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    CNIPA Responding to "Signifiantly Expanding the Statutory Punitive Compensation Limit for IP Infringement" issued by the CPPCC


    2019/8/12|Industry News

    source:Electronic Intellectual Property Center, MIIT


    Reply of National Intellectual Property Administration (CNIPA) to No. 0345 (No. 21 of Policy and Law) Proposal on Second Session of the 13th CPPCC National Committee


    Commissary Chen Zhilie: 

    As to your proposal on significantly expanding  the punitive compensation limit for the intellectual property infringements, the following reply is hereby made:

    As per your suggestions in the proposal, the intentional infringements with serious circumstances always happen at the present stage, however, the punishments are still insufficient, and the compensation is remarkable lower, all of which seriously injure the legitimate right of IP owners, and restrain the innovation enthusiasm. For these reasons, you suggested to greatly increase the punitive compensation for IP infringements, and formulate a punitive compensation system, and further disclose the infringers’ information by network means, and develop the measures of joint punishment. We totally agree with your suggestions for the high pertinence. Thus, CNIPA will cooperate with the relevant departments to resolutely implement the decisions and plans of the Party Central Committee and the State Council on greatly increasing of the punitive compensation for IP infringements. Actually we have made advices for amending the related IP laws and regulations. 


     Increase Compensation for Patent Infringements

    To thoroughly implement the decisions and plans of the Party Central Committee and the State Council on improving IP protection by strengthening patent protection and promoting the implementation and utilization of patents and perfecting the legal systems of patents, CNIPA launched the preparations for the 4th Overall Amendments to Patent Law in 2014. The Patent Law Revision Bill (Draft) was reported to the State Council in July of 2015. On December 5, 2018, the 33th Executive Meeting of the State Council discussed and passed the Patent Law Revision Bill (Draft) (hereinafter referred to as the Draft). On December 17, 2018, the Draft was passed by the 7th Meeting of Committee of Education, Science, Culture, Health and Sports of the 13th National People’s Congress (NPC), and firstly examined by the NPC Standing Committee on December 25, 2018. The Commission of Legislative Affairs of the NPC Standing Committee sought for public opinions on the Draft. In order to increase the punishment to the patent infringements and raise the cost of infringements, the punitive compensation system was added in the Draft, stipulating the “up double below quintuple” compensation for the intentional patent infringements. At present, the Commission of Legislative Affairs is studying and making amendments to the Draft in accordance with the deliberations from the members of the NPC Standing Committee, and will arrange the further examinations.  

    The IP legislation is always paying attention to strengthen the protection of the legal interest of right owners and increase the compensation to the IP infringements. In other fields, the punitive compensation system was introduced to the Amendments to Trademark Law in 2013, i.e., the “up double below triple” punitive compensation was to the malicious trademark infringements with serious circumstances. The number was raised to “up double below quintuple” in the amendments to Trademark Law in April of 2019. The amendments to the Copyright Law have been added into the legislation program of the 13th NPC Standing Committee, in which the punitive compensation is also the major concern, and we believe that the related amendment draft will come out.  

    We totally agree with your proposal that the low cost of infringements was one of the reasons causing the repeated infringements, so it was necessary to increase the punishment to protect the companies’ innovation enthusiasm. As to your suggestion of increasing the punitive compensation limit to 100 times to the malicious infringements, we still need to further evaluate the effect of implementing the punitive compensation system, because the system is newly introduced into the amendments to Patent Law, which is designed to protect the public interests on the basis of innovations and promote the balanced social development. Besides, the “quintuple” punitive compensation is the top level. To improve the patent protection, besides the increase of the punitive compensation, the multiple measures shall be taken in an all-around way, with a focus on protecting the rights of patent owners. For example, the Patent Law Revision Bill (Draft) has stipulated: firstly, increasing the statutory compensation limit from one million yuan to five million yuan; secondly, improving the rules of evidence and the amount of compensation is determined by the People’s Courts, i.e., when the right owner is trying to provide evidence but the books of accounts or materials related to the infringing acts are under control of the infringers, the People’s Courts shall order the infringers to provide the books of accounts or materials related to the infringing acts, if they do not, the courts shall decide the amount of compensation on the basis of the claims of the right owners and the available evidences.  

    In the future, CNIPA will actively work with NPC Standing Committee to advance the amendments to Patent Law, and refer to the opinions from all sectors of the society, and continue to study and implement the specific measures to increase the punishment to the infringements. Moreover, the Commission of Legislative Affairs will take your valuable suggestions in the process of amending the related laws.


     Promotion of Joint Punishment in the Field of Intellectual Property

    To deeply implement the requirements of the Party Central Committee and the State Council for improving IP protection and community credit system construction, and advance the construction of the IP credit system, and establish the joint punishment system to the dishonest acts, 38 organizations and departments covering National Development and Reform Commission, People’s Bank of China, National Intellectual Property Administration (CNIPA) co-signed and issued the Memorandum of Cooperation on Joint Punishment of Seriously Dishonest Entities in the Field of Intellectual Property (hereinafter referred to as “the Memorandum”), in which the joint punishment shall be carried out to the serious dishonest entities in the IP field (patent). As per your suggestions, the measures such as the construction of specific system, the publicity of information of the infringing entities, the prohibition of procurement or bidding with the governments, the prohibition of funding and commendation and reward from the governments, have been implemented through the joint punishment system. 

    The Memorandum stipulates that the joint punishment shall be carried out to six types of IP (patent) infringements like the repeated infringements, and defines that the targets of joint punishment are the subjects committing the serious dishonest acts in the IP (patent) field, including the legal person, the legal representative, the person in charge, the directly responsible personnel, the actual controller, the non-legal entity and its person in charge and the implementer. The Memorandum

    explicitly requests to disclose the list of the entities committing serious dishonest acts, and stipulates that CNIPA shall regularly share the list with other departments and organizations signing the Memorandum through the sharing platform of the national credit information. Moreover, the list also shall be public to the whole society on such the governmental websites as the Credit China, the National Enterprise Credit Information Publicity System and the National Intellectual Property Administration.   

    The Memorandum introduces two punishment measures: first, CNIPA shall implement five punishments, such as disqualifying the patents for fast granting and fast protecting, disqualifying the dishonest entities for applying the national IP models and the superior enterprises, and the National Patent Operation Pilot Program, disqualifying the dishonest entities for reducing the patent application fee and enjoying privileges of priority examination, etc.; second, other departments and organizations shall implement 33 joint punishments, such as limiting the governmental funds, subsidies, and social security fund, restricting the dishonest entities to take part in government purchase as the suppliers, disqualifying the dishonest entities for the recognition awards, etc.  

    The Memorandum is conductive to improve the efficiency, co-movement, systematicness of the punishments, powerfully deterring the serious dishonest acts in the IP field, advancing the construction of the IP credit system, and perfecting the system of joint punishment to the dishonest acts. In the next step, CNIPA will strictly implement the Memorandum by designing the method of managing the list of joint punishment to the serious dishonest entities in the field of patent, and promoting the formulation of a cooperated memorandum to conduct joint punishments to the serious dishonest entities in the field of trademark and geographic indication. 

    Thank you for your attention to the intellectual property protection. CNIPA will work with the related departments to fully implement the decisions and plans of the Party Central Committee and the State Council, advancing the amendments to IP laws such as Patent Law, increasing the punishment to the IP infringements by using multiple means such as the joint punishment. We will protect the legal interest of the innovation entities in practice, improve the level of IP protection and create a good business environment. We wish you pay constant attention to our work and provide your valuable opinions.

    CNIPA

                                                                   August 2, 2019