16 Comparative Study on the Judicial Protection ofIntellectual Property: From the Viewpoint of the Trial ofIntellectual Property Cases between China and Japan
Luo Dongchuan(*)
Following its entry into the WTO, China is facing the new challenge of how to strengthen judicial protection
for the intellectual property. In recent years, China has put forward the strategy of building the country bystrengthening science and education while advocating judicial system reform. Meanwhile, Japan also isimplementing its judicial system reform. Japan put forward the “Intellectual Property Policy Outline” anddrew up the “Basic Law on Intellectual Property” in 2002. Under the new circumstances, China and Japan
have attached unprecedented importance to the judicial system and intellectual property protection. This is the
new background of intellectual property protection. Under this historical situation, it is of special importanceto make a comparative study on judicial protection for intellectual property between China and Japan because
both countries can learn from each other in judicial protection for intellectual property and judicial system
reform. This article, from the perspective of how to improve the law enforcement and judicial system in orderto adapt to the new needs in the new century in terms of intellectual property protection, makes a comparative
study of the judicial systems and judicial remedies for intellectual property between China and Japan.
Under the present circumstances, both China and Japan are attaching greater importance to judicial
reform and IPR protection than ever before.

1Comparison of the Trial System forIntellectual Property between Japan andChina

1-1 Overview of the IPR trial in Japan and
China
Both China and Japan have already established
IPR departments in their courts. In Japan, the 3rd,
6th, 13th and 18th Civil Departments in the Tokyo
High Court are responsible for IPR cases. In
addition, the 29th, 46th, and 47th Civil Departmentsin the Tokyo District Court are also responsible for
IPR infringement cases.
China started to set up intellectual property
courts in Beijing, Shanghai and Guangdong in 1993.
In 1996, the Supreme People’s Court set up its
intellectual property court. As of 2002, altogether
31 high courts in China had set up civil trial courts
specially dealing with intellectual property issues.
At the same time, except forpeople’sintermediate courts at the provincial capitals,
intermediate courts at various local levels have also
set up a civil department specially dealing withintellectual property. For example, Haidian District
and Chaoyang District in Beijing, Pu Dong New
District and Huangpu District in Shanghai, andShinan District in Qingdao have also set up theirrespective IP courts.
It is an international trend to set up special IP
departments or special IP courts.

1-2 General introduction to the intellectual
property trial and its related judicial
system1-2-1 Types of IPR cases accepted
The district courts in Japan (such as theintellectual property departments of the Tokyo
District Court) mainly deal with intellectual
property infringement disputes, including thoserelated to patent right (including utility models anddesign disputes), trademark right, copyright, unfair
competition, plant variety right and semiconductor
IC layout. In contrast, Chinese intellectual property
courts accept all types of intellectual property
disputes, including, IP right ownership disputes andrelated contract disputes (the jurisdiction of somecases requires approval by the Supreme People’s
Court), in addition to IP infringement.
1-2-2 Number of IPR cases accepted
From 1991 to 2001, intellectual property
infringement cases in Japan nearly doubled. The
Tokyo District Court accepted about half of all cases
in Japan, reaching 300 per year.
In China, the number of newly accepted cases
over the past 10 years has been on the increase,with an average yearly increase of 10-20%. In suchmajor cities as Beijing, Shanghai, Guangdong,
Jiangsu and Zhejiang, the rate of increase is evenhigher.
From 1990 to 2000, Chinese courts accepted
36,504 first instance IPR cases and decided 36,088
cases. Among decided cases, there were 9,318
patent cases, 3,027 trademark cases, 4,486(*) Deputy Chief Judge of the Third Civil Tribunal of the Supreme People’s Court of China

