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Summary of the Patent Law 2021

Publication July 9, 2021

The Standing Committee of the National People's Congress officially passed the Amendments to the Patent Law on October 17, 2020 and release it to the public. Compared with the previous version, the amendments this time cover design patents, patent enforcement, statute of limitations, damages, patent implementation and abuse, open license, patent linkage, etc. The newly amended Patent Law has 82 articles in total and has come into effect since June 1, 2021. The followings are brief summary regarding changes in the newly amended patent law.

Design Patents(2、29、30、42)

The primary amendments to the articles regarding design patents cover articles 2, 29, 30 and 42:

  1. Expanding the definition of design patents to new designs of shape, pattern or combination thereof as well as the combination of colour with shape and pattern with respect to the whole or part of a product, which is aesthetically pleasing and suitable for industrial application;
  2. The domestic priority period for a design patent application is 6 months;
  3. Specific requirements for claiming priority for a design patent, including a written request when filing the application and submit a copy of the patent application document of which priorities are claimed within 3 months since filing of the new application;
  4. Extending the term of design patents from 10 years to 15 years.

It is reasonable to believe that these amendments are in preparation for joining "Hague Convention on the International Registration of Industrial Designs" (Geneva version 1999) (the “Hague Convention”). In the Suggestions for Amending the Implementation Rules of the Patent Law (the draft for public comments) issued by CNIPA, special provisions on international applications for designs is added in Chapter XI. China has not yet become a formal contracting party to the Hague Convention but is accelerating its accession. The Hague Convention is a treaty administered by WIPO with more than 70 member parties. Like the PCT Treaty, applicants can submit an international application through the Hague Convention to retain the possibility of entry to the more than 70 member countries. Given the fact that many jurisdictions do not have substantive examinations on design patent applications, international applications submitted through Hague Convention can be a convenient and efficient means for rapid access to respective jurisdictions. 

Adjustment to Patent Related Terms(30、42)

The newly amended Patent Law has made some adjustments to several terms involved in patent prosecution process. First of all, in terms of priority, in addition to the new provisions on the priority of domestic design patent applications, the newly amended Patent Law also extends the submission time limit of the priority text of invention and utility model patent applications from 3 months to 16 months, which further facilitates the applicants.

In addition, this version of patent law further stipulates the compensation system for unreasonable delays during examination and the compensation system for delay in FDA examination for drugs. In particular, article 12 of the amended patent law provides that if a patent is granted after 4 years from the date of application and after 3 years from the date of substantial examination request, the patent administration department under the State Council, at the request of the patentee, shall grant a time compensation for the patent term due to the unreasonable delay in the process of examination to invention patents, unless the unreasonable delay caused by the applicant. To compensate for the time taken up by the review and approval of a new drug to the market, the patent administration department under the State Council shall, at the request of the patentee, grant a time compensation for the patent term for any invention patent related to a new drug that has been granted a marketing license in China. The compensation shall not exceed 5 years,and the total effective patent term after the new drug is approved for market shall not exceed 14 years. It should be noted that both of the above compensations are subject to the patentee's request, rather than automatically applied.

Encouraging Patent Implementation while Striking against Patent Abuse(6、15、20、50-52)

First of all, the amendment of Article 6 and Article 15 of this revision not only stipulates the disposal of enterprises' rights to apply for patents and patent rights therefore granted regarding service inventions, but also clarifies the service inventors’ right to be rewarded, which is not limited to economic rewards, but also includes rewards in the form of equity incentives, dividends, options, etc.  Under the new patent law, while enterprises have the right to dispose the right to file patent applications created by service inventions, they should also establish and attach importance to the reward system for service inventors.

Furthermore, this revision also created a new open license system. By insertion of article 50, article 51 and article 52 of the patent law, the newly amended patently established an outline of an open license system. The patentee may waive part of the annual fee by establishing such an open license for an unspecified group. For the patentee, the open license of idle patents can revitalize idle patents while also save the annual fee. For licensees seeking technology, it is also possible to avoid some of the business costs of finding available patents that are beneficial to them by looking in a large "patent pool" created by the state. Relevant departments may formulate detailed rules to ensure the fair and reasonable of the system in the future.

