Explaining the ‘low and unexplainable’ patent damages in China: an empirical analysis of 992 judicial opinions

Patent damages in China are commonly criticized as low and unexplainable, which raises concerns over the overall credibility of China’s patent system. This article describes and reports the results of a large-scale empirical analysis of 992 invention patent infringement lawsuits decided by Chinese courts between 2014 and 2018 with damages awarded. The results show that whether patent damages in China are low depends on the selection of standards. If compared with damages granted by courts in the United States or the expectations of patent holders, patent damages in China are undoubtedly low. However, if considering the patent holder’s actual losses – a more rational standard – the allegation of low patent damages does not stand. In addition, around 64.1% of the variations in patent damages in China can be explained by pre-selected ex ante factors, among which proxies for patent value and scale of infringement play an important role. These findings demonstrate that patent damages in China are not as low and unexplainable as commonly believed. Instead, the rather ‘low’ damages compared to their counterparts in the United States reflect the main body of patent infringement lawsuits between small entities over technology improvements on small widgets and goods in China.