The proposed 4th amendment aims to strengthen the protection of patent rights, which is a good news to applicants.

However, instead of improving current patent enforcement related proceedings via judicial route, the current draft tends to achieve the above goal via administrative route by granting more power to the administrative organ (local patent bureau), which causes concerns from overseas clients, and judicial system oppositions.

BACKGROUND

The State Council of China issued an instruction on "Crush IP Infringement of Producing and Selling Counterfeits and Fake Products" on November 13th, 2011. According to this instruction, the SIPO has started to draft new amendment to Chinese Patent Law and issued a draft proposal on its website on August 9, 2012,for soliciting the public opinions for one month.

GOALS OF THE AMENDMENT

This amendment aims to submit appropriate measures against weak patent protection, strengthen both administrative and legitimate protections of patent rights, protect legitimate interest of patentees, reduce the cost for protection of patent right, save maximum social resources, and encourage innovation for whole society.

GENERAL CONTENTS OF THE AMENDMENT

  1. Grant Administrative Organs the rights for investigation and evidence collection;
  2. The right for determining monetary damages to be delegated to local patent bureau;
  3. Decision on Invalidation made by the PRB shall be effective on the date of issuance;
  4. Grant Administrative Organs the right for punitive monetary damages determination; and
  5. Grant Administrative Organs the right for cease and punishment: four times punishment, up to RMB 200,000 (around US$33,000).

AMENDMENT DETAILS

1) Grant Administrative Organs the right for investigation and evidence collection:

The right for investigation and collect evidences proposed is conferred to Court and Administrative Organ by the Draft of the 4th Amendment of the Chinese Patent Law (Draft).

According to civil procedure, Chinese courts have the right to make an investigation under the guidance of a judge before and during court proceedings.

In fact this proposal is primarily made for administrative organs.

2) The right for monetary damages determination to be conferred to local patent bureau:

According to current Chinese patent law, Administrative Organs have only the right to mediate damages between plaintiffs and defendants.

In order to accelerate handling infringements, the Draft has proposed to delegate the right for damages determination on Administrative Organs.

3) Decision on Invalidation made by the PRB should be effective on the date of issuance:

According to current Chinese Patent Law, the invalidation case could be handled only by the PRB. However, if any party is not satisfied with the PRB's decision, it could bring an administrative litigation to the court (two instances).

The Draft proposed that the decision made by the PRB should take effect immediately upon publication. Based on the PRB decision, courts or Administrative Organs should timely handle infringement cases.

4) Grant Administrative Organs the right for punitive monetary damages determination:

According to current Chinese Patent Law, the principle for determination of damages is compensatory in nature.

However, considering the protection of intangible IP right is cost consumptive and more difficult, in contrast, infringement of IP right currently less risky and cost less. Obviously, the pure compensatory principle is vulnerable for IP infringement and protection.

For bad faith infringement on patent right, the Draft has proposed to award patentee up to treble damages upon the scale, situation and harmful effect of infringing acts.

5) Grant Administrative Organs the right for cease and punishment: four times of the punishment, up to RMB 200,000 (around US$33,000).

Referring Chinese Trademark law, the Draft proposed to delegate the patent Administrative Organs the right to organize the raid on its own initiative against infringing acts that seriously violate market order and the right to impose the administrative punishment on infringers up to four times of the punishment or in case of difficulty to determine unlawful gains, a fine of RMB 200,000 (around US$33,000) is imposed.

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.