Prolonged protection period for design patents, protection of partial designs, national emergency novelty protection, a newly introduced patent linkage system, new enforcement mechanisms and higher damages compensation. It took China 13 years to implement a new patent law, but the 2021 Patent law surely comes with major changes.
Having moved to China in 2007 and studying the China's new Patent Law in 2008 during my Masters in Law at Peking University, after years of practicing with the 2008 Patent Law, it brings me joy to write about the new Patent Law in China that has been announced just now to go into force in June 2021.
The 2008 Patent Law can be seen as the Patent law that made China take patent law seriously as the previous law looked at novelty in China rather than in the whole world. It cannot be overstated that the 2008 patent law has contributed to China's current place in the world economy.
Laws with time need updates, and although the Patent law in 2008 was welcome, it needed revision in order to propel China towards the next decennia in which it further builds on the IP mechanism to further economic growth and trust in its laws.
The 2021 Patent Law, as promulgated on 17 October 2020 by the Standing Committee of the National People's Congress, will come into force on 1 June 2021. The new law will provide necessary changes, but also introduces some uncertainty.
What companies need to know
Below I have selected what I believe to be the most interesting changes at this moment. In the upcoming months I will write more about some of these changes in depth.
Design patent protection period
The protection period for design patents is prolonged from 10 years to 15 years, hence giving the applicant an additional five years of protection. The idea behind this is that China can as such join the Hague system, which requires a minimum of 15 years of protection for design rights.
Partial designs protection
Under the 2008 patent Law, design patents could only be obtained when applied for together with a product. So, if you would like to protect Graphic user interface, this would need to come together with a product, for example the iPhone.
This practice is different from the USA and the EU, where partial designs (please bear in mind that the EU has a Design Rights Law, and China has put the design rights under the patent law), can be registered separately. Under the 2021 Patent Law, China has changed its law so that partial designs can be registered too.
One of the necessary requirements for patentability is novelty. In order to obtain a patent, the subject matter of the patent needs to be new anywhere in the world.
The 2021 Patent Law introduces a six-month novelty protection in case of national emergency or any extraordinary state of affairs. A good example of future beneficiaries of this provision could be pharmaceutical companies that make vaccines. As such, these companies can in an early stage release information regarding the potential patent whilst not losing novelty.
The protection term for pharmaceutical patents can be extended if requested by the patentee in case delays in the application process occurred for approval of a new drug marketing in China. The maximum amount of extension is five years, with the total effective time of the patent after being approved for the market not being more than 14 years.
Also, patent extension is possible in case CNIPA has caused unreasonable delay during the examination process of a patent.
Patent Linkage system
China has introduced the patent linkage system in its 2021 Patent Law. This mechanism that seems to be a result of trade negotiations between Washington and Beijing, means that generic drugs can only be market approved after the patent protection time of a drug patent has expired. This is different from the EU system, which has the Bolar exception.
As such, this patent linkage system in the 2021 Patent Law, means that CNIPA and CDFA will work together in order to regulate the market approval of drugs to any potential patent dispute regarding the new drugs, Market approval can only be granted after the dispute is dealt with.
Administrative patent enforcement mechanism
Although China already has an administrative enforcement mechanism for patent infringement (the administrative route), which can be followed separately or together with patent litigation at the courts (the litigation route), the 2021 Patent Law gives further provisions regarding this process and empowers CNIPA.
This is interesting, as previously the administrative route for patent infringement was not followed much for invention patents as it would be difficult for administrative officers to decide whether or not a patent was infringed. The new procedures put a lot of emphasis with CNIPA, so it can be expected that this might become an interesting route for companies to follow in the future.
The statutory amount of compensation will be increased from 10 thousand RMB to one million RMB under the 2008 Patent Law to 30 thousand to five million RMB under the 2021 Patent Law.
In most patent cases the judge will award statutory compensation as it might be difficult to prove the other ways of damage compensation.
China introduces punitive damages in the 2021 patent law. Punitive damages can be awarded up to one time or five times the amount of the original damages.
As such, punitive damages will try to discourage potential patent infringers from infringing a rightsholders patent.
Evidence regarding illegal profits – shift of the burden of proof
Under the 2021 Patent Law a judge may order the defendant to submit to the court their financial books and other related documents related to the illegal against of infringement.
In case the party does not disclose this, then the court may award damages based upon the proof of the rightsholder and claims put forward by the rightsholder.
Good faith, not harming public interest and not restricting competition
A double-edged sword in the new law seems to be that under the new law, patents should be filed in good faith, should not harm the public interest and shall not restrict competition.
The good faith principle is a first step that could be really helpful in the battle against patents that are applied for by companies in China that have copied foreign patents.
On the other hand, the public interest part and the not restricting competition part needs to be further explained. If not explained further, it could create legal uncertainty for rightsholders.
After all, patents are monopolies that are meant to be the exception to competition law (anti-monopoly law). The legal thinking behind this is that society grants inventors a short monopoly in exchange for giving the knowledge of the patent to the public, which benefits society in the long term.
We will see in the future which path China takes regarding this.
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.