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2020 Amendments to the Chinese Patent Law

26

OCT

2020

On October 17, 2020, Xi Jinping, President of the People's Republic of China, issued Presidential Decree No. 55, announcing the “Decision of the Standing Committee of the National People's Congress on Amending the Patent Law of the People's Republic of China” which was adopted at the 22nd Meeting of the Standing Committee of the 13th National People's Congress.

Following its revisions in 1992, 2000 and 2008 respectively, this is the fourth time the Patent Law was revised, which fully reflects that the Patent Law of China has always been keeping up with times and international trends. The newly revised Patent Law will come into force on June 1, 2021. For your better understanding of the changes, below is a summary of the amendments to the Law.

  • Amendments Related to Design

1. Definition of design

The wording “the whole or a part of” is used for the first time in the definition of design, which adjust the protection scope of design patents by including partial designs or designs of a part of a product into the protection scope.

Article 2(4): Design means any new design of the shape, the pattern, or their combination, or the combination of the color with shape or pattern, of the whole or a part of a product, which creates an aesthetic feeling and is fit for industrial application

2. Domestic priority becoming applicable for design patent applications

Previously, domestic priority was not applicable for design patent applications in China. After this revision, for design patent applications, Chinese applicants can also claim priority to earlier-filed Chinese design patent applications. It should be noted that double-patenting still shall be avoided, i.e. the Chinese designs which are claimed as priorities will not be granted.

Article 29(2): Where, within twelve months from the date on which any applicant first filed in China an application for a patent for invention or utility model, or within six months from the date on which any applicant first filed in China an application for a patent for design, he or it files with the patent administration department under the State Council an application for a patent for the same subject matter, he or it may enjoy a right of priority.

3. Protection period of design patents

The protection period of design patents is adjusted from 10 years to 15 years, so as to be in conformity with the basic requirements of the Hague Agreement and thus prepare for China’s accession to the Hague Agreement.

Article 42(1): The duration of patent right for inventions shall be twenty years, the duration of patent right for utility models shall be ten years and patent right for designs shall be ten fifteen years, counted from the date of filing.

  • Establishment of Open License System

Open license system is for the first time established in China. The patentee may, through an announcement by a patent administration department of the State, voluntarily license any entity or individual to exploits his/its patent. To make the announcement, the patentee shall:

  • Declare on the willingness to implement open licensing or withdrawal of the declaration shall be made in writing;
  • Specify the method and standard for payment of royalties;
  • Provide the patent evaluation report for utility model or design patents.

Where the open license declaration is withdrawn, the validity of open license granted earlier will not be affected.

During the implementation period of the open license, the patentee may be entitled to reduction or exemption of annuity fees.

Implementation of an open licensing does not affect the granting of other licenses, but prohibits the granting of a sole or an exclusive license.

Any party who wishes to exploit an open-licensed patent shall notify the patentee in writing and pay the royalties in accordance with the announced method.

Where the parties have disputes over the implementation of an open license, the parties may resolve the disputes through negotiation if possible; where negotiation fails, they may request the patent administration department under the State Council for mediation or institute legal proceedings in the people's court

Newly-added Article 50: Where the patentee voluntarily declares in writing to the patent administration department under the State Council that he/it is willing to license any entity or individual to exploit his/its patent and specifies the method and standard for payment of royalties, the patent administration department under the State Council shall make an announcement and implement open licensing. Where the open license declaration is made for utility model or design patent, a patent evaluation report shall be provided.

Where the patentee withdraws the open license declaration, it shall be submitted in writing and be announced by the patent administration department under the State Council. Where the open license declaration is withdrawn by announcement, the validity of the open license granted earlier shall not be affected.

Newly-added Article 51: Any entity or individual who wishes to exploit an open-licensed patent shall notify the patentee in writing and pay the royalties in accordance with the announced method and standard for payment of royalties to obtain a patent license.

