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(Feb 27, 2009) On December 27, 2008, the Decision of the Standing Committee of the National People's Congress on Amending the Patent Law of the People's Republic of China (PRC) was adopted; it enters into effect on October 1, 2009. The Patent Law was first adopted on March 12, 1984 (and in force on April 1, 1985), and has been amended twice before, on September 4, 1992, and August 25, 2000. (Nicola Dagg et al., The Third Amendment to China's Patent Law Passed, INTELLECTUAL PROPERTY: INSIGHT, Allen & Overy website, Jan. 13, 2009, available at http://www.allenovery.com/
AOWEB/AreasOfExpertise/Editorial.aspx?contentTypeID=1&contentSubTypeID=
7944&itemID=49808&aofeID=306&prefLangID=410
; New China Patent Law Is Unveiled, Intellectual Property Protection in China [IPPC] website, Feb. 9, 2009, available at http://english.ipr.gov.cn/ipr/en/inf
o/Article.jsp?a_no=265466&col_no=934&dir=200902
; J. Benjamin Bai, et al., What Does the Third Amendment to China's Patent Law Mean to You?, JONES DAY COMMENTARIES, Jan. 2009, available at http://www.jonesday.com/pubs/pubs_detail.aspx?pubID=S5806.)

Some highlights of the changes in the revised Law's provisions are as follows.

Application Process

  • Introduction of an absolute novelty standard (and the concept of "existing technology"), under which patent examiners, in processing patent applications, must consider evidence of public use of any existing technology inside and outside China, thereby enhancing the standard of protection for patents and potentially reducing infringements (art. 22, paras. 2 & 5). "Previously only publication anywhere in the world and public use in China was relevant for such determinations." (Dagg et al. & Bai et al., supra.)
  • Removal of the requirement that Chinese individuals and entities first file patent applications in China for inventions made in China. Thus, first filings may be made in other countries; i.e., applicants can apply for a foreign patent even before they obtain a Chinese patent. However, the applicants must obtain clearance from the State Intellectual Property Office (SIPO beforehand to ensure protection of state secrets, or their Chinese patent application for the invention will be rejected (art. 20, para. 1 & new para. 2). Reportedly, the purpose of the checks is to block foreign applicants or foreign-owned research labs in China from applying for patents outside the country and thereby circumventing the current Patent Law's foreign filing requirement. (IPPC, supra.).
  • Double patenting clarified. The amended Law incorporates July 2007 SIPO guidelines aimed at limiting what had been a "widespread practice," although "frowned upon by the courts," of double patenting, whereby an applicant obtained an invention patent and a utility model patent for the same invention. (Bai et al., supra.) If the same applicant files an application on the same day for both a utility model patent and an invention patent for the same invention, and the previously obtained utility model patent right has not yet expired, the applicant may only be granted the invention patent right if he declares his relinquishment of that utility model patent right (art. 9, new para. 1). (Id.)
  • Scope of protection clarified. The new Law preserves the stipulation that an application for a design patent is limited to one design and that two or more designs incorporated in products belonging to the same class and sold or used in sets may be filed as one application, but it adds the clarification that "two or more similar designs incorporated in the same product" may also be filed as one application. (art. 31, para. 2). {Cut could this point—seems minor}
  • Stricter standards set for applications for design patents, so that "designs such as beer or soft drink bottles or wine labels can no longer be awarded design patents" (art. 25, para. 1, new item 6). (IPPC, supra).

Disclosure

  • Increased transparency: the SIPO is to "fully, precisely, and punctually issue patent information, and periodically publish the Patent Gazette" (art. 21, new para. 2).
  • Requirement of disclosure of the direct source and of the original source for inventions made with genetic resources, with an explanation to be included should the applicant be unable to provide that information (art. 26, new para. 5). (Dagg et al. & IPPC, supra.)

