After almost two years' preparation, the State Council finished the Draft Amendment of the Chinese Patent Law (hereinafter refers to "the Draft") in August 2008 and submitted the same to the Standing Committee of the National People's Congress (NPCSC) for approval. The NPCSC held a first reading of the Draft on August 25, 2008. Usually, the NPCSC will hold three readings and make further amendments to the Draft before it approves the same. It is said that the Draft will be finally adopted by the NPCSC in the first half year of 2009.

This is the third revision to the Chinese Patent Law since it was first promulgated in 1984. The previous two amendments were enacted in 1992 and 2000. The first amendment added pharmaceutical compositions to the list of patentable subject matter and inaugurated China's membership in the Patent Cooperation Treaty (PCT). The second amendment brought Chinese Patent Law into compliance with the TRIPS agreement.

Below are some revised articles abstracted from the Draft, which involve significant changes as compared with the current Chinese Patent Law.


FILING OF PATENT APPLICATION

Disclosure of Genetic Resources

 

Revised Article 5 paragraph 2 reads,

For an invention-creation, the completion of which depends on genetic resources, but the acquisition or exploitation of said genetic resources are contrary to relevant laws and regulations of the State, no patent right shall be granted.

Revised Article 27 paragraph 6 reads,

Note:

Under the current laws and regulations, only the PRC Stock Farming Law () and the PRC Tentative Regulation on Human Genetic Resources () provide regulations and restrictions on acquiring and using animal and human genetic resources, especially for exporting purposes. To protect China's rich biological and genetic resources, the draft addresses genetic resource issues for the first time in the Chinese patent law history. According to the draft, the origin of a genetic resource must be disclosed if an invention's completion relies on the acquisition and exploitation of genetic resource. The impact of this provision on the Chinese patent practice depends greatly upon how genetic resource will be defined and what will constitute illegal acquisition and exploitation. Detailed requirements for the disclosure of genetic resources are expected to be worked out later in the revision process of the Patent Rules or in special regulations.

 

 

Double Patenting

 

Revised Article 9 paragraph 1 reads,

Note:

According to the interpretation of the current Patent Examination Guidelines on the Double Patenting issue, for any identical invention-creation, the same applicant may file an invention patent application and a utility model application on the same or different dates. On the condition that the applicant declares to abandon the previously granted patent right as of the date of filing, he can still obtain the patent right for the pending application. So the applicant may take this opportunity to obtain patent protection for one invention-creation for a period of more than twenty years.

The draft only allows that the same applicant may file, at the same date, a patent application for invention and a patent application for utility model for the identical invention-creation. So, it is not possible for the applicant to obtain patent protection for one invention-creation for a period of more than twenty years.


Co-owner s Right

Revised Article 15 reads,

Where the right for patent application or the patent right is shared by two or more entities or individuals, and an agreement is concluded by all co-owners, the exploitation of the right shall follow the agreement; if there is no such agreement, any of the co-owners could individually exploit or authorize others to exploit the patent right through ordinary license agreement, but the royalty obtained from the license of patent right shall be shared by all of the co-owners.

Other than prescribed above, the exploitation of the right for patent application or the patent right shall be consented by all co-owners.

Note:

The article clarifies the right of the co-owners. When two or more entities or individuals co-own a patent application or patent, all co-owners must consent to the following acts, unless otherwise agreed: 1) assigning the right to apply for a patent; 2) assigning or withdrawing the patent application; 3) assigning, abandoning or pledging the patent right; and 4) licensing others to exploit the paten in an excluded way.


Designation of Foreign-related Patent Agencies

Revised Article 20 paragraph 1 reads,

Where any foreigner, foreign enterprise or other foreign organization having no habitual residence or business office in China applies for a patent, or has other patent matters to attend to, in China, it or he shall appoint a patent agency legally established under laws to act as his or its agent.

Note:

The current Chinese Patent Law has a special clause which empowers the SIPO to designate certain patent agencies to handle foreign-related matters for patent prosecution in order to guarantee the quality of service. In the draft, all patent agencies established under China s laws can handle foreign-related patent matters. It means that although foreigners still have to appoint a patent agency to act as their agent when filing patent applications or dealing with other patent-related matters before SIPO, they can appoint any patent agency established under China s laws.


Foreign Filing License

Revised Article 21 paragraph 1 reads,

Any entity or individual may file a patent application in a foreign country for invention-creation made in China, in the event that said invention-creation has passed the confidentiality examination by the Patent Administration Department under the State Council.

