China: SIPO Seeks For Opinions On The Fourth Amendments To The Chinese Patent Law

On April 1, 2015, the State Intellectual Property Office of China (i.e. SIPO) released a notice seeking for public opinions on the newly drafted amendments to the Chinese Patent Law, which were published simultaneously. The drafted amendments pertain to the fourth amendments to the Chinese Patent Law. Routinely, the Chinese Patent Law is amended about every 8 years. Some significant points of the drafted amendments are as follows.

I. ENHANCING PATENT PROTECTION THROUGH ADMINISTRATIVE AND JUDICIAL ROUTES

a) Efficacy of a Mediation Agreement and Enhanced Administrative Sanctions against Patent Infringement

The efficacy of a mediation agreement and its execution has been a headache to the patentee in practice. When the accused infringer refuses to fulfill the mediation agreement, the patentee has to additionally institute legal proceedings though an effective mediation agreement is there. The drafted amendments to Article 60 enhance and clarify the efficacy of a mediation agreement made by a local intellectual property office, i.e. where the mediation agreement is affirmed valid by the people's court, it is executable by the court.

Further, the drafted amendments empower the local intellectual property offices (i.e. the patent administration department) administrative measures such as confiscating and destroying the infringing products, the parts, tools, molds and equipments, specially for carrying out the infringing act, so as to enable the local intellectual property offices to be more powerful in handling patent infringement.

For the infringing act in group or repeated infringing act, it not only harms the rights and interests of the patentee directly, but also disrupts the market order and harms the environment of innovation as well as the public interests. The patent administration department may get involved in the case at its own discretion and hold the infringer for administrative accountability.

b) Improved Administrative Fines against Patent Counterfeiting

The drafted amendments to Article 63 improved the upmost administrative fines against patent counterfeiting from the current "a fine of not more than four times of his illegal earnings", "a fine of not more than RMB 200,000 Yuan" to "a fine of one to five times of his illegal turnover" and "a fine of not more than RMB 250,000 Yuan", respectively.

c) Enhanced Administrative Investigation on Patent Infringing or Counterfeiting Act

The drafted amendments to Article 64 are mainly for enhancing the capabilities and authorities of the local intellectual property offices to make investigation on patent infringing or counterfeiting act, solving the difficulty in collecting evidence against patent infringing or counterfeiting act.

d) Punitive Damages for Willful Infringement

The drafted amendments to Article 65 empower the people's court to award double or treble damages for willful infringement to punish the infringement in bad faith and with serious consequences. This is a great change to the current principle of indemnity in awarding damages.

e) Shifting of Burden of Proof re Damages

In consideration of the difficulty in collecting evidence in relation to damages, the drafted amendments to Article 61 provides that, on the premise that the patent owner has tried his best in collecting evidence, the people's court may at its discretion order the accused infringer to submit materials including accounting books in relation to the accused infringing act in order to determine the damages. The damages will be in the patent owner's favor if the accused infringer refuses to submit the ordered materials.

f) Internet Infringement and Safe Harbor Rule for ISPs

With the development of the internet technology and the e-business, patent infringement through internet is also increasing in China. Currently, the people's court can only apply the principles in the Tort Law to determine the liability of internet service providers (i.e. ISPs). By introducing the above article, the ISPs may predict their obligations more accurately. This newly added article also provides for the "notice and take down" rule for the ISPs to effectively remove products being suspected of infringing a patent in especially e-business.

II. IMPROVING PATENT EXAMINATION SYSTEM AND PATENT QUALITY

a) Protection of Partial Designs

The drafted amendments to Article 2 introduce protection of a partial design in China, i.e. a design incorporated into a part of an entire product, which is not physically separable from the entire product. This will enhance protection of a design especially when improvements to designs lie in only certain elements.

b) Extended Protection Term for a Design Patent

The drafted amendments to Article 42 provide that the duration of the patent right for design shall be fifteen years, counted from the date of filing. The amendments are for meeting the requirement of the Hague Agreement Concerning International Registration of Industrial Designs. It is expected that China will join the Agreement in the near future.

c) Exception to Un-patentable Subject Matters

The drafted amendments to Article 25(3) prescribe that, methods for the diagnosis or for the treatment of diseases relating to bred animals are patentable subject matters. The amendments are for the purpose of meeting the government policy and for harmonization with the practice in some other countries.

