Major changes to patent laws in China

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On 17 October 2020, the Standing Committee of China’s National People’s Congress passed a new amendment to the Patent Law of the People’s Republic of China (“Patent Law”) which will take effect on 1 June 2021. This amendment will mark only the fourth change since it was first introduced in 1983, as well as the first revision since 2008 (“2008 Patent Law”). This article briefly outlines the major changes the new amendment will make to the law.

Enforcement of patent rights

Some of the most remarkable amendments to the Patent Law are intended to strengthen the protection against patent infringements.

Revisions are made to increase the costs of patent infringements and reduce the patentees’ burden of proof with regard to actual damages. Firstly, the maximum statutory damages are increased from one million to five million RMB, while the minimum statutory damages from 10,000 to 30,000 RMB. Secondly, punitive damages are made available. For severe cases of willful infringement, the court can award damages of up to five times the actual damage. Thirdly, to help determine the actual damage, the revised law allows the courts to order the defendant to surrender account books and documents related to the infringement under the condition that the plaintiff has made his/her/its best effort to collect the relevant evidence. If the defendant refuses to comply, or produces falsified materials, the court can decide on the amount of damages purely based on the plaintiff’s claim and evidence.

Moreover, the clause on pretrial injunctive relief is revised to expand the scope of its application, as well as to be in conformity with the current Civil Procedure Code. The 2008 Patent Law provides that before filing a lawsuit, a patentee or interested party can request a court order to cease the patent infringement committed or to be committed by another person, which unless stopped in time, may cause irreparable harm to his/her/its lawful rights and interests. In the revised law, one can seek for injunctive relief also when the patent infringement may hinder the realisation of his/her/its rights. At the same time, one may now request, as injunctive relief, property preservation or court order requiring the relevant party to do or not to do an act.

Furthermore, the statute of limitations for lodging an infringement lawsuit is increased from two to three years. The starting date is changed from “the date when one knows or should have known about the infringement” to “the date when one know or should have known about the infringement and the infringer”. Such changes are made to be consistent with China’s first Civil Code, which will take effect on 1 January 2021.

In China, administrative remedy is available for patentees to tackle patent infringements. One may request the administrative department for patent-related work to handle infringement dispute. If the infringement is established, the aforesaid department can order the infringer to cease the illegal act.

Some new clauses are added to the law to make administrative enforcement more effective. Firstly, when handling infringement disputes, the administrative department for patent-related work is, for the first time, explicitly given the power to inquire the parties concerned, investigate the circumstances related to the suspected illegal act, conduct onsite inspection of the places where the suspected illegal act is committed, and check the products related to the suspected illegal act. Secondly, under the revised law, patentees can request the patent administrative department under the State Council (i.e. National IP Administration) to handle disputes that have a significant impact across the country. At the same time, administrative department for patent-related work under local governments can consolidate patent infringement disputes involving the same patent, as well as handle inter-jurisdictional infringement cases.

Pharmaceutical patents

A few amendments are made to promote innovation in the pharmaceutical industry, as well as to fulfil some of China’s obligations set forth in the Economic and Trade Agreement entered with the United States.

The revised law has added a new clause to allow owners of patents covering new pharmaceutical products to request patent term extension to compensate for the time spent on obtaining marketing approval in China. It is provided that the extension shall not exceed five years, and the total effective patent term after the new product is approved shall not exceed 14 years.

Also, the revised law lays the groundwork for a pharmaceutical patent linkage system as a mechanism for early resolution of pharmaceutical patent disputes. It is provided that during the marketing approval process of a new drug, the relevant patentee or interest party may lodge a patent infringement suit before the court, or alternatively, file an administrative complaint before the patent administrative department under the State Council (i.e. National IP Administration) against the applicant of the marketing permit. If the new drug is found to be infringing the patent of others in one of the above proceedings, the pharmaceutical supervisory and administrative department under the State Council shall suspend the marketing approval of the drug. The revised law also requires the pharmaceutical supervisory and administrative department under the State Council to work with the patent administrative department under the State Council to draft specific measures for dispute resolution during the marketing approval process, which will be implemented after the approval of the State Council.

Design patent

A few amendments are made to enhance the protection of design patent. Firstly, partial design becomes patentable in China. The 2008 Patent Law defines design patent as the new design of the shape, pattern, or the combination thereof, or the combination of the color with shape and pattern of an entire product, which is rich in aesthetic appeal and fit for industrial application. In the revised law, the definition is changed to cover both the entire product and part of the product. This amendment is made mainly in response to the reality that infringers often copy only part of a patented product design to avoid legal sanction, and it will, no doubt, enable innovators to protect their designs more effectively.

Secondly, the revised law extends the patent term for design to 15 years, which is 10 years under the 2008 Patent Law. The revision reflects an increasing recognition of the commercial value of design, and at the same time, is meant to meet the needs for China to join the Hague Agreement Concerning the International Registration of Industrial Designs

Thirdly, under the revised law, an applicant for a design patent can claim priority based on his/her/its first design application on the same subject filed in China. With the 2008 Patent Law, only foreign priority can be claimed for designs, while both foreign and domestic priorities are enjoyed by applicants of inventions and utility models.

Besides those introduced above, the 2020 amendment to the Patent Law encompasses some other notable changes. To name a few, the patent owner is allowed to request an extension of patent term to compensate for unreasonable delays, not caused by the applicant, that occur in granting the patent. An open license system is set up to facilitate patent commercialisation. The novelty grace period is made applicable to initial disclosure that has been made in the public interest during a national emergency or under extraordinary circumstances.

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