Main Points of the Fourth Amendment to Chinese Patent Law (Approved on October 17, 2020, effective from June 1, 2021)
China's National People's Congress has approved the Fourth Amendment to Chinese Patent Law on October 17, 2020. The amended law will be effective from June 1, 2021. We also expect that the Implementing Regulations of the Chinese Patent Law and the Patent Examination Guidelines will also be amended accordingly, before the effective date of the amended law. These regulations and rules will provide more explanation and details regarding the Amendment.
Although the approved version of the Fourth Amendment is somewhat different from the previous versions, we do not think it is necessary to discuss these differences. Rather, we will discuss keys changes in the approved version as compared to the current law. We have paraphrased and highlighted in blue the key changes below, followed by our comments in black.
Article 2.4 Partial designs will be allowed.
A much welcomed change. It will provide flexibility to all applicants and much convenience to applicants from countries where partial designs are allowed.
Article 15.2 For service-inventions, the state encourages employers to implement ownership incentives and adopt means such as equities, options, and profit sharing, etc., to allow the inventors to reasonably share the benefits of innovation.
Although the provision is only an "encouragement", rather than a requirement, we do not think that it is necessary or proper. We think that the employers should be left freely, within the boundary of law, to decide on how to reward and remunerate the inventors. We look forward to more details.
Article 20.1 In exercising the application or patent right, one should follow the principle of honesty and credibility, but shall not abuse the right to harm public interest or other's legitimate rights.
We think that the stated principle is appropriate, but look forward to further interpretation and details.
20.2 Abusing patent right, excluding or restricting competition, if constituting monopolistic conduct, shall be treated according to Anti-Monopoly Law of China.
This provision corresponds with the Anti-Monopoly Law.
Article 24.1 (1) Newly added exception to novelty-defeating disclosures: Disclosures made within 6 months of application date and for public interest purposes during national emergency or extraordinary situation.
We think that a typical example of the exception would be for someone to publish a research paper regarding treatment or vaccine for the corona virus before filing the relevant patent application, but look forward to further interpretation and details.
Article 29 Applicant may claim priority to its own first-filed Chinese design patent application within six (6) months of the first filing and for the same subject matter.
Applicant can already do so in invention and utility model patent applications.
Article 42.1 Design patent term will be extended to fifteen (15) years, from the current ten (10) years.
It is generally believed that this provision will help clear the way for China to join the Hague Agreement, which other major countries have all joined.
42.2 For patents granted after four (4) years since application date and three (3) years since request for substantive examination, applicant may request for patent term extension on the basis of unreasonable delays during prosecution of the patent, except for delays caused by the applicant.
We look forward to further details.
42.3 In order to compensate for time used for new drug evaluation and approval, the term of a relevant patent for an approved new drug in China may be extended by up to five (5) years upon request by patentee. However, after the new drug enters market, the total remaining term of the relevant patent may not exceed fourteen (14) years.
A much welcomed provision for the pharmaceutical industry. We look forward to further details.
Articles 50 – 52 Provisions regarding Open Patent Licenses, setting out mechanisms and procedures whereby patent owners can publish, through the CNIPA, their intentions to license their patents to any interested party. Annuities will be reduced or waived during the license period.
The provisions will help to further commercialize Chinese patents. We look forward to more details.
Article 66.2 In an infringement action involving a utility model or design patent before court or administrative agency, all parties can submit the Patentability Assessment Report on their own. Currently only the patentee and interested party can do so upon request by court.
The report will be more important when enforcing utility model or design patents.
Article 70.1 CNIPA, at the request of patentee or interested party, may handle patent infringement disputes that have significant impact nationwide.
We think this is an inappropriate enlargement of the CNIPA's authority and jurisdiction, but look forward to more details.
70.2 Patent administrative authority of a local government, at the request of patentee or interested party to handle patent infringement disputes, may combine cases involving the same patent within its jurisdiction. The authority may also request a higher level local government authority to handle cases involving the same patent across different jurisdictions.
This is further streamlining of the administrative authority's handling of patent disputes.
Article 71.1 Patentee's loss and infringer's gain are treated equally as basis for determining damage amounts.
This provides more option/freedom to the patentee in proving damage amounts.
71.1 In case of willful infringing act, if the circumstances are severe, the court may set the amount of damages to be one (1) to five (5) times of the determined amount.
While this may provide more deterrence, it could also be excessive.
71.2 Statutory damage amount will be under RMB 5 million (about US$715,000). Currently the amount is under RMB 1 million.
A much welcomed change as damage amounts in most cases are still determined based on the statutory amount.
71.4 In order to determine the amount of damages, if the plaintiff has done everything within its ability and the relevant account books and materials are mainly under the infringer's control, the court may order the infringer to provide such account books and materials. If the infringer does not provide or provide false account books or materials, the court may determine the damage amount by considering the plaintiff's request and evidence.
This will make it easier for the patentee to prove the damage amount.
Article 74.1 Statute of limitation for filing infringement lawsuit is three (3) years (currently two years) from when patentee knew or should have known the infringement action and the infringer.
This is in line with China's civil procedure law.
Article 76.1 During administrative review and approval for a drug, the party seeking drug approval and the patentee of a relevant patent may initiate legal proceeding with the court to determine whether the drug falls within the protection scope of the patent. The drug regulatory agency, within a specified period of time, may decide whether to suspend the drug review and approval process based on an effective judgment by the court.
This generally sets up a mechanism for settling patent disputes in drug regulatory review and approval process. But there are many details that will need to be clarified.
76.2 The parties may also request the CNIPA to make an administrative decision regarding the patent dispute.
This is an enlargement of the CNIPA's jurisdiction. We look forward to more details.
76.3 The Drug Regulatory Authority and the CNIPA will formulate specific linkage methods regarding drug marketing approval and patent dispute resolution during the approval period.
We look forward to more details.
As can be seen, the Fourth Amendment introduced a number of major changes to the Chinese Patent Law. At the same time, the implementation of these changes will largely depend on interpretation and further details regarding the provisions. We look forward to the corresponding Implementing Regulations by the State Council and the Patent Examination Guidelines by the CNIPA in the coming months. We will keep you informed.
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