d) Domestic Priority for Design Applications

Drafted Article 29(2) of the Patent Law prescribes that an applicant may claim a domestic priority of a prior design application within six months. The current Chinese Patent Law only provides that an applicant may claim priority to a prior design application filed in a foreign country or area.

e) Authority of the PRB to Examine a Patent Application or Patent at Its Discretion

The Patent Reexamination Board (i.e. the PRB), according to the drafted amendments to Article 41, is authorized to examine at its own discretion, defects, especially obvious defects concerning the merits of the invention, in a patent application without being limited to the scope of the request for patent reexamination during reexamination proceedings. This may help improve the quality of granted patents and the efficiency of patent procurement.

The PRB is also authorized, according to the drafted amendments to Article 46, to examine at its own discretion, during the invalidation proceedings, defects in a patent, especially those obvious defects concerning the merits of the invention which are not raised by the petitioner of the request for invalidation, so as to improve the stability of granted patents and reduce further requests for invalidation against the same patent on different grounds.

III. IMPROVING THE SERVICE INVENTION-CREATION SYSTEM

a) Statutory Ownership of Service Invention-creation

According to Article 6 of the current Patent Law, an invention-creation made by a person by using the material and technical means of the entity to which he belongs is a service invention-creation. The drafted amendments obviously restrain the statutory scope of service invention-creation, i.e. the ownership of such an invention-creation shall be based on an agreement regarding the ownership, and if there is no such an agreement, the inventor or designer shall be the owner.

b) Obligations of the Entity of a Service Invention-creation

The drafted amendments to Article 16 clarifies that the employer of the inventor or designer has the obligation to reward the inventor or designer and pay a remuneration to the inventor or designer upon exploitation of the invention-creation, regardless whether the invention-creation is transferred to others or not.

IV. PROMPTING EXPLOITATION AND OPERATION OF PATENTS

a) General Policy for Prompting Exploitation and Operation of Patents

Drafted Article 76 of the Patent Law provides that the local intellectual property offices have the responsibility to promote exploitation and operation of patents.

Drafted Article 78 intends to relieve the constraint of the current system on the state-owned R&D institutions and colleges or universities, endowing the inventors or designers with more rights to exploit the service invention-creation.

c) Commitment License

These newly added Articles 79-81 relate to the commitment license, of which the fundamental purpose is to prompt disclosure of patent information and operation of patents by establishing a platform for those who are interested in exploiting the patent to contact the patentee.

A patent with a declaration of commitment license is open for others to use in a fair, reasonable and un-discriminative manner. This reduces the difficulty of negotiation and the costs and risks in patent transactions.

d) Patent Right Pledge

Newly added Article 83 introduces the relevant provisions relating to patent pledge in the Regulations of the Patent Law into the drafted Patent Law and adds provisions to guarantee the interests of the pledgor.

V. RESTRICTING ABUSE OF PATENT RIGHT

a) Restriction to Abuse of Patent Right

The amendments to Article 14 will enable the people's court to cite the provisions of the Patent Law directly without relying on other laws when the patentee takes abuse of his patent right in violation of the general principles of good faith, public interests and fair competition etc.

b) Requirements for Submitting the Evaluation Report on Patentability

The drafted amendments to Article 61(2) render the evaluation report on patentability for a utility model patent or a design patent, which is granted without being subjected to substantive examination, one of the prerequisites for instituting a patent infringement litigation before the people's court or for claiming patent infringement before an intellectual property office.

c) Disclosure Requirements for Standard Essential Patents

Newly added article 82 prescribes the obligation of the patent owner to disclose his standard essential patents and the fees for exploiting the SEP, and it aims at protecting the interests of standard exploiters and consumers and urging the patentee who participated in setting of a standard to disclose his patents.

VI. OTHERS

Besides the above amendments, the drafted amendments to the Patent Law generally broaden and enhance the responsibility of the SIPO and the local intellectual property offices to enable the later to play a more important role in patent administration. For the first time, the drafted amendments to the Patent Law provide for the responsibility of Chinese patent attorneys and the nature of the All-China Patent Attorneys Association (i.e. ACPAA) and actions against not-eligible patent agencies and attorneys. (Details of this article may be found on http://www.ccpit-patent.com.cn).

Originally published August 2015.

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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