1. Under Chinese patent law, compensation for patent infringement can be calculated based on actual losses, benefits to the infringer, or a royalty rate. However, in practice courts often award statutory damages between $4,646-$774,377 instead of assessing actual damages. 2. New amendments taking effect in June 2021 will introduce punitive damages for the first time, allowing up to five times the original compensation if infringement is deemed intentional and serious. 3. While Chinese law provides for calculating damages based on losses, benefits, or royalty rates, statutory damages have become the default method due to their simplicity, and actual compensation methods are rarely considered.

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 Neil Wilkof Friday, May 14, 2021 - actual damages, China, new amendments, patent infringement, punitive damages, Statutory damages
Kat friends, Professors Bashayer Almajed and Bashar Malkawi, o er a summary of the current approach to damage calculations for patent
infringement under Chinese law.
Chinese Patent Law: A Multi-layered Approach to Damages
The Chinese patent law was enacted in 1985 and amended in 1992, 2000 and 2008. Importantly, on 17 October 2020, new amendments were enacted,
due to take e ect on June 1, 2021. Compensation for patent infringement is one of the key areas of focus.
Like the legal approaches in the U.S. and EU, the traditional framework for calculating patent damages in
cases of infringement in China is multifaceted and founded on actual compensation. However, in
practice, China tends to rely on statutory damages rather than assessed compensatory damages.
According to research at Zhongnan University, 97.25% of all patent infringement judgments awarded are
statutory damages, thus making it nigh on impossible to properly analyze pa erns in judicially imposed
royalty rates.
Despite that US. patent law does not provide for statutory damages in patent cases, the "25% rule of
thumb”, [i.e., a xed ratio of 25:75 for determining a baseline royalty, related respectively to the licensor
and the actual or potential licensee and litigation damages] is, in fact, not meaningfully di erent from a
“statutory damages” rule, and the use of statutory damages in China is, for similar reasons, namely simplicity and clarity.
In nancial terms, the award of statutory damages in China has been of a signi cantly lower order of magnitude, closer to the pre-Uniloc 25% rule
approach. The Uniloc v. Microsoft decision held that the 25 percent rule of thumb is a fundamentally awed tool for determining baseline
calculations, because it did not tie the reasonable royalty base to the facts of the case at issue.
Actual Damages
The starting point in China is that compensation will be calculated based on actual losses, calculated as the bene ts accrued to the infringer, the
losses su ered by the patentee, or a multiple of an assessed license fee. Article 71 of the 2020 amendment states that:
 The damages for a patent infringement shall be determined according to the actual loss su ered by the right holder due to the
infringement or the bene ts obtained by the infringer from the infringement. 
If di cult to assess, Article 71 goes on to state that pro ts earned because of the infringement can be used as the basis. If this also proves di cult,
the “the damages shall be reasonably determined by reference to the multiple of the royalty for this patent.” As in US law, there is no xed, statutory
royalty rate.
Statutory Damages
As mentioned, Chinese courts rely heavily on statutory damages but, unlike most Western legal systems, Chinese law speci cally enables this option.
Thus, Article 71 states that if the rst three methods of assessing actual damages, as mentioned above, are too di cult to determine, the court may
award statutory awards instead, with the current range being from 30,000 yuan to no more than ve million yuan (approximately $4,646 to
$774,377).
In theory, therefore, statutory damages are the fourth and last resort method in the hierarchy. However, statutory damages have become the
standard remedy. As such, this has led a self-ful lling e ect because, with exceptionally few awards being based on actual losses, unfair pro ts or a
multiple of royalty rates, many lawyers and industry specialists do not even consider these as options when seeking to calculate patent
damages in China.
Damages for patent infringement: the Chinese perspective

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Moreover, although Chinese case law reveals a move towards higher patent damages claims, in practice many cases are se led prior to
judgment. Notably, the Supreme Court’s 2016 Judicial Interpretation shows that, for increased awards, the primary focus is on the rst two
methods of calculation, i.e., proof of actual losses and pro ts, rather than royalty rates. The result is that royalty rate assessments are broadly
overlooked as a calculation method.
Punitive Damages
As a signi cant further step towards deterrence, the 2021 reforms in China will introduce punitive
damages for the rst time. Starting June 2021, Chinese law will allow the judge to award up to ve times
the original compensation (the bene ts of the infringer or the losses of the patentee) in punitive
damages if he/she deems that the infringement is intentional and serious in terms of size,
duration, and geographical location.
This mirrors the U.S. remedy of ‘enhanced damages’ allowed under the Patent Reform Act of 2009,
even if, in the U.S., enhanced damages are based on a multiple of three, not ve.
Picture on right is by Savannah Grandfather and is licensed under the Creative Commons A ribution 2.0
Generic license.
Picture on left is by Mr. priono and is licensed under the Creative Commons A ribution-Share Alike 4.0 International license.
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