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copyright cases, 13,710 technical contract cases,
and 5,963 unfair competition and other IPR cases.
In 2001, Chinese courts at all levels accepted 5,041
IPR cases, a 10% increase over the previous year.
In 2002, 6,201 first-instance cases were decided.
Regarding second-instance appeal cases, a total of
1,544 cases were accepted and 1,461 cases were
decided.
1-2-3 Jurisdiction of IPR cases
IPR infringement cases in Japan are decided by
the district court of the defendant’s domicile, or of
the place where the accused infringing product ismanufactured or sold. The Tokyo District Court
has jurisdiction over the Eastern Japan area while
the Osaka District Court has the same jurisdiction
over the Western Japan area. In Japan, 85% offirst-trial IPR cases are tried by the Tokyo andOsaka District Courts.
In Japan, there are two kinds of patent lawsuits.
One is administrative lawsuits against the decisions
made by the Japanese Patent Office and comesunder the jurisdiction of the Tokyo High Court. If
the defendant refuses to accept the ruling by the
Tokyo High Court, he can appeal to the Supreme
Court. Another type of case is patent infringementcases. These cases fall under the jurisdiction of the
district courts. The defendant can appeal to theHigh Court and then the Supreme Court.
In China, if a lawsuit is filed against the Patent
Review Committee of the State Intellectual
Property Office (formerly called the Chinese Patent
Office) on the decision of grant of patent or patenteffectiveness, the case will be tried by the FirstIntermediate People’s Court of Beijing. If the
defendant refuses to accept the decision made bythis court, he can appeal to the Beijing High
People’s Court.
According to Article 5 of Regulations on the
Applicable Laws in the Trial of Patent Dispute of theSupreme People’s Court, lawsuits arising from
infringement of patent are under the jurisdiction of
the people’s court where the act of infringementtakes place or of the defendant’s domicile. The
place of the infringement includes: the place of the
manufacturing, use, offer to sale, sales, import of
the alleged infringing invention or utility model; theplace of the use of the patented process, or theplace of manufacture, use, offer to sale, import ofthe product that was manufactured by the patented
process; the place of the manufacturing, sales andimport of the design patent product; and the place
where the act of passing-off regarding anotherparty’s patent took place. Article 6 stipulates that if
the defendant only files the lawsuit against the
manufacturer of the infringing product, excluding
the seller and if the place of manufacturing isdifferent from that of sales, the people’s court
where the product is manufactured has thejurisdiction over the case. If both manufacturer andseller become defendants, the people’s court where

the product is sold has the jurisdiction over thecase. If the seller is a branch of the manufacturer,
and the plaintiff files a suit against the manufacturer
in the place where the infringing product is sold,the people’s court there has the jurisdiction.
The Supreme People’s Court made new
regulations on the jurisdiction of IPR infringementcases in Interpretation on the Applicable Laws in
Trials of Trademark Civil Dispute Cases andInterpretation on the Applicable Laws in Trials of
Copyright Civil Dispute Cases. The above two legal
interpretations
stipulatethat
trademarkinfringement cases and copyright infringementcases are under the jurisdiction of the people’s
court where infringing action takes place, where
the infringing products or counterfeit goods are
stored or seized, and of the defendant’s domicile. In
other words, the people’s court doesn’t try cases oftrademark infringement and copyright infringement
according to the place of final result of theinfringing act. The place of storage means a placethat is used to store large quantities or frequently
used to store or conceal infringing products orcounterfeit goods. The place of seizure means aplace where the Customs, the Administration for
Industry and Commerce or the Copyright
Administrations seal up and seize the infringing
products or counterfeit goods according to therelevant law. The place of seizure in the above twolegal interpretations only refers to the place where
infringing products or counterfeit goods are sealed
up and seized by intellectual property enforcement
authorities. The place where the people’s court
seals up and seizes the infringing products orcounterfeit goods before the trial will not be
regarded as the place of seizure under the above
two legal interpretations. In the place of storage or
seizure of the infringing products or counterfeit
goods, the party concerned not only can file alawsuit against the party who stores, manages ortransports such products or counterfeit goods, butalso can file a lawsuit against the seller or
manufacturer of the infringing products orcounterfeit goods, or both of them at the sametime.
1-2-4 Concentrated trial of IPR cases(1) In the Outline for Intellectual Property
Strategy, Japan has put forward the proposal toconcentrate jurisdiction for IPR cases to the Tokyo
District Court and Osaka District Court.
(2) According to the Supreme Court’s legal
interpretations on disputes involved in patent,
trademark, copyright, plant variety right, IC layoutright, and so on, all IPR cases should be examinedby intermediate courts or higher, except for insome exceptional situations approved by the High
People’s Court where certain grassroots people’s
courts can try certain types of IPR cases.
Patent, plant variety, and IC layout disputecases must be under the jurisdiction of the● 127 ●IIP Bulletin 2003