During the implementation period of the open license, the patent annuity fee paid by the patentee shall be reduced or exempted accordingly.

The patentee who implements open licensing may grant a general license after negotiating with the licensee on royalties, but may not grant an exclusive or a sole license for the patent.

Newly-added Article 52: Where the parties have disputes over the implementation of an open license, the parties may resolve through negotiation; where the parties are unwilling to negotiate or the negotiation fails, they may request the patent administration department under the State Council for mediation or institute legal proceedings in the people's court.

  • A New Situation Applicable for Novelty Grace Period

In view of the coronavirus pandemic, public disclosure made when a state of emergency or an extraordinary situation occurs in the country is added as a new situation applicable for novelty grace period, which is a new effort made by China in pursuing a balance between public interests and private rights.

Article 24: An invention-creation for which a patent is applied for does not lose its novelty where, within six months before the date of filing, one of the following events occurred:

Newly-added (1) It is made public for the first time for the purpose of public interest when a state of emergency or an extraordinary situation occurs in the country;
… …

  • Establishment of Patent Term Compensation System

In recent years, China has been putting emphasis on improving the efficiency of patent examination. The establishment of patent term compensation system in a way urges the patent administration departments to actively perform their duties and finish the examination of a patent within a reasonable time frame. Thus, patentees are given more time to exploit their patents, thereby creating economic benefits and promoting national innovative development.

This compensation system to some extent references the patent term extension system of the US. It assumes that substantive examination of a patent usually is finished within 3 years for requesting the examination and allows patent term extension if the examination takes more time. In addition, for invention patents related to new drugs, a patent term compensation is granted for the time taken for the review and marketing approval of the drugs, but the compensation period shall not exceed 5 years, and the total effective patent term shall not exceed 14 years after the drugs are marketed.

Newly-added Article 42(2)&(3): Where the patent right for invention is granted after the expiration of four years from the date of filing and after the expiration of three years from the date of requesting substantive examination, the patent administration department under the State Council may, at the request of the patentee, grant a patent term compensation for the unreasonable delay in the granting process of the invention patent, except for the unreasonable delay caused by the applicant.

In order to compensate for the time taken for the review and marketing approval of a new drug, for invention patents relating to new drugs that have been approved for marketing in China, the patent administration department under the State Council may, at the request of the patentee, grant patent term compensation. The compensation period shall not exceed five years, and the total effective patent term after the new drug is marketed shall not exceed 14 years.

  • Promotion of Patent Implementation and Commercialization

1. The amended Article re-affirms the rights of employer entities to implement and utilize service inventions.

Article 6(1): An invention-creation, made by a person in execution of the tasks of the entity to which he belongs, or made by him mainly by using the material and technical means of the entity, is a service invention-creation. For a service intention-creation, the right to apply for a patent belongs to the entity. After the application is approved, the entity shall be the patentee. The entity may handle the right to apply for patents and patent rights for its service invention-creations in accordance with the law, and promote the implementation and use of related invention-creations.

2. Entities are given more discretion in choosing appropriate incentive measures for inventors.

Newly-added Article15(2): The state encourages entities that are granted patent rights to implement property rights incentives and adopt methods such as stock rights, options, and dividends, to enable inventors or designers to reasonably share the benefits of innovation.

  • Amendments Related to Patent Infringement

1. It is specified that misuse of patent rights which eliminates or restricts market competition, if constituting monopolies, shall be dealt with in accordance with the Anti-Monopoly Law of the People’s Republic of China.

2. In disputes over infringement of utility model or design patents, the relevant parties may initiatively provide a patent evaluation report.

3. The fine imposed for passing off a patent is raised from four times the illegal earnings and RMB 200,000 Yuan to five times and RMB250,000 Yuan, and meantime the fine imposed for infringement with illegal earnings of no more than RMB50,000 Yuan is adjusted to no more than RMB250,000, which gives the patent enforcement departments more discretion in imposing a fine according to the seriousness of illegal acts.