Note:

Under the current Patent Law, when Chinese entities or individuals intend to file a patent application in a foreign country for an invention-creation made in China, they must first file a patent application in China. The draft provides that when entities or individuals intend to file a patent application in a foreign country for an invention-creation made in China, they only need to get approval from SIPO. The change from the "first filing requirement" to "foreign filing license requirement" is significant. It gives more flexibility to the foreign-invested companies in selecting countries when filing patent applications for such invention-creations. In practice, filing of a patent application with SIPO for invention-creation made in China might be considered as submitting a petition for foreign filing license for the subject matter of the application.

Further, the current Patent Law limits its first filing requirements for inventions created in China to Chinese entities and individuals, while the draft expands the foreign filing license requirement to include foreigners.


Unity of a Design Application

Revised Article 32 paragraph 2 reads,

An application for a patent for design shall be limited to one design incorporated in one product. Two or more similar designs for the same product, or two or more designs which are incorporated in products belonging to the same class and being sold or used in sets, may be filed as on application.

Note:

Two or more similar designs of the same product will be allowed to be contained in a single design application in the future in addition to designs of products being sold or used in set. These similar designs might not be deemed as "double patenting" in the future.


IMPROVED CRITERIA FOR THE GRANT OF PATENT RIGHT

Absolute Novelty

 

Revised Article 23 reads,

 

Any invention or utility model for which patent right may be granted must possess novelty, inventiveness and practical applicability.

Novelty means that, the invention or utility model shall neither belong to the prior art, nor has any other person filed, before the date of filing of the invention or utility model, with the Patent Administration Department under the State Council an application which described the identical invention or utility model and was published in patent application documents or patent documents after said date of filing.

Inventiveness means that, as compared with the prior art, the invention has prominent substantive features and represents a notable progress and that the utility model has substantive features and represents progress.

Practical applicability means that the invention or utility model can be made or used and can produce effective results.

The prior art referred to in this law means any technology known to public before said date of filing either in the country or abroad.

Note:

In the current Chinese Patent Law, a mixed novelty standard is adopted, wherein, prior art includes (1) publication within or outside China and (2) public use or other means of disclosure only in China. If an invention, utility model or design is known to the public in other countries through means other than publications (such as use, sale or display), it does not constitute a novelty bar when assessing the novelty of the invention, utility model or design. In the draft, "prior art" is broadened to include public use or other means of disclosure outside China.


Patentability Requirement for a Design Patent

 

Revised Article 24 reads,

Any design for which patent right may be granted shall neither belong to the prior design, nor has any other person filed, before the date of filing of the design, with the Patent Administration Department under the State Council a design application which described the same design and was published in patent documents after said date of filing.

Any design for which patent right may be granted shall be obviously distinguished from the prior design or a combination of the feature of the prior design.

Any design for which patent right may be granted must not be in conflict with any prior right of any other person obtained before the design is granted a patent right.

The prior design referred to in this law means any design known to public before the date of filing either in the country or abroad.

Note:

Under the current Chinese Patent Law, a design application may be granted a valid design patent as long as it is neither identical with nor similar to any prior designs, which is deemed as "novelty" requirement. But in the draft, an "inventive step" will be further required. The definition of "prior design" is added, which covers all prior designs disclosed either in China or abroad.

Further, it is clarified that "the prior right of any other person" referred to in this article means prior right obtained by others before the design patent is granted.


Non-patentable Subject Matter for a Design Patent

 

Revised Article 26, paragraph 1 item 6 reads,

For any of the following, no patent right shall be granted:
¡à
(6) Designs of a planar printing consisted of patterns, colors or their combination which mainly have labeling functions.

Note:

In the Draft, the design of a planar printing (plane presswork) which mainly have labeling functions will be excluded from protection by a design patent. However, how to define a "planar printing which mainly have labeling function" is still not clear.


PROTECTION OF PATENT RIGHT

Offer to Sell of a Product Incorporating Patented Design

 

Revised Article 11 paragraph 2 reads,

After the grant of the patent right for a design, no entity or individual may, without the authorization of the patentee, exploit the patent, that is, make, offer to sell, sell or import the product incorporating its or his patented design, for production or business purpose.

Note:

 

The current Patent Law provides that a patentee of a design patent can prevent others from making, selling or importing patented product. In order to better protect the interest of the patentee of a design patent, "offer to sell", which is not an infringing action for a design patent now, will be prohibited in the future.


Protection Scope of a Design Patent

 

Revised Article 60 paragraph 2 reads,

The scope of protection of the patent right for design shall be determined by the product incorporating the patented design as shown in the drawings or photographs. The brief description may be used to interpret the design of the product shown in the drawings or photographs.

 

Note:

 

Under the current Chinese Patent Law, the extent of protection of a design patent shall be determined by the product incorporating the patented design as shown in drawings or photographs. In the draft, it is clarified that the brief description may be used to interpret the protection scope of a design patent.

