Main Points Of The Fourth Amendment To Chinese Patent Law (Approved On October 17, 2020, Effective From June 1, 2021) – Intellectual Property – China…

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China's National People's Congress has approved theFourth Amendment to Chinese Patent Law on October 17, 2020. Theamended law will be effective from June 1, 2021. We also expectthat the Implementing Regulations of the Chinese Patent Law and thePatent Examination Guidelines will also be amended accordingly,before the effective date of the amended law. These regulations andrules will provide more explanation and details regarding theAmendment.

Although the approved version of the Fourth Amendment issomewhat different from the previous versions, we do not think itis necessary to discuss these differences. Rather, we will discusskeys changes in the approved version as compared to the currentlaw. We haveparaphrased and highlighted inblue the key changes below,followed by ourcomments in black.

Article 2.4 Partial designs will be allowed.

A much welcomed change. It will provide flexibility to allapplicants and much convenience to applicants from countries wherepartial designs are allowed.

Article 15.2 For service-inventions, the state encouragesemployers to implement ownership incentives and adopt means such asequities, options, and profit sharing, etc., to allow the inventorsto 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 orproper. We think that the employers should be left freely, withinthe boundary of law, to decide on how to reward and remunerate theinventors. We look forward to more details.

Article 20.1 In exercising the application or patent right, oneshould follow the principle of honesty and credibility, but shallnot abuse the right to harm public interest or other'slegitimate rights.

We think that the stated principle is appropriate, but lookforward to further interpretation and details.

20.2 Abusing patent right, excluding or restricting competition,if constituting monopolistic conduct, shall be treated according toAnti-Monopoly Law of China.

This provision corresponds with the Anti-Monopoly Law.

Article 24.1 (1) Newly added exception to novelty-defeatingdisclosures: Disclosures made within 6 months of application dateand for public interest purposes during national emergency orextraordinary situation.

We think that a typical example of the exception would be forsomeone to publish a research paper regarding treatment or vaccinefor 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-filedChinese design patent application within six (6) months of thefirst filing and for the same subject matter.

Applicant can already do so in invention and utility modelpatent 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 theway for China to join the Hague Agreement, which other majorcountries have all joined.

42.2 For patents granted after four (4) years since applicationdate and three (3) years since request for substantive examination,applicant may request for patent term extension on the basis ofunreasonable delays during prosecution of the patent, except fordelays caused by the applicant.

We look forward to further details.

42.3 In order to compensate for time used for new drugevaluation and approval, the term of a relevant patent for anapproved new drug in China may be extended by up to five (5) yearsupon request by patentee. However, after the new drug entersmarket, the total remaining term of the relevant patent may notexceed fourteen (14) years.

A much welcomed provision for the pharmaceutical industry. Welook forward to further details.

Articles 50 52 Provisions regarding Open PatentLicenses, setting out mechanisms and procedures whereby patentowners can publish, through the CNIPA, their intentions to licensetheir patents to any interested party. Annuities will be reduced orwaived during the license period.

The provisions will help to further commercialize Chinesepatents. We look forward to more details.

Article 66.2 In an infringement action involving a utility modelor design patent before court or administrative agency, all partiescan submit the Patentability Assessment Report on their own.Currently only the patentee and interested party can do so uponrequest by court.

The report will be more important when enforcing utility modelor design patents.

Article 70.1 CNIPA, at the request of patentee or interestedparty, may handle patent infringement disputes that havesignificant impact nationwide.

We think this is an inappropriate enlargement of the CNIPA'sauthority and jurisdiction, but look forward to more details.

70.2 Patent administrative authority of a local government, atthe request of patentee or interested party to handle patentinfringement disputes, may combine cases involving the same patentwithin its jurisdiction. The authority may also request a higherlevel local government authority to handle cases involving the samepatent across different jurisdictions.

This is further streamlining of the administrativeauthority's handling of patent disputes.

Article 71.1 Patentee's loss and infringer's gain aretreated equally as basis for determining damage amounts.

This provides more option/freedom to the patentee in provingdamage amounts.

71.1 In case of willful infringing act, if the circumstances aresevere, the court may set the amount of damages to be one (1) tofive (5) times of the determined amount.

While this may provide more deterrence, it could also beexcessive.

71.2 Statutory damage amount will be under RMB 5 million (aboutUS$715,000). Currently the amount is under RMB 1 million.

A much welcomed change as damage amounts in most cases are stilldetermined based on the statutory amount.

71.4 In order to determine the amount of damages, if theplaintiff has done everything within its ability and the relevantaccount books and materials are mainly under the infringer'scontrol, the court may order the infringer to provide such accountbooks and materials. If the infringer does not provide or providefalse account books or materials, the court may determine thedamage amount by considering the plaintiff's request andevidence.

This will make it easier for the patentee to prove the damageamount.

Article 74.1 Statute of limitation for filing infringementlawsuit is three (3) years (currently two years) from when patenteeknew or should have known the infringement action and theinfringer.

This is in line with China's civil procedure law.

Article 76.1 During administrative review and approval for adrug, the party seeking drug approval and the patentee of arelevant patent may initiate legal proceeding with the court todetermine whether the drug falls within the protection scope of thepatent. The drug regulatory agency, within a specified period oftime, may decide whether to suspend the drug review and approvalprocess based on an effective judgment by the court.

This generally sets up a mechanism for settling patent disputesin drug regulatory review and approval process. But there are manydetails that will need to be clarified.

76.2 The parties may also request the CNIPA to make anadministrative decision regarding the patent dispute.

This is an enlargement of the CNIPA's jurisdiction. We lookforward to more details.

76.3 The Drug Regulatory Authority and the CNIPA will formulatespecific linkage methods regarding drug marketing approval andpatent dispute resolution during the approval period.

We look forward to more details.

As can be seen, the Fourth Amendment introduced a number ofmajor changes to the Chinese Patent Law. At the same time, theimplementation of these changes will largely depend oninterpretation and further details regarding the provisions. Welook forward to the corresponding Implementing Regulations by theState Council and the Patent Examination Guidelines by the CNIPA inthe coming months. We will keep you informed.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.