4. Regarding infringement compensation:

The amount of compensation for patent infringement can be determined directly based on either the actual losses of the patentee or the benefits obtained by the infringer, in no particular order.

For intentional patent infringement with serious circumstances, the amount of compensation is determined at more than one time and less than five times the determined referenced amount. The amount of damages awarded by the people’s court is amended from not less than RMB 10, 000 Yuan and not more than RMB 1, 000, 000 Yuan to not less than RMB 30, 000 Yuan and not more than RMB 5, 000, 000 Yuan.

The amount of compensation for the damage shall also include the reasonable expenses of the right holder incurred for stopping the infringing act.

5. In patent infringement lawsuit, where the right holder has endeavored to present evidence, and the relevant evidence is mainly in control by the infringer, the people’s court may order the infringer to bear the burden of proof. That is to say, if the infringer fails to present corresponding evidence, the infringer shall take the consequences.

6. Reliefs which the right holders may obtain when their patent rights are infringed or the enforcement of their rights is hindered, are such as requesting the court to adopt property preservation, order certain actions, or prohibit certain actions. Provisions related to the handling of property preservation measures by the court are deleted in the Law, which means it shall be performed according to the Civil Procedure rules.

7. The jurisdiction of administrative departments at different levels over patent infringement disputes is specified; the State Council handles disputes that are of nationwide significance, and patent administration department of local people’s government may request the competent department of the local people’s government at a higher level to handle cases related to cross-regional infringement.

8. The function of patent administration department is separate from that of patent enforcement department, and the power of patent administration department is restricted.

9. The statute of limitation for patent disputes is amended to 3 years, to be in line with the tort liabilities.

Relevant Provisions in this section:

A new Article is added as Article 20: Applying for patents and exercising patent rights shall follow the principle of good faith. The patent rights shall not be abused to harm public interests or the legitimate rights and interests of others.

Any misuse of patent rights, which eliminates or restricts competition thus constituting monopolistic behavior, shall be dealt with in accordance with the Anti-Monopoly Law of the People’s Republic of China.

Article 61 is renumbered as Article 66 and the second paragraph therein is amended to read: Where any infringement dispute relates to a patent for utility model or design, the people's court or the administrative authority for patent affairs may ask the patentee or any interested party to furnish a patent evaluation report made by the patent administration department under the State Council after having conducted search, analysis and evaluation of the relevant utility model or design, and use it as evidence for hearing or handling the patent infringement; the patentee or interested party or the accused infringer may also initiatively provide a patent evaluation report.

Article 63 is renumbered as Article 68 and is amended to read: Where any person passes off a patent, he shall, in addition to bearing his civil liability according to law, be ordered by the administrative authority for patent enforcement to correct his act, and the order shall be announced. His illegal earnings shall be confiscated and, in addition, he may be imposed a fine of not more than five times his illegal earnings and, if there is no illegal earnings or the illegal earnings are not more than RMB 50,000 Yuan, a fine of not more than RMB 250,000 Yuan. Where the infringement constitutes a crime, he shall be prosecuted for his criminal liability.

Article 64 is renumbered as Article 69 and is amended to read: When investigating and prosecuting the suspected act of passing off a patent based on the evidence obtained, the administrative authority for patent enforcement has the right to take the following measures:

  1. query the parties concerned, and investigate the relevant circumstances of the suspected illegal act;
  2. carry out an on-the-spot inspection of the site where the party's suspected illegal acts took place;
  3. review and reproduce the contracts, invoices, account books and other relevant materials related to the suspected illegal act;
  4. examine the products relevant to the suspected illegal act; and
  5. seal up or withhold the products proved to be passing off the patented product.

When handling patent infringement disputes at the request of the patentee or interested party, the administrative authority for patent affairs may take the measures listed in items (1), (2), and (4) of the preceding paragraph.