intermediate people’s courts designated by theSupreme Court.
1-2-5 Trial procedure
In Japan, after an IPR case is accepted, it isexamined by the same collegial panel until its
completion. This is the same as in China.
When a case begins to be tried in Japan, there
is not a complete court trial process that reviews
factual and legal evidences. After an IPR case isaccepted, usually the judge assembles both parties
in the court or a meeting room in order to discusssuch questions as evidence and disputing points,
usually once a month. The whole oral argument
process usually has 10 rounds. Both parties air
their opinions by exchange of briefs, and the judge
will summarize issues asserted by both parties
after full consideration of the briefs submitted byboth parties. Thus, not so many oral arguments areheld in the Japanese court. In the whole process,the judge, from a neutral standpoint, guides bothparties to air their opinions. Sometimes, if
necessary, the judge would also ask both parties toadhere to their points. In Japan, there is no jury
system and the judge is responsible for the review
of all evidences.
The Chinese court adopts the court trial
system, which includes the reading of the complaint
and plea, the court’s investigation (including
production and confirmation of evidences byparties) and oral arguments. The judge can handdown the verdict at the court or at a later,
designated date. The intellectual property judges in
China, however, pay great attention to the pre-court
procedures, including exchange of evidences andthe written statements and confirmation of the
disputing points.
1-2-6 Evidence
It is a common practice around the world,
including Japan and China, that both parties in a
lawsuit bear responsibilities in the submission ofevidence. Unlike the United States, there is no
discovery procedure in either Japan or China.
Article 105 of the Japanese Patent Law
stipulates that one party in the lawsuit can ask the
court to order the opposite party to submit
evidence required to establish the infringing action
or calculate amount of damage unless the opposite
party has the appropriate reasons to refuse.
China has made some specific regulations on
burden of proof in various intellectual property laws
such as Article 57(2) of the Patent Law, Article
56(3) of the Trademark Law and Article 52 of the
Copyright Law. However, the shift of burden of
proof regarding process patent as stipulated in
Article 57(2) of the Patent Law doesn’t mean thatthe right holder is completely free of any
responsibility in providing evidence. The patent
holder should first show evidence that he enjoys
the process patent and the defendant manufactures
the same product as manufactured through the

IIP Bulletin 2003

patented process, and only after that can the court
ask the defendant to provide the evidence that its
product is manufactured differently from thepatented method.
In China, there is the evidence preservation
system. That is to say, in the case of emergency orthat the evidence might be eradicated, application
can be filed to the court for the preservation of theevidence. In the Trademark Law and Copyright
Law amended in 2001, evidence preservation
before trial is also adopted.
The China Civil Proceeding Law also
stipulates that one party in the lawsuit can fileapplication asking the court to collect evidence if it
is difficult to collect evidence due to objective
reasons.
Chinese courts employ an evidence exchangesystem. In China’s court practice, the purpose of
the exchange of evidence before opening court is toascertain the evidence provided by the parties,
clear up the debating point, and understand theirclaims in order to make an adequate preparation forthe court opening. When exchange of evidence
involves patent and trade secrets, the exchange ofevidence must be made within the extent requestedby the plaintiff. The people’s court should hold aclosed-door hearing when so requested by theparties and can impose a duty on the opposite party
to maintain secrecy. Disobeying the confidentiality
obligation may be dealt with as civil contempt
depending on the circumstances and may be thereason for issuing an order to stop infringement andpay damages.
In trials involving trade secrets in Japan, even
if the party insists on not revealing them to the
opposite party, generally speaking, a judge will ask
the said party to disclose them from the viewpointof judicial fairness. But the party can disclose therelated details little by little based on the defense
asserted by the counter party to avoid an exposureof unknown trade secrets and suffering damages
thereby.
1-2-7 Professional knowledge(1) The investigator system is adopted in the
Court Organization Law in Japan. It stipulates thatbased upon the request of the judge, an investigator
will be arranged in an industrial right litigation inorder to solve the technological problems related tothe case by presenting a research report withtechnological analysis.
(2) There is an appraisal system in the Civil
Procedure Law in China, which stipulates that in
the face of technological problems in court, it ispossible to request the appraisal by a legally
accepted appraisal organization.
(3) Based on this provision, China is also
exploring ways for the introduction of the expert
witness system and expert consulting system.
Catering to the needs of the case, the parties can
ask for one or two experts or “expert witnesses” to● 128 ●

attend court, explaining the details related to theprofessional technologies.
(4) The people’s court is able to study
technological cases from experts and consulting
offices if needed, as well as have the technologicalfacts concerned appraised by the request from theparties concerned.
2