 

 

Evaluation Report on Patentability of Utility Model or Design Patent

 

Revised Article 62 reads,

Where any infringement dispute of patent right relates to patent for utility model or patent for design, the people's court or the administrative authority for patent affairs may ask the patentee or the interested person to furnish an evaluation report on patentability made by the Patent Administration Department under the State Council.

The Patent Administration Department under the State Council makes search, analysis and evaluation on the relevant utility model or design, upon the request of the patentee or the interested person, and issues an evaluation report on patentability. Said evaluation report on patentability is a preliminary evidence for the People's court or the administrative authority for patent affairs to determine the patentability of the patent right.

 

Note:

 

An evaluation report on patentability made by the SIPO is required when the patentee or the interested person enforces his or her patent right. The aim of submitting such a report is to avoid someone institute legal actions against others in bad faith. However, the article was also criticized by many people because said report was made by the SIPO without hearing the opinions of the patentee or interested person.

Prior Art Defense

 

Revised Article 63 reads,

In a patent infringement dispute, if the accused infringer has evidence which can prove that the technology or design being exploited by him or it belongs to the prior art or prior design, there should be no infringement.

 

Note:

 

This article clarifies plea based on prior art or prior design. That is, if accused infringers can prove that the technology or design, which they exploit, belongs to the prior art or prior design, there should be no infringement.


Statutory Damages Penalty and Fine

 

Revised Article 64 reads,

 

Where any person passes off the patent of another person as his own, he shall, in addition to bearing his civil liability according to law, be ordered by the administrative authority for patent affairs to amend his act, and the order shall be announced. His illegal earnings shall be confiscated and , in addition, he may be imposed a fine of not more than four times of his illegal earnings and, if there is no illegal earnings, a fine of not more than RMB 200,000 yuan. Where the infringement constitutes a crime, he shall be prosecuted for his criminal liability.

 

Revised Article 65 reads,

 

Where any person passes any non-patented product off as patented product or passes any non-patented process off as patented process, he shall be ordered by the administrative authority for patent affairs to amend his act, and the order shall be announced. His illegal earnings shall be confiscated and, in addition, he may be imposed a fine of not more than RMB 200,000 yuan.

Revised Article 66 reads,

 

The amount of compensation for the damage caused by infringement of the patent right shall be determined by negotiation of the two parties. If an agreement can not be obtained through negotiation, the amount of compensation for the damage shall be assessed on the basis of the losses suffered by the patentee or the profits which the infringer has earned through the infringement. If it is difficult to determine the losses which the patentee has suffered or the profits which the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of the exploitation fee of that patent under contractual license. Should the losses which the patentee has suffered, the profits which the infringer has earned and the exploitation fee of the patent under contractual license all can not be determined, the court may, according the type of the patents, the nature and condition of the infringement actions, orders an amount of compensation of RMB 10,000 Yuan to RMB 1,000,000 yuan.

The amount of compensation shall include any reasonable costs of the patentee for stopping the infringement actions.

Note:

 

 

The draft increases, in the event of any person passes off the patent of another person as his own or passes any non-patented product/process off as patented product/process, the fine of not more than three times of his illegal earnings to not more than four times of his illegal earnings, and the fine of not more than 50,000 Yuan to 200,000 Yuan even if there is no illegal earnings.

The current Patent Law provides that the amount of compensation for damage caused by infringers shall be based on the patentee's losses, or infringer's profits, or the royalty of a license agreement. However, it does not stipulate statutory damages if all of the above three methods are unavailable. Although the Supreme People's Court issued a judicial interpretation providing statutory damages for the patentee, the current Patent Law does not have such clauses. To reflect the current judicial practice and better protect the interests of the patentee, the draft adds the statutory damages as an option in determining the compensation to the patentee when infringement is established. Under current practice, statutory damages can be from RMB 5,000 to 500,000, at the discretion of the Supreme Court's judicial interpretation. The draft incorporates a provision on statutory damages which increases the upper limit to RMB 1,000,00. Besides, the draft also makes it clear that the compensation to the patentee for patent infringement should include reasonable expenses the patentee has incurred in order to stop the infringing act.

Evidence Preservation

 

Revised Article 68 reads,

For the purpose of stopping infringement, in the event that the evidence might be destroyed or difficult to obtain later on, the patentee or the interested person may request the people's court for vidence preservation before instituting a lawsuit.

The people's court shall make a decision within forty eight hours after it formally accepts the request for the evidence preservation; the preservation measures shall be executed immediately once the court rules to grant preservation measures.

Where the people's court rules to grant preservation measures, it may require the requester to provide guarantee; if the requester refuses to provide guarantee, the request shall be rejected.

If the requester doesn't institute lawsuit within fifteen days from the date the preservation measures are executed, the people's court shall release the preservation measures.