When the administrative authority for patent enforcement and the administrative authority for patent affairs perform their functions and duties specified in the preceding two paragraphs in accordance with the law, the interested party shall assist and cooperate and shall not refuse or interfere the performance.

A new Article is added as Article 70: The patent administration department under the State Council may, at the request of the patentee or interested party, handle patent infringement disputes that are of nationwide significance.

The administrative authority for patent affairs under the local people’s government shall handle patent infringement disputes at the request of the patentee or interested party and may handle cases that relate to infringement on the same patent within the administrative region in a combined manner; for cases that involve the infringement on the same patent across regions, the administrative authority for patent affairs of the people’s government at a higher level may be asked for handling.

Article 65 is renumbered as Article 71 and is amended to read: The amount of compensation for the damage caused by the infringement of the patent right shall be determined on the basis of the actual losses suffered by the right holder because of the infringement or the profits earned by the infringer through the infringement; where it is difficult to determine the losses of the right holder or the profits earned by the infringer, the amount shall be reasonably determined with reference to the multiple of royalties of the patent. For intentional patent infringement with serious circumstances, the amount of compensation shall be determined at more than one time and less than five times the amount determined according to the above method.

Where it is difficult to determine the losses suffered by the right holder, the profits the infringer has earned and the royalties of the patent, the people's court may award the damages of not less than RMB 30, 000 Yuan and not more than RMB 5, 000, 000 Yuan in light of such factors as the type of the patent right, the nature and the circumstances of the infringing act.

The amount of compensation for the damage shall also include the reasonable expenses of the right holder incurred for stopping the infringing act.

In order to determine the amount for compensation, under the circumstances where the right holder has endeavored to present evidence, and the related account books or materials are mainly in control by the infringer, the people’s court may order the infringer to provide account books and materials relating to the infringing act; if the infringer does not provide or provides false account books or materials, the people’s court may rule on the amount of compensation based on the claims of and the evidence provided by the right holder.

Article 66 is renumbered as Article 72 and is amended to read: Where any patentee or interested party has evidence to prove that another person is committing or is about to commit an act that infringes the patent right and hinders its realization and that if such infringing act is not checked or prevented from occurring in time, it is likely to cause irreparable harm to it or him, it or he may, before any legal proceedings are instituted, petition the people's court to adopt property preservation, order certain actions, or prohibit certain actions.

Article 67 is renumbered as Article 73 and is amended to read: In order to stop patent infringement, under the circumstances where the evidence might be destroyed or where it would be difficult to obtain in the future, the patentee or interested party may petition the people's court for evidence preservation before instituting legal proceedings.

Article 68 is renumbered as Article 74 and is amended to read: Prescription for instituting legal proceedings concerning the infringement of patent right is three years counted from the date on which the patentee or any interested party obtains or should have obtained knowledge of the infringing act.

Where no appropriate fee for exploitation of the invention, subject of an application for patent for invention, is paid during the period from the publication of the application to the grant of patent right, prescription for instituting legal proceedings by the patentee to demand the said fee is three years counted from the date on which the patentee obtains or should have obtained knowledge of the exploitation of his invention by another person. However, where the patentee has already obtained or should have obtained knowledge before the date of the grant of the patent right, the prescription shall be counted from the date of the grant.

  • Other Amendments and Newly-added Provisions

1. Nuclear transformation methods are added into the list of non-patentable subject matters.

Item 5 of Article 25(1): nuclear transformation methods and substances obtained by means of nuclear transformation;

2. The time limit for submitting a certified copy of priority document: For invention and utility model patent applications, the time limit for submitting a certified copy of priority document is adjusted to be within 16 months from the earliest priority date; and for design patent applications, 3 months from the filing date.

Article 30: Any applicant who claims the right of priority for an invention or a utility model patent shall make a written declaration when the application is filed, and submit, within sixteen months from the date of filing the first application, a copy of the patent application document which was first filed.