Some Issues in the Judicial Remedy ofIntellectual Property Cases

IPR judicial remedy means that, when thelegal right of an IP owner is infringed, it is possible
to demand measures for protection from the judicial
authorities. This is the main method to realize IPR
protection, which will protect the right from being
infringed illegally by the means of the state power.
As for IPR, besides criminal remedy andadministrative remedy, there is procedural remedy
and substantive remedy in the aspect of civil
judicial remedy.
2-1 Procedural remedy
Procedural remedy means measures to offer akind of protection to the party concerned before thecourt makes a ruling. Provisional measures as
defined in Article 50 of the TRIPS Agreement arealso the procedural remedies for the protection of
IPR. Every country generally has measures to stop
the acts of infringement as stipulated in Article 50of the TRIPS Agreement. What is more importantis that the article stipulates that provisional
measures should be adopted before the beginning of
the court proceedings, if necessary. It also
stipulates the preservation of evidence before alawsuit.
When China amended the Patent Law in 2000,
and the Trademark Law and Copyright Law in 2001,
it added the provisions on provisional measures
before the court proceedings. As for the detailed
implementation of provisional measures, forexample, qualification of the applicant, applying
procedure,evidence,
security,
review,
compensation of damage when court proceeding is
not initiated, etc., the Supreme Court made adetailed stipulation by its judicial interpretation. In
China, there is no definition for the concept of“preliminary injunction”, but the nature andcontent of that term are the same as in provisional
measures, meaning the court would order the stopof the infringement action before the lawsuit isinitiated.
In Japan’s Civil Preservation Law, the term of“provisional disposition” is defined. When an act of
infringement brings about imminent risk of damage
or risk of tremendous damage to the party
concerned, it is possible to request for the adoptionof provisional disposition. In Japan, with more andmore attention paid by enterprises to the protectionof IPR, and based on the demand for immediate
action to solve infringement disputes, provisional

disposition becomes one of the important ways thatthe parties prefer to select to speed up the solution
for IPR disputes. In fact, most cases of provisional
disposition requested in IPR litigations in Japan
have something to do with the prohibition of theinfringement of the IPR with the purpose of
stopping the manufacture and sale of the infringing
products. In that sense, by applying provisional
disposition, the party concerned seems to be able
to realize the same results as the final trial.
The two countries differ in their ways of
implementing provisional measures. In Japan, only
when there are few questions remaining does thejudge grant preliminary injunction without asking
the disputing parties. Usually opposing parties will
be asked before ordering preliminary injunction,
and when deemed necessary, the judge will ask theparties to come to the court to explain the facts andreasons. There are only a few cases of provisional
measures in China. From legal interpretation issued
by the Supreme People’s Court, the provisional
measures should be decided before the lawsuit isinitiated. Therefore, generally speaking, the court
will examine assertions of the requesting party only
and will not contact the opposite party. But at thesame time, the legal interpretation also stipulates
that, when necessary, the court can ask the
opposite
party
about
facts.
Aftertheimplementation of the provisional measures, theopposite side may ask the court to review andreconsider its decision on provisional measures andhas the right to request the rescission of theprovisional measures. In such a case, the court has
to listen to the opinions of both sides and should
agree to rescind the provisional measures if thereason is appropriate.
In Japan, the judge will have the discretion in
deciding whether the applicant should makecompensation for damage resulting from theprovisional disposition if the applicant loses thecase in the lawsuit. If the judge believes that theapplicant has committed fault, for example, byconcealing the relevant facts, then the applicant
would be ordered to pay compensation for thedamages caused by the implementation of theprovisional disposition. In China, if the applicant
does not initiate a lawsuit or loses the case in thelawsuit after the implementation of the provisional
measures, the court must order the applicant tomake compensation for the damages. In China,
even when the plaintiff doesn’t file the preliminary
injunction before the lawsuit, he can still file theapplication for the provisional measures when filingthe lawsuit.
2-2 Substantial remedy(1) Substantial remedy refers to the substantial
protection the party concerned can enjoy throughjudicial procedure. As far as intellectual property isconcerned, substantial remedy mainly refers tocourt’s acceptance of the substantial claims put● 129 ●IIP Bulletin 2003

