China to allow victims of IP theft to sue for damages

US President Donald Trump has repeatedly lashed out at China's lax IP protection laws

Beijing (AFP) - Victims of intellectual property theft in China could soon be allowed to sue for damages as Beiing looks to tighten its IP protection framework, state media reported Monday, with Washington clamouring for action on the issue.

Victims can claim “punitive damages” under the draft law presented Sunday at a meeting of the Standing Committee of the National People’s Congress (NPC, China’s legislature), the official Xinhua news agency reported.

While there has been legislation protecting patents, trademarks and copyright, this law, if passed, will mark the first time victims of IP theft can sue for damages.

“It is necessary to significantly increase the financial penalties for IPR infringements to better exert the deterrent effect of the law,” Shen Chunyao, deputy head of the NPC Constitution and Law Committee when presenting the draft to lawmakers, told Xinhua.

US President Donald Trump has repeatedly lashed out at China’s lax IP protection laws, forced technology transfers and alleged IP theft, saying it costs the US as much as $600 billion per year, a charge China has denied.

Chinese leaders on Sunday also announced they were looking at a new law governing foreign investment that would prevent the forced transfer of technology and give foreign firms the same privileges as Chinese companies.

Those who flout intellectual property rules in China could soon find themselves subjected to bigger fines as the country looks to tighten its patent framework, state media reported Monday.

It was presented on Sunday at a meeting of the NPC Standing Committee.

Under the draft law, victims of IP theft can claim for damages, the official Xinhua news agency reported.

“It is necessary to significantly increase the financial penalties for IPR infringements to better exert the deterrent effect of the law,” said Shen Chunyao, deputy head of the NPC Constitution and Law Committee when presenting the draft to lawmakers.

China and the US have been locked in a bruising trade war, with the US seeking a massive reduction in its trade deficit with China as well as deeper reforms in Beijing to stop the alleged theft of intellectual property and further open the economy to foreign companies.

US and EU officials have long complained of a lack of fair access for foreign companies in China, as well as rampant theft of intellectual property.

China’s legislature on Sunday also announced that it is looking at a new law governing foreign investment that would prevent the forced transfer of technology and give foreign firms the same privileges as Chinese companies.

Separately, a patent law is also getting amended to increase the compensation amount by up to five times.

Under a draft law also presented at the NPC meeting, victims of patent infringement can receive up to 5 million yuan ($720,000) in compensation.