Any applicant who claims the right of priority for a design patent shall make a written declaration when the application is filed, and submit, within three months, a copy of the patent application document which was first filed

If the applicant fails to make the written declaration or to meet the time limit for submitting the copy of the patent application document, the claim to the right of priority shall be deemed not to have been made.

3. A new Article is added to clarify how to deal with disputes over patent rights in the process of drug approval process.

Newly-added Article 76 In the process of review and approval of drug marketing, if a dispute arises between the applicant for drug marketing authorization and the relevant patentee or interested party due to the patent right of the drug applied for registration, the relevant party may file a lawsuit with the people’s court and request a judgment on whether the drug-related technical solution applied for registration falls within the scope of protection of the patent right of others’ drugs. The drug regulatory department under the State Council may, within the prescribed time limit, make a decision on whether to suspend the approval of the marketing of relevant drugs based on the effective judgment of the people’s court.

The applicant for drug marketing authorization and the relevant patentees or interested party may also request the patent administration department under the State Council for an administrative ruling on the dispute over patent rights related to the drug applied for registration.

The drug regulatory department under the State Council, in conjunction with the patent administration department under the State Council, shall formulate specific measures for the connection of patent dispute resolution at the stage of drug marketing license approval and drug marketing license application, which shall be implemented after the approval of the State Council.

4. More emphasis is put on the role of national patent administration department in the dissemination and utilization of patent information.

Article 21: The patent administration department under the State Council and its Patent Reexamination Board shall handle any patent application and patent-related request according to law and in conformity with the requirements of being objective, fair, correct and timely.

The patent administration department under the State Council shall strengthen the construction of a patent information public service system, release patent information in a complete, correct and timely manner, provide basic patent data, publish patent gazette on a regular basis, and promote the dissemination and utilization of patent information.

Until the publication or announcement of the application for a patent, staff members of the patent administration department under the State Council and other persons involved have the duty to keep its contents confidential.

Newly-added Article 48: The patent administration department under the State Council and the administrative department of patents of the local people’s government shall, in conjunction with relevant departments at the same level, take measures to strengthen patent public services and promote the implementation and utilization of patents.

5. The name of the Patent Reexamination Board is adjusted in line with the administration restructure and name change.

Article 41: The patent administration department under the State Council shall set up a Patent Reexamination Board. Where an applicant for patent is not satisfied with the decision of rejecting the application made by the patent administration department under the State Council, the applicant may, within three months from the date of receipt of the notification, request the Patent Reexamination Board patent administration department under the State Council to make a reexamination. The Patent Reexamination Board patent administration department under the State Council shall, after reexamination, make a decision and notify the applicant for patent.

Where the applicant for patent is not satisfied with the decision of the Patent Reexamination Board patent administration department under the State Council, it or he may, within three months from the date of receipt of the notification, institute legal proceedings in the people's court.

This name change is also involved in Articles 45 & 46.

6. Other Minor Adjustments

  1. Article 14 is renumbered as Article 49;
  2. Title of Chapter 6 is amended to “Special License for the Exploitation of Patent”;
  3. Article 73 is renumbered as Article 79, Article 74 is renumbered as Article 80, and the wording “disciplinary sanction” is amended to “sanction”;
  4. Article 72 is deleted.

From the latest amendments made to the Patent Law, it can be seen that the protection for right holders becomes more reasonable and comprehensive. For example, it is easier for patentees to exercise their rights, and meantime there is more liability for infringers if he/it commits infringing acts and thereby increasing their costs of breaking the law. Also, the power of public authority is further restricted, thereby urging patent administration departments to perform their duties actively and exercise their power prudently. All these changes signal that China's patent protection system will become more humane, modern and international.

About the Firm

AFD China Intellectual Property Law Office
Address Golden Towers, Tower B, 21st floor, 38 Xueqing Road, Haidian, Beijing 100083, China.
Tel 86-10-8273 0790
Fax 86-10-8273 0820
Email afdbj@afdip.com
Link www.afdip.com

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