forward by the party concerned, that is to say, arequest for stopping the act of infringement and fordamage compensation.
(2) In terms of the context of the substantial
remedy, Japan and China both provide injunction tostop the act of infringement and order of damage
compensation. After the confirmation of theinfringement of the rights, the court can, based
upon the request of the party concerned, order the
defendant to compensate for the damage of theinfringement of the rights.
(3) In the IP lawsuits in China, besides theinjunction and compensation for damage, there areother ways such as apology, restitution, recovery of
reputation, and eradication of disturbance on therightholder.
(4) Action 106 of the Japanese Patent Law
stipulates the definition of “Measures for recoveryof reputation”. That is to say, upon the request of apatentee or exclusive licensee, the court may, inlieu of damages or in addition thereto, order aperson who has injured the business reputation of
the patentee or exclusive licensee by infringing thepatent right or exclusive license, whether
intentionally or negligently, to take the measuresnecessary for the recovery of the business
reputation.
2-3 Infringement of right and invalidation
In the patent infringement litigation, thedefendant often demands the invalidation of thepatent held by the plaintiff or declaration ofnonexistence of right asserted by the plaintiff. Thisis one of most important defenses used bydefendants in IP cases. Demanding invalidation is
also a method sometimes used by the defendant topostpone the litigation. This has prolonged theperiod of time required from initiation tocompletion of intellectual property litigations,which ultimately affects the effectiveness of theprotection of intellectual property. In this respect,
Japan and China share some similar experience.
Before 1992 Supreme People’s Court
interpretation, in China, if defendant requested thedeclaration of invalidity of the plaintiff’s patent, thecourt usually stopped the trial until the Patent
Review Board (PRB) made the final ruling on
validity of the patent. If the defendant refused toaccept the ruling of the PRB and appealed it to thecourt, the infringement court would have to stop
the infringement proceedings until the conclusionof validity proceedings. China’s Supreme People’s
Court, in 1992, announced in its legal interpretationthat request of invalidation against utility model anddesign patent should be put forward during the plea
period, otherwise the court doesn’t have to stop theproceedings. As for the invention patent, even if the
defendant requests for invalidation, the proceedings
need not be stopped.
In Japan, the Japanese Supreme Court’s
decision on Fujitsu (also known as the Kilby Case)IIP Bulletin 2003

in April 2000 had historical and realistic significance,
which has changed the whole process of intellectual
property litigation in Japanese courts. The JapaneseSupreme Court opined that the court that tries thepatent infringement case can decide on the validityof the patent. The Kilby decision has changed thepast practice on invalidation request, and has
expedited the protection process. But the court stillcannot announce directly that the patent is invalid,
instead, only can dismiss the plaintiff’s claim byruling it as abuse of right.
In China, due to many suspensions of IP
infringement proceedings in the past, the People’s
Supreme Court in 2001, in its legal interpretation
entitled Regulations on the Applicable Laws in the
Trial of Intellectual Property Dispute, stipulated theconditions for suspending the IP infringement
proceedings.
In Japan, if the defendant initiates invalidation
proceeding before the Japan Patent Office, the court
may suspend the infringement proceedings. If the
defendant appeals the JPO’s decision on invalidity
to the Tokyo High Court (or then the Supreme
Court), the infringement proceedings will reopen
after the decision on validity of the disputed patent
is finally made by the High Court or the Supreme
Court.
In order to improve the efficiency of patent
infringing proceedings, both the Chinese andJapanese courts are exploring ways to expedite thetrial process while dealing properly with therelationship between patent infringing proceedings
and patent invalidation proceedings. The current
measures taken by the Japanese court, which were
declared by the Supreme Court in the Kilby
decision, are quite positive, but whether thevalidation review procedure becomes meaninglessis worth research. It is also a challenge to thequality of the judge. Invalidation proceedings aredealt with by the Department of Appeal of the JPO
or the Tokyo High Court, while the first instance ofa patent infringement lawsuit is dealt with by a
district court. Whether both sides can reach aconsensus on validity of the disputed patent andhow to solve any differences between them is an
outstanding question. It is worth researching theimpact on the patent system and interests of theinvolved parties, as well as on how to coordinate
the relationship between patent infringement
proceedings and patent invalidation proceedings.
2-4 Doctrine of equivalents
This is one of the hottest issues in theJapanese legal society. In particular, the Supreme
Court acknowledged and affirmed the doctrine ofequivalents and also put forward five applicableprinciples in the decision on THK Co. Ltd. v.
Tsub-akimoto Seiko Co., Ltd., Heisei 6(0) No. 1083,
February 24, 1998 (also known as the Ball Spline
Case), which has had a deep impact on the Japanese
patent society.

