China: What Does The Third Amendment To China´s Patent Law Mean To Pharmaceutical Companies?

Last Updated: 27 August 2008
Article by Tony Chen and Ann W. Chen

Since its enactment in 1984, China's Patent Law has been amended twice, first in 1992 and then in 2000. The first amendment added pharmaceutical compositions to the list of patentable subject matter and inaugurated China's membership in the Patent Cooperation Treaty ("PCT"). The second amendment brought China's Patent Law into compliance with the Trade-Related Aspects of Intellectual Property Rights ("TRIPS") Agreement.

A third amendment to the Patent Law is widely expected to be approved by the People's Congress soon. The latest draft of the third amendment was released for public comment on March 5, 2008 (the "Draft"). This Commentary discusses several changes to the Patent Law in the proposed third amendment and their potential impact on pharmaceutical patent protection in China.

Tough Disclosure Rules for Inventions Relying on "Genetic Resources" or "Traditional Knowledge"

China is rich in genetic resources and traditional knowledge, and the Chinese government supports and encourages research to develop intellectual property derived from these assets. For inventions "completely relying" on genetic resources or traditional knowledge, the Draft for the first time imposes a requirement that the patent applicant disclose in the application the direct and original sources of the genetic resources or the source of the traditional knowledge.

Biotechnology companies need to pay close attention to this disclosure requirement because failure to comply could result in either the denial or invalidation of a Chinese patent. It should be noted that there is no equivalent requirement in the patent laws of Europe, Japan, or the United States.

The Draft also stipulates that no patent shall be granted to inventions "completely relying" on genetic resources or traditional knowledge if the acquisition or use of the underlying genetic resources or traditional knowledge violated Chinese law or regulation.

Because of the stiff penalty attached to noncompliance with the requirements in the Draft, the international business community has raised concerns with the Chinese government about the potential chilling effect of the new rules on commercial research and development related to "genetic resources" and "traditional knowledge."

Absolute Novelty Requirement for Patentability

Article 22.2 of China's existing Patent Law has a blended novelty standard for patentability—in assessing novelty of an invention, Chinese patent examiners consider publication anywhere in the world but not public use outside of China. This blended novelty standard occasionally allows "patent hijacking," i.e., the patenting in China of another party's invention witnessed at a public event (such as a trade show) outside of China. The Draft replaces this blended novelty standard with an absolute one, and it requires patent examiners to consider public use evidence from both inside and outside China in examining patent applications. Adoption of an absolute novelty standard will have the effect of reducing patent hijacking. The Draft does not state whether this absolute novelty requirement would be made retroactive. If so, it would open up the prior art space significantly for challenging the validity of existing Chinese patents.

Heavy Penalty for Foreign Filing Without a License

As international pharmaceutical companies set up research and development centers in China, they need to consider where to first file patent applications for inventions made in China. Today, Article 20.1 of China's Patent Law requires that a Chinese patent applicant for an invention made in China must first file a patent application in China before any foreign filing. However, the current law is silent about what a foreign applicant is required to do in the same situation. Consequently, some foreign-owned research labs in China assign the right to apply for patent to an entity outside of China and circumvent the foreign filing requirement of the current Chinese patent law.

The Draft blocks this "loophole" with a foreign filing license regime like the system in the United States. Under the new requirement, for any invention made in China, the applicant must obtain permission from the State Intellectual Property Office prior to filing a patent application in a foreign country. In most cases, the foreign filing license automatically will be granted shortly after the filing of a Chinese patent application. Violation of this requirement will result in loss of patent rights in China.

Because Chinese patent applications must be submitted in Chinese, this new rule will force international pharmaceutical companies to develop resources to draft original patent applications in Chinese to protect inventions made in China.

Strengthening Patent Co-Ownership Rights

As pharmaceutical companies enter into research collaborations with Chinese universities and companies, they need to understand how Chinese law governs the commercialization of jointly developed and owned patent rights. In that regard, the Draft includes provisions that prevent unilateral use of the patent rights without the consent of co-owners.

Specifically, the Draft states that unless agreed upon otherwise, consent by all co-owners is required for (1) assigning the right to apply for a patent; (2) assigning or withdrawing the patent application; (3) assigning, abandoning, or pledging the patent right; and (4) licensing others to exploit the patent. Under such rules, pharmaceutical companies should draft collaborative research agreements in ways to ensure that commercial use of the patent rights arising from the joint research efforts will not be blocked by the default veto power of the co-owner.

Road Map for Compulsory Licenses

No compulsory license has ever been granted in China even though Chapter VI of China's current Patent Law contains compulsory license provisions. However, the Draft contains new rules that will make it more feasible and likely for compulsory licenses to be granted in China.

First, the Draft provides that the government may grant a compulsory license to a party qualified to exploit the patent if the patent owner, without justification, has not exploited or sufficiently exploited the patent three years after the patent grant. The Draft also provides that a compulsory license may be granted if it is judicially or administratively determined that the patent owner used the patent right in an anticompetitive fashion.

In addition, the Draft authorizes the grant of a compulsory license "where the public interest so requires" and where a developing country with no or insufficient capacity to manufacture a patented drug for treating an epidemic disease "hopes to import the drug from China."

International pharmaceutical companies have voiced serious concerns about the breadth and ambiguity of the compulsory license provisions in the Draft. The shaping of these provisions in the final stages of the lawmaking process deserves careful monitoring by the pharmaceutical research community.

Formalization of the Regulatory Review Exemption

China's Patent Law does not expressly exempt activities related to regulatory review from patent infringement. Such an exemption currently exists as a judicial interpretation of the broad experimental use exception provided in Chinese patent law. The Draft codifies the judicial interpretation by stating that it is not an act of infringement if a patented drug or patented medical apparatus is manufactured, used, or imported solely for the purposes of obtaining and providing information for administrative approval.

While the Draft formalizes the exemption for activities related to regulatory review, it does not provide any provision for patent term extension to compensate for regulatory delays in obtaining State Food and Drug Administration approval of drugs. Neither does the Draft provide a patent linkage system like the Hatch-Waxman patent certification and 30-month stay mechanism.


Strong patent protection in China for pharmaceutical inventions is a top priority for the international pharmaceutical industry as China's pharmaceutical market grows by leaps and bounds and China becomes a center of pharmaceutical research and development. The proposed amendment to China's Patent Law contains changes that will significantly affect how pharmaceutical companies will compete in this market. Recent examples in China show that the government will take note of comments from the international business community in making and amending laws. Pharmaceutical companies planning to be active in China should make their opinions heard.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions