IP theft? China’s tougher patent law brings payouts, pharma dispute fix

Revised law introduces compensation for losses caused by patent infringement, and early resolution mechanism for pharmaceutical cases

US government has called for China to address the issue, a long-standing grievance for companies

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China’s new mechanism for pharmaceutical patent disputes has been hailed as its answer to the US pharmaceutical patent system. Photo: Reuters

Published: 9:00am, 21 Oct 2020Updated: 9:00am, 21 Oct 2020

China has tightened its punishment for patent infringement, including new safeguards for pharmaceutical patents, as it seeks to improve protection of intellectual property and encourage innovation.

In a first for China, if a patent is infringed intentionally or with severe harm caused to the patent holder, the guilty party will be liable to pay compensation of up to five times the loss suffered, the benefit received by the violator or the patent licence fee. If that cannot be quantified, courts can demand compensation of 30,000 to 5 million yuan (about US$4,500 to US$750,000), up from the previously stipulated 10,000 to 1 million yuan.

The revised law, which will take effect next June, also establishes an early resolution mechanism for pharmaceutical patent disputes.

It has long been a grievance of companies that China’s punishment of patent infringement was too lenient to act as a deterrent.

The tightening is the first change to patent law since China and the United States signed a partial trade deal in January.