China Will Soon Allow Victims of Intellectual Property Theft to Sue for Damages under a New Draft Law

Intellectual Property

China to allow victims of intellectual property infringements to sue for damages, state media reported on Monday, as Beijing seeks for ways to strengthen its intellectual Property protection framework, with US demanding for action on the issue.

According to Xinhua news agency reports, a draft law – under which the victims can file for ‘punitive damages’ – was presented at a meeting of the Standing Committee of the National People’s Congress (NPC, China’s legislature) on Sunday. There has been copyright, trademarks, and legislation protecting patents, but if the new law is passed, it will mark first time a victim of IP theft can take action against the damages.

It is important to substantially increase the financial penalties of intellectual property infringements to better apply the deterrent effect of the law, Xinhua reported, citing Shen Chunyao, NPC Constitution and Law Committee’s deputy head while presenting the draft law to lawmakers.

US President Donald Trump had repeatedly criticized over China’s negligent IP protection laws, alleged IP theft, and forced technology transfers, claiming it costs the United States around $600 billion per year, while China has denied the charge.

China and the United States have been locked in a never-ending trade tension, with the US looking for a massive reduction in its trade downfall with China and better reforms in its capital to stop alleged IP theft as well as open the economy to foreign firms. Both the US and EU officials have long pointed out the lack of fair access of foreign firms in China along with the pervasive theft of intellectual property.

On Sunday, Chinese leaders announced they are considering a new law managing foreign investment that would not only prevent the forced transfer of technology but also provide foreign companies the same privileges as firms in China.

On other hand, a patent law is getting revised to increase the amount of compensation by up to five times, while under the new draft law, victims of IP theft can receive compensation worth up to 5 million yuan ($720,000).

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Rahul Pandita

Rahul Pandita

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