To Increase Damages of Intellectual Property Infringement in China: A Double-Edged Sword for the Market

Abstract

TRIPs Agreement encourages WTO members to enhance intellectual property (IP) protection, and developed countries have been pushing developing countries to the high level of protection of IP. However, this is not always good for the market. The damages for IP infringement increased drastically in China in recent years. This has drawn our attention to the application of the Chinese IP laws. This article analysed the rules in Chinese patent, trademark and copyright laws and their application by Chinese courts regarding damages adjudication with most updated legislative documents, statistics, important cases as well as the judicial policies of the Chinese Supreme Court. The article found that, driven by judicial policy, the courts used significant discretion to achieve increase of damages unjustifiably. This is a double edged sword for the market because, though favourable to IPR owners, it is harmful to the rule of law and it makes IP enforcement a business to misappropriate licit profit of infringer, especially in view of the emerging IP trolls. China should carry out reform to improve the legal regime of damages for IP infringement. The solution to these problems lies in resorting to the strict application of compensatory damages.