China: SIPO Proposes To Amend The Patent Law

Last Updated: 29 February 2016
Article by Ji Liu

Almost four months after the submission of the draft Patent Law Amendment Bill of China proposed by SIPO, which passed through the Bureau Affairs Meeting of SIPO in late August 2015, the Legislative Affairs Office (LAO) of the State Council released this draft on 2 December 2015, for further public consultation. In the meantime, the Bill has been developed as a Preparatory Project in the Legislative Programme 2015 of the State Council from the Research Project in the last year. The above signs indicate that the Amendment Bill can be expected to be finally passed by the National People's Congress (NPC) in two or three years.

The Chinese government has paid increasing attention to the importance of intellectual property in recent years. In June 2014, the Standing Committee of the NPC heard the Report on the Implementation of the Patent Law and emphasized that the Patent Law Amendment Bill should focus on enhancing the protection of patent right and on coordination and convergence amongst laws. To that end, the latest draft Bill includes, amongst other things, provisions aiming at strengthening patent enforcement, enhancing protection of design patent, perfecting service invention system, promoting exploitation and utilization of patent, and giving more power to the Patent Reexamination Board.

Strengthening Patent Protection

There are several problems exist in the current situation that hinder the enforcement of patent rights. For example, it's often difficult to collect evidence for proving infringement and damages. Moreover, damages awarded in infringement suits are usually inadequate to compensate for the loss of the proprietors.

To remedy the above, the latest draft Bill proposes to strengthen the measures to collect evidence in both court and administrative proceedings.

The court may order the defendant to submit account books and other evidence, which are not accessible to the proprietors, to prove the damages. In the case the infringers refuse to submit, or deliver up forged account books or the like, the court may determine the amount of damages by reference to the proprietors' claim. Further, double or triple damages are brought into the draft Bill for willful infringement in the court proceedings, depending on factors including circumstances, scale and consequences of infringement. Also, the maximum statutory damages is proposed to be increased from 1 million Chinese Yuan to 5 million Chinese Yuan.

With respect to the administrative route, the Patent Administration Departments (PAD) may have more measures to investigate and collect evidence, including for example, making inquiries to the relevant persons, conducting on-spot inspection, examining and making copy of the documents, inspecting the accused product, and sealing and detaining the products of willful infringement that disrupts the market order. The PAD may have more power to stop infringement as well. If the PAD finds that willful infringement is established and disrupts the market order, it can order the infringer to stop infringement activity, confiscate illegal earning, seize infringing products or special equipment used for the infringement, and impose a fine. Further, the agreement made through the mediation by the administrative organ can be affirmed and enforced by the court.

SIPO also plans to take measures to curb the patent infringement over internet. According to the draft Bill, Internet Service Provider (ISP) shall be obligated to takedown the links to infringing products, when the ISP knows or should have known that an internet user infringes upon the patent right by utilizing the internet services it provides.

Enhancing Protection of Design Patent

An interesting and significant improvement regarding design patent is partial design. According to the draft Bill, the scope of a design patent is expanded to partial design of a product. Also, as an effort to meet the requirement of the Hague Agreement Concerning International Registration of Industrial Designs, SIPO proposes to extend the protection term of a design patent from 10 years to 15 years. The above will add to the effectiveness of a design patent as a deterrent to infringement.

Perfecting Service Invention System

Under the current patent law, inventions that are made mainly by using the material and technical conditions of an employer shall be deemed as an employment invention. In contrast, in the draft Bill, statutory ownership for such kind of inventions is changed to the inventors, unless otherwise agreed between the inventors and the employer.

The employer has the obligations to reward the inventors and give remuneration to the inventors for the employment invention, no matter whether or not the invention is transferred to others before or after the filing of the patent application.

Promoting Exploitation and Utilization of Patent

Seemingly learning from the German Patent Act, SIPO introduces the concept of License of Right (LOR) into the draft Bill. The patent proprietors may request SIPO to publish a written statement so as to offer a license to anyone at a defined royalty. Before withdrawal of the offers of LOR, the patentee shall not grant exclusive or sole license to others, or request for preliminary injunction.

With respect to Standard Essential Patents (SEP), SIPO's new draft add implied license for undisclosed SEP. If the patentee fails to disclose his essential patents during the process of standards formulation, it shall be deemed that the user of the standards has been licensed to use the patented technology. The license fee shall be negotiated between the parties, and in case no agreement is concluded by the parties, SIPO shall make a decision thereon.

Giving More Power to the Patent Reexamination Board (PRB)

In the draft Bill, the PRB is empowered to bring new grounds, e.g. other obvious substantive defects, into reexamination or invalidation proceedings on its own initiative even if such defects are not mentioned in the rejection decision or in the invalidation request. This proposal has attracted many criticisms during public consultation, but retains in the latest draft.

Conclusion

The draft Bill, if finally passed ratification by the NPC, would be positive for patent proprietors, as it would lower the burden of proof and be more effective to recover higher damages for willful infringement. It would make enforcement quicker and would further strengthen the power of the administrative organ to deal with patent disputes. All of these amendments will directly or indirectly enhance protection of patent rights in China through a more sophisticated patent system.

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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