In addition, this revision not only advocates the implementation of patents, but also establishes special provisions striking against patent abuses. Article 20 of the amended Patent Law stipulates that the principle of good faith shall be observed in applying for a patent and in enforcing a patent right. The patent right shall not be abused to harm the public interests or the lawful rights and interests of others. Any abuse of patent rights to exclude or restrict competition, which constitutes a monopolistic act, shall be dealt in accordance with the Anti-Monopoly Law of the People's Republic of China. According to the Anti-Monopoly Guidelines on Intellectual Property Rights issued earlier by the Anti-Monopoly Commission of the State Council, the abuse of patent rights can be regulated under the Anti-Monopoly Law.

Resolutions for Problems Frequently Occurred in Patent Enforcements(66、68、69、71、72、73、74)

For many years, patentees in China has complained a lot for difficulty in collecting and providing evidence, long term of litigations, high cost for enforcing their rights and low damages awarded.  This time, the newly amended patent law has introduced a series of new regulations and amendments to resolve these problems to some extent.

In view of the high costs for patent enforcement, this amendment not only retains the clause that the amount of compensation includes reasonable expenses, but also further stipulates that the patentee, the interested party and the accused infringer can apply to issue the evaluation report on their own initiative rather than at the request of the court. In current practice, the court would recognize the patent evaluation report issued by the patentee and interested party on their own initiative. However, the patent law before this amendment does not grant the accused infringer the right to request the evaluation report of the patent right.

In view of the difficulty in collecting evidence, in addition to evidence preservation, Article 71 of this amendment further stipulates that the people's court can order the infringer to submit account books and materials when the right holder has tried his best to provide evidence and the books and materials related to the infringement are mainly controlled by the infringer. This brings the already effected judicial interpretation into the patent law system and reduces the burden of proof for the patentee. In addition, the amendment extends statutory limitation from two years to three years, which equals the statute of limitations in the Civil Procedure Law and gives the right holders more time to gather evidence and file lawsuits.

Aiming to resolve the problem of low damages, the amended patent law introduced the following amendments to the calculation of the damages:

  1. Adjusted the means for calculating damages,the benefit of the infringer now has the same priority with the actual loss of the patentee;
  2. Raised the statutory damage to RMB 30,000 to5,000,000;
  3. Stipulated a punitive damage of 1x to 5X damages regarding intentional infringement
  4. Raised the upper limit of the fine for counterfeiting from four times to five times of the illegal gains, and the statutory fine for those with no illegal gains will be increased from less than RMB 200,000 yuan to less than RMB 250,000.

Miscellaneous

  1. Patent Linkage
    This revision also added a system similar to that of Patent Linkage in other jurisdictions. Article 76 stipulates: during the process of drug approval, once there is a patent dispute related to the drugs, the parties may request for a court judgment or an administrative decision, and the pharmaceutical supervisory and administrative department under the State Council can decide whether to suspend the approval process. At present, the Chinese FDA and CNIPA have organized and formulated the Implementation Measures for the Early Resolution Mechanism of Drug Patent Disputes (Trial),which specifically stipulates the detail implementation measures for the drug patent linkage system.
  2. Preliminary Injunction(72)
    Article 72 of the newly amended patent law expands the scope of preliminary injunction. Before amendment, the scope of preliminary injunction only covers active infringing activities.  After amendment, the preliminary injunction also covers those activities preventing the patentee to exercise its patent right.
  3. Adjustment to Patent Administration Departments(21、41、45、46、48、69、70)
    Due to the internal adjustment of relevant departments, the Patent Re-examination Board (PRB),which was directly under the State Intellectual Property Office before, is merged into the Patent Office subordinated to CNIPA, and its original business will be taken charge of by this new Patent Office (Re-examination and Invalidity Trial Department) after the merger, which is reflected in the amended Patent Law as the new term "Patent Administration Department under the State Council".
  4. Amendments Regarding Situation Development (24、25)
    This revision includes anew exception for losing novelty, namely "first publication for public interest when there is an emergency state or an extraordinary state in the country. In addition, in Article 25, the nuclear transformation method is also included in the non-patentable subject matters.

This article was originally published in Fusion Strength.

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