● 130 ●

The doctrine of equivalents (DoE) is a very
important issue in the patent infringement
proceedings, one that must not be overlooked.
Although every country basically acknowledges
this principle, the detailed criterion for applying
DoE is different. Although the history of patent trial
in China is not very long, based upon theexperience of other countries, China has also
adopted this principle. Moreover, the ChineseSupreme People’s Court has clarified its criteria for
applying DoE in the legal interpretation entitled
Regulations on the Applicable Laws in the Trial of
Patent Dispute.
How to apply the doctrine of equivalents is
related to the question of what will be protected bya patent. It is quite difficult to define the scope of
the protection of an invention only through patentclaims. Therefore, the application of the DoE may
be regarded as contributing to reasonable
protection for technological innovations whileserving the purpose of the patent system itself.
What scope of protection the disputed patent has
been conferred may become the focus of a disputeand therefore the key issue to the patent
infringement proceedings. How to define the scopeof protection of a patent can be said to be theprerequisite of the judgment of infringement. In
practice, however, it becomes obvious that literalclaim construction by itself is not sufficient torealize effective patent protection. This is partly
because, due to the ever rapid development oftechnologies, the possibility becomes quite highthat a feature or element of the patented
technology will become able to be replaced byanother feature or element that is developed after
issue of the patent and therefore is not, and cannot
be, claimed by the applicant. When defining thescope of patent protection, almost every country
adopts the DoE; i.e., basically defines it based on
the patent claims appearing in the patent certificate,but also, by taking into account the specification andthe drawings, includes within the protected scope
the product that has a feature which has not been
claimed but can be deemed as equivalent to theclaimed feature.
However, the doctrine of equivalents should be
implemented strictly, otherwise it might be abused.
If the DoE is used inappropriately, it will affectlegality and effectiveness of the patent system itself.
The use of the DoE in cases of patent infringement
should be understood and handled correctly.
2-5 Compensation for damage
The compensation for damage in IPR
infringement cases has quite different aspects fromthat in cases that involve tangible assets.
Calculation of the IPR damage compensation isalways an important and difficult issue in IPR cases.
In the knowledge society, since acts of IPR
infringement are becoming more concealable andthe damage caused is incalculable, the voice toincrease damage compensation and for revision of
the law is very high.
In Japan, according to Article 417 of theJapanese Civil Code, the compensation for IPR
damage is made as monetary compensation, anddamage compensation must be compensatory andcannot be punishable.
In China, in terms of damage compensation for
IPR infringement, besides the stipulation in the
Civil Code, there are some clear stipulations in the
Patent Law, Trademark Law and Copyright Law.
The Chinese court has maintained the principle ofcomprehensive damage compensation in order todefine the compensation amount in a fair andrational way. Regarding IPR cases, application ofpunishable compensation is still non-existent in
China.
The comprehensive damage compensation
rule means, as for the act of infringement taken by
the accuser, regardless of whether it is intentionalor unintentional, and regardless of whether theaccuser would be dealt with by criminal punishment
or administrative punishment, the accuser shouldmake damage compensation for the damage causedby his acts, both physically and psychologically. The
purpose of comprehensive damage compensation isto protect the rights of the injured party as much as
possible, and to fully compensate for the damage
suffered by the injured party. This principle iscompatible with the stipulation in the TRIPS
Agreement that requires “the infringer to pay theright holder damages adequate to compensate forthe injury the right holder has suffered”.
In IPR infringement proceedings, the Chinese
people’s court will, based upon the principle ofcomprehensive damage compensation, assure theinjured party receives enough compensation for thedamage caused by the infringement so that the
injured party will not suffer economic loss. For
those cases in which calculation of the damage isaffected by the evidence issues, the court will,based upon the request of the injured party, set a
compensation amount that is favorable to theinjured party.
When infringement is found, the Chinese court,
in addition to damage compensation, may impose
on the infringer(s) such civil liability and civil
penalty as apology, restitution, confiscation of theinfringing products and the equipment which isused to manufacture infringing products, and/or fine.
The Japanese court can order the seizure anddestruction of the infringing products.
In terms of patent infringement cases,
Japanese scholars believe that although Article 709
of the Japanese Civil Code and Article 102 of the
Patent Law stipulate respectively damage
compensation issues for act of tort (infringement ofanother party’s right) and patent infringement, it isdifficult for the plaintiff to demonstrate the exact
amount of damage amount. Section 102(1) of the● 131 ●IIP Bulletin 2003

