Earlier this month, the State Intellectual Property Office
("SIPO") of the People's Republic of China released a
proposed amendment to the Chinese Patent Law and is now accepting
comments. The proposed amendment will be the fourth amendment
to the Chinese Patent Law since its initial adoption in
The two key components of the proposed amendment include: (1)
giving SIPO more power to administratively enforce the patent laws
(as compared to using more conventional judicial enforcement); and
(2) increasing the amount of damages available in patent
Currently, China has a dual enforcement mechanism for IP
infringement: judicial (via the courts) and administrative (via
SIPO). Administrative enforcement for IP, especially for
patents, is often disfavored because, while SIPO can issue
injunctions, it cannot award damages. And because SIPO cannot
enforce its own injunctions, enforcement efforts were greatly
hindered. Instead, one needed to ask a court to enforce a
To address those issues, the proposed amendment enables the
administrative authority to award damages for "losses
suffered." But, the amendment does not define what these
losses are, how they are to be calculated or whose losses should be
compensated (e.g., only the patentee or anyone with standing to
initiate an administrative action). Presumably, a definition
(e.g., lost profits, infringer's earnings, etc.) and method for
calculation will be defined in a later-issued regulation that will
be based on the solicited comments to the amendment.
The proposed amendments further grant the administrative
authority "the right to investigate and punish the alleged
patent infringer disrupting the market order in accordance with the
law; the patent administration department under the State Council
shall organize the investigation of suspected patent infringement
activity which has significant impact on the country."
This implies that the administrative authority can initiate its own
investigations when disruptions of the market order occur,
thus granting SIPO tremendous power. Under the current
draft amendments, when SIPO finds that infringement has occurred,
it could issue injunctions, seize illegal earnings, and seize and
destroy any infringing products and equipment used in the
infringement. In addition, SIPO could issue fines up to four
times the illegal earnings or 200,000 RMB, if there are no illegal
earnings or the earning are difficult to calculate. But, the
phrases "disruptions of market order," "illegal
earnings" and "difficult to calculate" are not
defined in the proposed amendments.
In addition, the proposed amendments increase the likelihood of
collecting increased damage awards above the statutory maximum of 1
million RMB. Specifically, amended Article 65 allows damages
for willful infringement and awards of the patentee's
reasonable expenses. But again, the terms "willful
infringement" and "reasonable expenses" are not
While the proposed amendments will significantly increase the
value of Chinese patents due to better enforcement and the
availability of higher damages awards, without more clarity and
safeguards, the law may not reach its full potential and could be
open to abuse. The proposed amendments may be a step in the
right direction, but interested parties should provide SIPO with
comments to help further clarify and improve the Chinese Patent
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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