China: China Is Amending The Patent Law

Last Updated: 5 March 2019
Article by Chuanhong Long

China's top legislature, Standing Committee of the National People's Congress (SCNPC), had a first reading on the Draft Amendment of the China Patent Law at the end of December 2018. This amendment would be the fourth amendment of the China Patent Law since it came into force in April 1985. The Draft Amendment was proposed by the State Intellectual Property Office at the end of 2015 and approved by the State Council in December 2018 after long discussion.

SCNPC invited public comments on the Draft Amendment on Jan. 4, 2019. FICPI has submitted its comments to SCNPC expressing its concerns to some of the proposals.

After collecting public opinions on the Draft Amendment, the SCNPC will have a second or even third reading on the Draft Amendment (possibly with further amendments) in a few months. Usually, the Draft Amendment will be approved by the SCNPC after the second or third reading.

The major contents of the Draft Amendment are introduced as follows.

1.Strengthen the patent protection against infringement

One of the major objectives of the fourth amendment of the China Patent Law is to strengthen the patent protection against infringement. In order to achieve this objective, the following measures were proposed in the Draft Amendment.

(i) Introducing punitive damages for serious willful infringement:for the willful infringement of patent rights, if the circumstances are serious, the amount of compensation may be determined within one to five times the amount calculated according to the losses suffered by the patentee, the benefit obtained by the infringer or the multiple of the patent licensing fee.

(ii) Increasing the amount of statutory damages: in case it is difficult to calculate the amount of compensation due to patent infringement, the amount of compensation that the court may determine at its discretion increases from 10,000 Yuan RMB to 1 million Yuan RMB (about US$ 1,500 to US$ 147,000) as stipulated in the current Patent Law to 100,000 Yuan RMB to 5 million Yuan RMB (about US$14,700 to US$ 735,000) in the Draft Amendment.

(iii) Ordering the defendant to provide evidence that can prove the damages: in order to determine the amount of compensation, when the patentee has done his best to provide evidence but the accounting books and materials relating to the infringement are mainly in the possession of the infringer, the court may order the infringer to provide the accounting books and materials relating to the infringement.Where the infringer fails to provide or provides false accounting books or materials, the court may determine the amount of compensation by reference to the claims of the patentee and the evidence as submitted.

(iv) Enlarging the authorities of the IP administration: when handling the patent infringement dispute cases, the IP administration may make inquiries of the relevant persons, investigate into the matters, conduct on-spot inspection, examine and make copy of the contract, invoices, accounting books and other materials, and inspect the alleged infringing products. According to the current patent law, the IP administration only has such authorities when handling the cases relating to the passing off of the patent right.

(v) Adding the Internet Service Provider's (ISP) obligation to stop patent infringement: the ISP shall be obligated to take necessary steps, such as deleting, blocking or disconnecting the link of the infringing products, upon the request of the patentee on the basis of the effective judgment, order or conciliation statement issued by the court or the decision made by the IP administration. If the ISP fails to take necessary measures in time after receiving the notice, it shall be bear joint liability for the extended portion of damages with the internet user who infringes the patent right.

(vi) Extending the statute of limitation on an action against patent infringement: the statute of limitation on an action against patent infringement is extended from two years in the current patent law to three years in the Draft Amendment, counted from the date on which the patentee knows about or should have known about the patent infringement.

2. Extend patent term of design and innovative drugs

(i) Extending the patent term of design from 10 years to 15 years to prepare for joining the Hague Agreement.

(ii) Providing patent term extension for innovative drugs: in order to compensate for the time taken for review and approval of innovative drugs for marketing, the State Council may decide to extend the duration of the patent right for the invention of the innovative drugs for which marketing approval applications are filed in China and abroad simultaneously, for a period of no more than five years, and the total effective duration of the patent right shall not exceed fourteen years from the marketing of the innovative drugs.

3.Perfect the patent granting system

(i) Adding the domestic priority for design application: if, within six months from the date the applicant first files an application for design in China, he files another application for design in China for the same subject matter, the applicant may enjoy the right of priority.

(ii) Giving the applicant more time to submit certified copy of the priority document: the applicant who requests the right of priority can submit, within 16 months from the date of filing the first application for a patent for invention or utility model, certified copy of the patent application documents filed for the first time. According to the current patent law, the time limit to submit certified copy of the priority document is within three months from the filing of patent application in China.

4. Promote the exploitation and utilisation of patent

(i) Clarifying the patentee's right to dispose the patent right: for an employment invention-creation, the entity may dispose the right to apply for patents and the patent rights according to law and adopt property incentives, such as equity, option, dividend, etc. to enable inventors or designers to reasonably share the profits brought by the invention-creation, and promote the implementation and application of relevant invention-creations.

(ii) Establishing the open license system: the patentee can make a statement of open license to the China Intellectual Property Administration (CNIPA), i.e. the patentee is willing to give license to anyone at a defined royalty for his patent. But, before the withdrawal of the statement of the open license, the patentee shall not grant exclusive or sole license to others.

5. Add restrictions to the patentee when enforcing the patent right

The application for patent and exercise of the patent right shall follow the principle of good faith, and shall not harm the public interest, unfairly exclude or limit competition.

Although the above Draft Amendment may be further amended before it is finally approved by the SCNPC, the direction of the amendment to the patent law is very clear, i.e. to further strengthen the patent protection in China.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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