Japanese Patent Law stipulates the calculation ofdamage compensation according to the damage
caused by the infringement action, which seems theordinarily adopted method. Under this provision,
the amount of damage the patent holder suffered
can be calculated by multiplying the number of
infringing products sold by the infringer by the unit
profit of the products that the patent holder could
have sold in the absence of the infringement. This
formula has taken the market share and marketing
effort of the patent holder into full consideration. If
the defendant did not gain any profit, thiscalculation method will not be affected. Section
102(2) of the Japanese Patent Law stipulates thatdamage compensation can also be calculated
according to the profits gained by the infringer. But
this method seems apt to provoke disputes over the
calculation of the infringer’s profits between theplaintiff and the defendant. In order to solve such a
dispute, Japanese Patent Law allows use of anexpert witness to calculate the amount of damage,and Japanese courts hold that “profit” refers to“average profit”. An expert witness to calculate theamount of damage will be appointed upon therequest of the plaintiff.
The Chinese Supreme People’s Court clarified
the calculation methods of damage compensation inits legal interpretations for patent and trademark
infringement. Article 20 of the legal interpretation
entitled Regulations on the Applicable Laws in the
Trial of Patent Dispute stipulated that the people's
court, according to Article 57(1) of the Chinese
Patent Law, can decide the amount of damage
compensation based upon the loss caused to theright holder due to the infringement or the profit
gained by the infringer, according to the request of
the right holder.
The loss suffered by the right holder can becalculated by multiplying the amount of decreased
sales volume due to the infringement of thepatented product by the reasonable profit margin
per product. When it is difficult to calculate thedecreased sales volume, the number of sold
infringing products multiplied by the profit margin
per patented product can be used in the calculationof the damage compensation.
The profit gained by the infringer can becalculated according to the following formula: thenumber of sold infringing products multiplied by the
profit margin per infringing product. The profit
gained by the infringer will be usually calculated
based on the infringer’s operating income. If theinfringer's business consists solely of infringementof the patent, however, the profit can be calculated
based on the infringer’s gross profit on sales.
The Supreme Court stipulated in Article 13 of
its legal interpretation entitled “Interpretation on the
Applicable Laws in Trials of Trademark Civil Dispute
Cases” that the people's court may select thecalculation method based upon the selection of the

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right holder. Profit, which refers to the profit gainedby the act of infringement, is calculated bymultiplying the sales of the infringing product by
the infringer’s profit margin per product. If it isdifficult to know the infringer’s profit margin, therightholder’s profit margin may be used. Damage,which refers to the damage caused by the act of
infringement, is calculated by multiplying theamount of decreased sales volume of the patent
holder due to the act of infringement or the soldvolume of the infringing product by therightholder’s profit margin.
Article 60 of China’s Patent Law amended in2000 stipulates that damage compensation can also
be calculated based on the amount of royalty
possibly paid to the patentee when the infringer
seeks to be licensed. The China Supreme Court
stipulated in Article 21 of Regulations on the
Applicable Laws in the Trial of Patent Dispute thatthe amount of damage compensation can be as
much as one to three times the possible royalty, andthe amount of possible royalty will be determinedby the people’s court according to thecircumstances of the case, kind or nature of patent,
average amount of royalties, scope and time of use.
Generally speaking, not less than a reasonableamount (namely, the same as the royalties) is
adopted in most patent cases. As for intentional
infringement, malicious action and repeatedviolation, however, the amount of compensation
should be calculated by multiplying the possible
royalty by one to three times. But as for thosepatents with high royalties, it should not be avoided
to multiply the amount in order to prevent theswindling of money by the party concerned in theway of contract defrauding.
The royalty based calculation method isadopted also in Japan. When the injured party
cannot get a sufficient amount of compensationfrom the calculation based on the rightholder’s loss
or the infringer’s profit, the party often claims forthe royalty-based calculation as a last resort. In
particular, Article 102(4) of the Japanese Patent
Law stipulates that Article 102(3) shall notpreclude a claim to damages exceeding the amountreferred to therein. That is to say, the above
methods could be used simultaneously. In such acase, where there has been neither willfulness nor
gross negligence on the part of the person who has
infringed the patent right, the court may take this
into consideration when awarding damages.
Next, let’s look at fixed damages or statutory
damages.
In Japanese Patent Law, there is no statutory
damages system, but Article 105ter provides that a
court may award a reasonable amount of damages
when it is extremely difficult to prove facts
necessary for the proof of damages from the natureof such relevant facts. This provision in fact allows
judges to decide the amount of damages. When● 132 ●

