Guangdong courts searching for fair infringement awards

Guangdong courts are working to crack the hard challenge of assessing damages in intellectual property cases, said Xu Chunjian, vice-president of the High People's Court in the province.

Xu told China Daily his team will make full use of rules covering disclosure of evidence, obstruction, expert testimony and preponderance of evidence to find actual losses or gains due to infringement.

The Chinese judicial system has long been criticized for low compensation awards for losses in IP cases.

Information from an IP research center at Zhongnan University of Economics and Law shows that statutory compensation - a standardized range of figures - has been awarded in 97.25 percent of patent cases in the country since 2008.

The average award was 80,000 yuan (about $13,000), one-third or even less than the claimed damages.

Yet fees alone in applying for and maintaining a 20-year invention patent surpass that amount, Zhan Ying, head of the research project, told the Legal Daily.

"We should be alert to the phenomenon that the statutory compensation provision - intended to be a fallback position - has become the mainstay," Zhan said.

He said part of the problem is difficulty in collecting evidence. "No one but infringers themselves is clear about how much profit is reaped from illegal production and sales."

Also, judges tend to be conservative in interpreting rules of evidence, he said.

In Guangdong province, well known for its bustling businesses, courts face more IP disputes than many other places in China. And judges there are trying to change the conservative image.

Legal observers said the provincial high court established a good reputation for its work on the long-running iPad case. Its mediation helped US electronics giant Apple and domestic LED maker Proview Technology reach a $60 million settlement in the trademark dispute.

Its other headline-making decisions include an unfair competition dispute between social media giant Tencent and security software developer Qihoo, and a patent suit between domestic home appliance leaders Gree and Midea.

In the dispute between Gree and Midea, the Guangdong judges awarded 2 million yuan in compensation, calculating losses based on profit generated from part of the infringing products.

When defendants refuse to provide accounting records in infringement cases, judges have ordered checks on their bank accounts or tax records, and then used industry profit margins as a reference to determine the illegal gain.

Lou Cun, director of the China Software Industry Association, noted the effect of the rulings on IP awareness.

"A court judgment awarding appropriate compensation is a far better lesson than countless sermons on IP importance," he said.

huangmengxin@chinadaily.com.cn