CHINA Law and Practice Contributed by: Hans She, Muran Sun, Andy Zhu and Ray Cao, Fangda Partners
The right-holder’s actual loss is typically calcu - lated by the decreased sales profit due to the infringement, and the infringer’s benefits are typically calculated by the sales profit of the infringing products (such as the sales volume multiplying the profit per product). Reasonable royalty is typically calculated by precedent licence contracts between the right- holder and third parties. Discretionary dam - ages are calculated based on the type of the patent and the nature and circumstances of the infringement. As for transfer pricing, there are no specific rules on its impact on assessment of damages, but it may be considered as a factor for lifting/reduc - ing the damages. It is hard to say what a typical award of dam - ages is in the pharma/biopharma/medical device industry, as each case involves its own facts. That said, the PRC’s Patent Law provides puni - tive damages in cases where the infringement is wilful and serious. In such circumstances, the damages may be determined as not less than one and not more than five times the amount calculated by the right-holder’s actual loss, the infringer’s benefits or the reasonable royalty. Generally, damages accrue when the infringe - ment starts. However, if the right-holder brings a suit after three years from the infringement and the infringer is known, and if the infringement continues and the patent is still valid at the time of filing the litigation, the damages shall be cal - culated three years in advance from the date of filing the litigation. The law does not specifically provide for whether interest is payable, though there are rare cases where interest is awarded, especially when the court adopted a discretion - ary amount of damages.
Usually, damages are awarded together with technical trials in the final judgment. However, it is possible for a quantum hearing to be held sep - arately if the court deems it necessary. Interim awards are also possible, though not very com - mon. As indicated in 5.1 Preliminary Injunctive Relief , in cases where the preliminary injunction is wrongfully granted and enforced, the applicant should pay damages to the respondent. Specific considerations include: • that the applicant does not bring a lawsuit or apply for arbitration within 30 days; • that the patent rights requested for protection are declared invalid; and • that the enforceable judgment finds that the respondent’s actions do not constitute infringement. Such claims are relatively rare and not frequently raised. It is hard to say whether such claims are easily settled. Only a plaintiff to a lawsuit may claim for dam - ages. Third parties are not entitled to claim for damages in a civil lawsuit. 5.5 Legal Costs According to Article 71 of the PRC’s Patent Law, the prevailing plaintiff in a patent infringement litigation is entitled to recover reasonable legal expenses, covering: • attorney fees; • notarisation fees; and • related costs, such as evidence investigation and preservation fees. It is essential to note that these legal costs are not automatically granted – the plaintiff must for -
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