Transfers, Joint Ownership, Agency

  • Clarification of procedures for transfer of a Chinese party's patent-related rights to a foreign party. Under the older Law, administrative approval was required for such transfers, but this conflicted with the Technology Import/Export Regulations, under which only "restricted" technology imports or exports had to be approved, while "freely importable or exportable" technology only requires registration. Under the new Law, the transfers are to comply with "formalities stipulated in relevant laws and administrative regulations" (art. 10, para. 2). (Dagg et al., supra.)
  • Clarification of joint ownership, through the addition of a new provision stipulating that if joint owners of a patent application or rights to a patent have an agreement on the use of the patent, that agreement governs; if there is no such agreement, each joint owner may individually exploit that patent or allow third parties to exploit by means of a non-exclusive license. In the latter case, royalties received must be distributed between the joint owners (art. 15, para. 1). Aside from the circumstances stipulated above, use of jointly owned patent applications or patent rights requires the consent of all joint owners (art. 15, para. 2). (Dagg et al. & Bai et al., supra.)
  • Removal of the requirement that a foreign individual or entity must engage a government-designated patent agency to act as agent in China. Instead, the patent agency is one "that is established according to law." The same phrase is added to the provision applicable to Chinese entities and individuals, who may, but are not required, to engage a patent agency to act as agent (art. 19, paras. 1 & 2).

Compulsory Licensing

  • Clarification of compulsory licensing requirements, whereby the SIPO may "grant a compulsory license if the patentee's exploitation of the patented technology is found either to be insufficient within a prescribed timeframe or to be eliminating or restricting competition," or, under certain newly introduced circumstances, "for the making and exportation of a patented medicine to certain countries and regions for the benefit of public health in accordance with international treaties" (new art. 50). (Dagg et al. & Bai et al., supra.)

Penalties

  • Increase of the penalty and of the payment for damages in cases of patent infringement, with the penalty raised to 400 percent from 300 percent of the illicit profits and the damages payment from RMB50,000 to RMB200,000 (about US$7,325 to $29,300), even if there was no profit made from the infringement (art. 63). (IPPC, supra.)
  • For the first time, exercise of discretion by people's courts in awarding damages from RMB10,000 to 1 million (previously RMB500,000) (about US$1,465 to $146,500), in cases where the actual damage cannot be specifically determined (art. 65). "Damages [may] also include all reasonable expenses that a patentee incurs to stop the infringing activities." (Dagg et al. &IPPC, supra.)
  • Procedural change in patent lawsuits to newly allow requests for pre-trial protection of evidence, overseen by the court and applied for by the plaintiff. The applicant must post a bond, and the court's protection decision must generally be made within 48 hours (art. 67). The revised Law also allows the obtaining of preliminary injunctive relief even after initiation of the court case, with the party's request for such relief to be handled in a similar manner (art. 66). (Dagg et al., supra.)

(See also Authorized Issuance: Patent Law of the PRC [full text, in Chinese], XINHUANET, Dec. 27, 2008, available at http://news.xinhuanet.com/newscenter/2008-12/27/content_10568803.htm; PRC Patent Law (3rd Revision) [English translation of the Law], CHINA LAW & PRACTICE (Feb. 2009) [CLP Reference No. 5100/08.12.27] [by subscription], http://www.chinalawandpractice.com/Article/2097421/Channel/9950/PRC-Patent-Law
-3rd-Revision.html
.)

According to Cheng Yongshun, former vice president of the IP law court of the Higher People's Court of Beijing, certain disputed issues, such as indirect infringement and the process of IPR identification, have not been covered in the amended Law. (IPPC, supra.) Moreover, while "junk patents" were reportedly "a major target of the drafters of the amendments, it was decided not to insert a concept of patent abuse" the drafters considered the concept should be dealt with instead under the Anti-Monopoly Law provisions, so that, unlike under United States law, there will be no separate patent abuse doctrine in Chinese law at the present time. (China's New Patent Law Amendments. The Times They Are A Changing...., CHINA LAW BLOG, Jan. 1, 2009, available at http://www.chinalawblog.com/2009/01/chinas_new_patent_law_amendmen.html.) A Draft Amendment to the Implementing Regulations of the PRC Patent Law was issued for public comment on November 4, 2008, by the SIPO. (Dagg et al., supra.)

In 2008, the SIPO has reported, the PRC granted 412,000 patent rights, including 352,000 domestic applications and 60,000 foreign ones. This represents a 17.1 percent increase over 2007. (China Grants More Patents in 2008, IPPC website, Feb. 1, 2009, available at http://english.ipr.gov.cn/ipr/en/info/Article.jsp?a_no=263842&col_no=925&a
mp;dir=200902
.)

Author: Wendy Zeldin More by this author
Topic: Intellectual property More on this topic
Jurisdiction: China More about this jurisdiction

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Last updated: 02/27/2009