What Kind of Damage Awards Can You Get in China?
Is it worth filing for a patent in China? What kind of damage awards can you get?
Pharma companies care more about injunction than damage awards, since it’s quite unlikely that any damage award can compensate for the large amounts of money that may be lost for patent infringement. Chinese courts often issue injunctions in pharma patent litigations (both by the court and administrative enforcement bureaus), though damage awards are possible too.
Although not all court cases are publicly available, there have been some recent published cases with pretty high damage awards, ranging from $750K USD to $25M USD. Keep in mind these are cases litigated under the old patent law, where punitive damages did not exist. Going forward, as punitive damages of up to five times are now part of the new patent law, future damage awards are likely to be even higher.
Uncooperative Defendants? Patentees Can Provide Evidence of Profits
In 2021, the Supreme People’s Court (SPC) awarded a $20 Million RMB ($3 Million USD) damage amount to a Swiss medical device company Synthes GmbH for patent infringement by a Chinese medical device company. The patent related to a medical device for treating femoral fractures which consisted of “a main nail” and “a bone fixation element.”
This particular case is interesting because the Court calculated the damage amount by relying on the patentee’s reasonable assessment of the profits, using evidence such as the infringer’s prospectus reporting the company’s annual operating profits. The court determined that the defendant did not adequately disclose its true profits (e.g., they claimed most of the receipts were “lost” or “missing”). Accordingly, the final assessed profits were based on information provided by the patentee, resulting in this very large $3 Million USD damage award.
Largest Damage Award 2021
The largest damage award of 2021 that we found based on publicly available records was $167 Million RMB ($25M USD), for infringement of a patent originally filed by Toshiba (sold to Oaks Engineering) for an air conditioning compressor. In October 2021, the Intermediate Court ruled that the defendant’s prior art defense was not valid, and proceeded to award a $167M RMB damage award to the plaintiff (Oaks) for patent infringement. The defendant may appeal, so this case is still not over yet.
A recent life science case from 2021 involving a patent covering a fermentation process for synthesizing dibasic acids had a $5 Million RMB award. In general, most successful pharmaceutical cases result in permanent injunctions.
Willful damages were just added to the patent law in June 2021, and thus the number of judgments will inevitably be lower than in a typical full year. We have not yet found any published cases, though official Chinese Court communications indicate that in 2021 courts across China handled 642,968 IP cases, and awarded punitive damages in 895 cases (0.13% of cases).
We will keep you updated on any further developments. Stay tuned for more important updates on IP law in China.
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This article is for general informational purposes only and should not be considered legal advice or a legal opinion on a specific set of facts.