Shanghai, China (Eugene Hoshiko/AP)
Shanghai, China (Eugene Hoshiko/AP)
Shanghai, China (Eugene Hoshiko/AP)

ERIKA KINETZ, Associated Press

SHANGHAI (AP) — China is considering raising its notoriously low limits on damages for intellectual property violations and strengthening litigation on trade secret theft, a Shanghai city official said Tuesday.

The comments by Lyu Guoqiang, commissioner of Shanghai’s Intellectual Property Office, echo an action plan issued in December by the State Council, China’s top administrative authority, which called for “increasing the application of criminal fines” as part of an effort to enhance criminal enforcement and judicial protection for intellectual property.

Taken together, the moves suggest a deepening commitment to IP enforcement in China, which is trying to wean its economy from low-end manufacturing and seek growth from innovation instead.

“Enhancing intellectual property protection is out of the intrinsic need of China’s economic development and economic transformation,” Lyu said.

Patent awards are currently capped at 1 million yuan ($160,905), trademark violations at 3 million yuan and copyright violations at 500,000 yuan — fractions of the potential compensation offered in U.S. courts. Those low levels and a general lack of faith in China’s legal system have pushed some brands to seek redress using courts outside of China.

“Many rights holders complain the damages are too low,” Lyu said. “China is not America. Our economies are different, but we still need to consider adjusting the damages standards.”

He said the government also was considering allowing brands to pursue punitive damages, as is done in many Western countries, and make it possible to get injunctions issued earlier in cases alleging theft of trade secrets.

“They want to learn from other systems,” said Michael Mangelson, the intellectual property attache at the U.S. Consulate in Shanghai. “They believe the U.S. has a system in place that facilitates innovation. That’s the focus for China now.”

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