infringement occurs and the amount of damages isvery difficult to confirm, the judge can decide theamount of damages according to the entire purportof the oral argument and the result of the taking ofevidence.
The Supreme People’s Court in China also
stipulated in Regulations on the Applicable Laws in
the Trial of Patent Dispute that when amount ofdamages cannot be calculated by methods that thelaw provides, but the right holder in fact suffers aloss or the infringer makes a profit, the people’s
court can determine the amount within the range of
not less than RMB 5,000 to not more than RMB
300,000, up to a maximum of RMB 500,000
depending on the situation.
Both the Copyright Law and Trademark Law
amended in 2001 in China prescribed the statutory
damage system. The Supreme Court made it clear
how to implement the statutory damages system inInterpretation on the Applicable Laws in Trials ofTrademark Civil Dispute Cases and Interpretation on
the Applicable Laws in Trials of Copyright Civil
Dispute Cases. When determining the amount of
statutory damages in the case of copyright
infringement, the people’s court should take thetype of works, reasonable royalty and nature andeffect of infringement into full consideration. When
determining the amount of statutory damages in
the case of trademark infringement, the people’s
court should take the nature, period and result of
the infringement, reputation the trademark enjoys,
royalty amount, type/period/scope of trademark andthe reasonable expenses for stopping the act of
infringement into consideration.
As for whether expenses incurred in theinvestigation and action to stop the infringement by
the right holder should be included in the amount ofdamages, Japanese scholars believe that, undersome circumstances, the injured party can request
for it. Interpretation on the Applicable Laws in Trials
of Copyright Civil Dispute Cases set by China’s
Supreme People’s Court states that the people’s
court can, upon the request of the right holder, put
the reasonable expenses incurred in theinvestigation and stopping of the infringement into
the amount of damages. This can be seen as thereflectionofthecomprehensive
damagecompensation rule.
As for whether the lawyer fee can be includedin the damage compensation, in China, the people’s
court can, according to situations, account whole orpart of the lawyer fee into the compensation
amount in order to compensate for the actual loss
suffered by the right holder. In Japan, courts in IPR
cases generally don’t take the lawyer fee of theprevailing party into consideration. Only in somecases involved in extremely difficult technologicaland legal matters would the lawyer fee be
considered as the loss of the plaintiff.

3

For
FutureDevelopment
oftheIntellectual Property Litigation System

Economic and scientific globalization has put
much stricter demands on intellectual property
protection. Meanwhile, the conflict over publichealth problem and protection of traditional
knowledge between developed and undeveloped
countries, and the great importance attached tobiological and business method patent by developed
countries, has also posed another new challenge tointellectual property protection.
How to set up an effective intellectual
property system, and how to co-ordinate
international intellectual property protection are
two major issues that will face every country in the
future. Judges in both Japan and China are facing
the same challenge in terms of IPR protection.
Regarding the intellectual property litigation,
we have to adapt to the demands of the new era,push forward the judicial reform, adhere to theprinciples of fairness, effectiveness and consistency
and improve the quality of the judges of the newgeneration. In addition, with the development of theknowledge economy, the importance of intellectual
property has forced people to use legal means tosolve such disputes in both China and Japan. The
commercial value of IPR is becoming increasingly
high, and the short-cycled nature of IPR also calls
for more rapid and efficient intellectual property
protection. Hence, the new developments in thisfield have put higher demands on the capability andquality of intellectual property judges.

● 133 ●IIP Bulletin 2003