the amount may be assessed on the basis of the profits the infringer has earned because of the infringement. Where it is difficult to determine the losses the right holder has suffered or the profits the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of the exploitation fee of that patent under a contractual license.Where the patent right is intentionally infringed and the circumstances are serious, the amount of compensation may be more than one time but less than five times the amount determined according to the above method.

Article 72.2 Where it is difficult to determine the losses suffered by the right holder, the profits the infringer has earned and the exploitation fee of that patent under a contractual license, the people’s court may award the damages of not less than 100,000 CNY and not more than 5,000,000 CNY in light of such factors, as the type of the patent right, the nature and the circumstances of the infringing act.