Note:

 

 

The current Patent Law and Judicial Interpretations do not clearly include evidence preservation. According to the draft, when a request for pre-suit evidence preservation is formally accepted by the court, the court must make a decision within forty-eight hours but may require guarantee for granting the preservation measures. Within fifteen days from the date of execution of the preservation measures, a lawsuit must be initiated or the preservation will be released.


Parallel Importation and "Bolar' Exception

 

Revised Article 70 items 1 and 5 reads,

None of the following shall be deemed as infringement of the patent right:

(1) Where, after the sale of a patented product that was made by the patentee or by the entity or an individual under the authorization of the patentee, or of a product that was directly obtained by using the patented process by the patentee or by the entity or an individual under the authorization of the patentee, any other person uses, offers to sell, sells or import that product;

(5) For acquiring information necessary for regulatory approval, an entity or individual, who has the intention to make pharmaceuticals or medical devices patented by others, makes the patented pharmaceuticals or medical devices.

Note:

 

 

The draft extends the scope of patent infringement exemptions, in light of Article 6 of the TRIPs Agreement, and proposes to allow parallel import in China, i.e. adopt the principle of world-wide patent exhaustion. Parallel import (after the first sale of a patented product or a product acquired directly through a patented method, either being marketed by the patentee or with the patentee's permission, the "importation" of such a product) is explicitly defined as non-infringement, and the "Bolar" exception is adopted for pharmaceutical and medical device related patents.


Exemption of Infringement

 

Revised Article 71 reads,

 

For an infringing product that was made without the consent of the patentee and was sold to a user or a distributor who buys and, for production and business purposes, uses, offers to sell or sells said infringing product, without knowing that said product is infringing the patent right, said user or distributor shall not be liable to compensate for the damage of the patentee if he can prove that he obtains the product from a legitimate source.

Note:

 

 

This Article corresponds to current Article 63 paragraph 2 and claries the patent infringement exemptions and include the "offer to sell" in the revised Article.


COMPULSORY LICENSE FOR EXPLOITATION OF PATENT

 

Revised Article 49 reads,

For any of the following, the Patent Administration Department under the State Council may, upon the request of the entity or individual which is qualified to exploit the invention or utility model, grant a compulsory license to exploit the patent for invention or utility model:

(1) The patentee, after the expiration of three years from the grant of the patent right and the expiration of four years from the date of filing of the patent application, has not exploited the patent or has not sufficiently exploited the patent without any justified reason;

(2) The practice of the patent right by the patentee has been determined by judicial procedure or administrative procedure as unfairly excluding or restraining competition, and it is necessary to grant compulsory license to the requester.

Revised Article 50 reads,

Where a national emergency or extraordinary state of affairs occurs, or where the public noncommercial use so requires, the Patent Administrative Department under the State Council may, upon the request by relevant responsible department under the State Council, grant the entity appointed by the responsible department which is qualified for exploitation of a compulsory license to exploit the patent for invention or utility model.

Revised Article 51 reads,

For the purpose of public health, the Patent Administration Department under the State Council may issue a compulsory license to manufacture the drug, which has been granted a patent right in China, and to export the drug to the following countries or areas:

(1) The most underdevelopment countries;

(2) Members who have no or insufficient capability to manufacture the drug and have fulfilled the relevant procedure in accordance with relevant stipulations in the international treaties of the WTO to which China is a party.

Revised Article 53 reads,

Where the compulsory license is to be granted to invention-creation of semiconductors, the exploitation of the invention-creation shall be limited to the following:

(1) Commonality non commercial use;

(2) The practice of the patent right by the patentee has been determined by judicial procedure or administrative procedure as unfairly excluding or restraining competition, and it is necessary to grant compulsory license to the requester.

Revised Article 54 reads,

Other than the compulsory license granted according to Article 49 item (2) and Article 51 of this law, the exploitation of the compulsory license shall be limited to supplying for the domestic market.

Note:

 

 

Although no compulsory license has been granted in China since the establishment of the patent system, the Draft clarifies the conditions where a compulsory license could be issued. In light of the Resolution on the Implementation of the TRIPs and Paragraph 6 of the Public Health Declaration and the Protocol on the Amendment to the TRIPs Agreement approved by the general council of the WTO, the Draft adds a new provision that allows SIPO to grant a compulsory license to a Chinese entity to manufacture a patented drug and export the drug to other WTO members that have no or inadequate capability to manufacture the drug when facing a public health crisis. The draft also addresses compulsory licenses granted because of national emergency or public interest. National emergency or public interest includes a public health crisis caused by the occurrence and/or spread of an epidemic disease.

In conclusion, the draft proposes significant revisions to the current Chinese Patent Law. It improves the novelty standard and design patentability requirement. It incorporates infringement determination standards widely used in practice, strengthens patent protection, extends the scope of patent infringement exemptions and further clarifies stipulations on compulsory licenses.


(The End)