Research On Punitive Damages System In Intellectual Property Infringement Cases

Innovation is the engine and source of vigor of economic and social development and the essence of being powerful and prosperous. Premier Li Keqiang gives the opening speech at Summer Davos Forum emphasized the important role that innovation should play in the economy for three years from 2014 to 2016. He pointed out that innovation is not only the key to the restructuring and upgrading of Chinese economy, but also the key to the recovery of the world’s economy. More efforts should be spent on scientific and technological innovation so as to make strategic adjustments on the industries and achieve restructuring of the economy. He emphasized that "Innovation is the engine of development" and human beings’creativity and intelligence is the source of innovation and development. While the protection law of intellectual property right (IPR) is the ultimate guarantee for the continuous output and development of human creativity, from which we can see the importance and necessity of the era of strengthening the protection of the intellectual property right (IPR). From the addresses made by Premier Li at Davos Forum all these three years, it’s not hard to see the core element and direction of the government policies. In order to spur innovation, not only does it need the instruction of the policy, the incubation of the environment, but also the protection of the law.The jurisprudential circle doesn’t reach a consensus on whether to adopt punitive damage system and whether the current IPR protection law can well perform its duty in protecting and spurring innovation. The author believes that, as for infringement, prevention is better than afterwards compensation, because it’s better for the development of IPO (intellectual property object) by preventing the occurrence of the infringement than compensation afterwards to recover it. However, the compensatory damage system isn’t able to fully play the role in preventing and punishing infringement and recovering its damages. The current IPR protection law in China doesn’t fully protect the rights of the IP owners and do good in preventing infringement towards them. Many infringers would rather to compensate some money to the IP owners to carry on the infringement as from which they can earn more money for themselves. It’s time to set up a practical protection law, which can punish the illegal traders and stop the infringement. It’s the aspiration of all the IP owners and accords with the needs of achieving a healthy and sound development of social and economic order.As compensatory damage system can’t effectively prevent the occurrence of infringement, the author calls for the adoption of punitive damage system. This thesis first introduces the definition and characteristics of punitive damage system. Through comparison with compensatory damage system, highlight the prominent functions punitive damage system has:1. Fully punish the infringer 2. Effectively prevent the occurrence of future infringements 3. Protect and spur the innovation of people 4. Promote the formation of good social moral atmosphere and innovative environment and the construction of IP legal system. Then the author introduces the value and necessity of adopting punitive damage system for IPR protection from the following aspects:1. From the needs of the IP owners,2. From the needs of achieving a healthy and sound social and economic development,3. From the instructions of the government policies. After studying on the necessary component and liability principle of punitive damage system, the thesis cast a light on how to set up and apply the punitive damage system. The author raises a few examples to illustrate the problems and difficulties in dealing with infringement cases with the current laws and how they can be perfected after adopting punitive damage system. Last but not the least, the author gives a few ideas on how to balance between compensating the IP owner for its lost and punishing the infringer without overprotecting the IP owner. For example, the government can establish a special fund with the punitive penalty (of course excluding the part for compensating the lost of the IP owner) and use it as a bonus for innovation or the restructuring of the company or industry, or as auxiliary funds in helping the companies suffered from piracy goods to run good again, or in spreading the knowledge of IPR protection. In this way, can punitive damage system do good in preventing the occurrence of infringement while avoid over-protection.