In the context of accelerating the construction of a knowledge-based economy, protecting intellectual property rights has become a consensus that protecting intellectual property rights is equivalent to protecting innovation. To enhance the compensation force, increase the infringement cost, and effectively prevent infringement are the basic policy orientations of intellectual property protection judicial protection. How to make the intellectual property damage compensation system better serve and ensure innovation, is an important historical problem for theoretical research and judicial practice in intellectual property protection.

The traditional tort law-based damage compensation system focuses on how to effectively fill the damage after infringement occurs. In intellectual property field, by using the damage compensation function, it can help the right holders regain the market value they lost due to infringement, which can play a role of stimulating innovation repair mechanism. From this point of view, returning to market value is an inevitable choice to improve the intellectual property damage compensation system.

However, how to determine the amount of intellectual property damage compensation, and accurately measure the market value loss, is a difficulty in practice. Various factors such as macroeconomic policy, industry policy, business conditions, production capacity, market situation and so on may affect the market value of intellectual property. It takes a high cost to collect and analyze these factors. Therefore, there is a trade-off between accurately reflecting the degree of market value loss reduction and reducing the difficulty of calculating damage compensation. From legislation, introducing alternative loss calculation methods such as infringement profit, license fee, statutory compensation and so on are measures to reduce the difficulty of calculating damage compensation. It is obvious that the adjustment of existing rules for intellectual property infringement damage compensation has made more choices that favor reducing the difficulty of calculating damage compensation, mainly with the purpose of making it easier for right holders to obtain damage compensation.

Modern tort law theory emphasizes more on the prevention function of damage compensation. By using effective damage compensation measures to prevent potential infringement from occurring, it can encourage competitors to independently research or seek permission in advance, form a social atmosphere that respects intellectual property rights, and achieve optimal innovation order. It can be said that prevention function in intellectual property damage compensation field has independent value and should be paid attention to.

Unlike ordinary torts that only cause harm to third parties’ interests in cases where only harm is caused by infringement actions. Intellectual property infringement is a typical case of benefiting from infringement. The motivation for intellectual property infringement actions is usually that using someone else’s intellectual property can make infringers gain profit or save research costs in the market. In cases where infringement profit exceeds actual loss, simply making infringers pay back all losses suffered by right holders cannot effectively prevent infringement from occurring. To effectively prevent infringement from occurring, it needs to pay attention to how to use effective damage compensation measures to make infringing actions lose their incentive. The above understanding provides theoretical basis for taking away infringers’ profit incentive independently. Similarly whether it is IPR law adopted by our country’s legislation such as license fee multiplier standard or foreign law reasonable license fee standard are all higher than actual license fee also for making infringers not pay more than what they would pay for seeking permission so as to achieve effective prevention from occurring.

Of course from an overall innovation environment perspective intellectual property infringement damage compensation system not only needs to pay attention to how effectively prevent infringement but also needs to prevent over-prevention from occurring especially in fields with obvious cumulative innovation characteristics over-inforcement may hinder subsequent innovation effect need some limitation on applying full-compensation principle limit damages within scope of affected IPR its own contribution avoid expanding protection scope too much reserve space for subsequent innovation timely adjust IPR infringement damage compensation number according to specific cases in effective prevention from occurring at the same time consider how to balance after-innovation when adjusting IPR infringement damage compensation number.

In intellectual property field introducing punitive damages system’s legitimacy basis also lies in effectively preventing infringement. Traditional punitive damages system based on revenge thinking emphasizes punishing infringers harshly. However due to innovation behavior having neutral morality does not need through punitive damages punish IPR infringement actions through revenge thinking in intellectual property field some potential infringers may out of fear of being held accountable or right holders’ total loss cannot be confirmed etc take risks even if they may face liability for paying damages even if they do not take infringing actions at this time it should be made into worse position than before taking infringing actions so that taking infringing actions becomes unprofitable Punitive damages can make infringers pay more than actual loss amount punitive damages for infringers have warning effect thus achieving prevention function.

Needless to say in judicial practice need strictly define scope of application of punitive damages system’s prevention function avoid wrong application contrary legislative intention For example for low-value patents need appropriate apply punitive damages avoid excessive high-penalty affecting higher quality patents

In observing IPR policy, it is helpful to deepen the understanding of existing rules and judicial policies, and provide theoretical guidance for the adjustment and improvement of rules. From the perspective of maintaining the overall innovation order, intellectual property infringement damage compensation system focuses on effectively preventing infringement as the center, showing different from traditional compensation system based on repair function. In legislation and judicial practice, how to follow the development trend, accurately formulate and apply intellectual property infringement punitive damages system, effectively play the role of stimulating innovation, preventing infringement, and creating a good innovation order, is still an important problem worth paying attention to.