The Standing Committee of the 13th National People's Congress has begun to review the fourth amendment to the Patent Law of the People’s Republic of China. During December 23-29, 2018, the Committee examined the Draft Amendment.

On January 4, the Patent Law of the People's Republic of China (Draft Amendment) was published on the website of the National People's Congress. The public can directly log on to the website of the National People’s Congress of the People's Republic of China to submit comments. The public can also send comments to the Legal Affairs Committee of the Standing Committee of the NPC ( No. 1 QianMenXiDaJie Street, Xicheng District, Beijing, Zip Code: 100805. Please indicate “Comments on the Patent Law (Draft Amendment)” on the envelope). The deadline for comments is February 03, 2019.

The following are the “Necessity in Amendments” and “Main Contents of Draft Amendment” summarized based on the official statements regarding the Draft Amendment published on the website of the National People’s Congress.

Necessity in Amendment

The Chinese government attaches great importance to intellectual property protection. General Secretary Xi Jinping has pointed out that it is necessary to strengthen the protection of intellectual property rights, improve the strength of law enforcement, enhance law enforcement efforts, significantly increase the costs of illegal activities, and give full play to the role of legal deterrence. Premier Li Keqiang has emphasized that the protection of intellectual property rights is to protect innovation, and the protection and use of intellectual property rights shall be improved, and infringements of intellectual property rights and counterfeiting and selling shall be cracked down.

With the development, there have been some new situations and problems in the patent field: the gap between the effect of patent protection and the expectation of patent holders, the protection of patent rights facing problems such as difficulty in providing evidence, high costs, and low compensation, the increase of cross-regional and internet infringements, the phenomenon of abusing patent rights occurring frequently; the low commercialization rate of patented technology, the asymmetrical information on supply and demand regarding patent licenses, and the insufficient commercialization services. In order to meet the needs of acceding to relevant international treaties and providing more convenience for inventors and designers to obtain patent rights, the patent authorization system also needs to be further improved.

Main Contents of the Draft Amendment

(I). Strengthen the protection of legitimate rights and interests of patentees. Intensify punishments for patent infringements. While giving full play to the leading role of judicial protection, improve administrative law enforcement, and thus enhance the effectiveness and efficiency of patent protection.

(1). Increase the compensation for patent infringements. Relevant provisions are as follows: For intentional infringement of patent rights, where the circumstances are serious, the amount of compensation may be determined to be one to five times the amount calculated according to the loss suffered by the right holder, the benefit obtained by the infringer or the patent license fee. In case where the amount of compensation is difficult to calculate, the compensation that the court may determine at its discretion increases from between RMB10,000 and 1,000,000, as stipulated in the current Patent Law, to between RMB100,000 and 5,000,000 (about US$720,000).

(2). Improve rules on burden of proof. The following provisions are added: In order to determine the amount of compensation, where the patentee has done all he could do to provide evidence, and the account books and materials related to the infringement are mainly controlled by the infringer, the people’s courts may order the infringer to provide the books and materials related to the infringement. Where the infringer does not provide or provide false books and information, the people’s court may determine the amount of compensation with reference to the claim of, and the evidence provided by, the patentee.

(3). Improve administrative patent law enforcement. The following provisions are added: the patent administrative department under the State Council may, at the request of the patentee or interested parties, handle patent infringement disputes that have significant nationwide impact; the local patent administrative authorities, when handling patent infringement disputes at the request of the patentee or interested party, may combine cases in which the same patent right is infringed in the administrative jurisdiction, and can request the patent administrative authority under a higher-level people’s government to handle cases involving infringement of the same patent right across jurisdictions.

(4). Clarify joint liabilities for internet service providers (ISP) for internet infringement. The following provisions are added: A patentee or interested party may notify the ISP to take necessary measurements such as deleting, blocking, or disconnecting the link to the infringing product, according to the judgment, ruling, mediation issued by the people's court, or the order to stop the infringement made by the patent administrative authorities. Where the ISP fails to take necessary measures in a timely manner, it shall be jointly and severally liable for the further infringement.

(5). Clarify the principles of honesty and the prohibition of abuse of rights. The following provisions are added: Applying for patents and exercising patent rights should follow the principle of honesty, and must not abuse patent rights to damage public interests and the legitimate rights and interests of others, or to exclude or restrict competition.

In addition, the statute of limitation concerning the infringement of patent right is changed from “two years” to “three years.”

A system for compensating for terms of patents for innovative pharmaceutical inventions is added. The following provisions are added: In order to compensate for the time for administrative review and approval of listing innovative drugs, the State Council may decide to extend the term of the relevant patent right, if the innovative drug is applied for listing in China and abroad simultaneously. The extension period shall not exceed five years. The total remaining effective term of patent after the listing of the innovative drug shall not exceed fourteen years.

(II). Promote the implementation and use of patents. Improve the incentive mechanism for inventors, designers and the patent granting system, strengthen public services for patents, provide more convenience for the acquisition and implementation of patent rights, stimulate innovation enthusiasm, and promote invention-creation.

(1). Clarify an entity’s right to dispose of service inventions. The following provisions are added: An entity may dispose of its right to the application and patent according to law, by implementing ownership encouragement and adopting means such as equities, options, and profit sharing, etc., to allow the inventor to reasonably share the benefits of innovation and promote the relevant innovation’s implementation and utilization.

(2). Strengthen patent commercialization services. Relevant provisions are as follows: The patent administrative department under the State Council shall strengthen the construction of the patent information public services system, provide basic data on patent information, and promote the dissemination and utilization of patent information; the patent administrative department under the State Council and the patent administrative authorities under the local people’s government shall take measures with relevant authorities at the same level to strengthen patent public services and promote the implementation and application of patents.

(3). Establish a patent open licensingsystem. The following provisions are added: If the patentee declares in written statement to the patent administrative department under the State Council that he is willing to permit anyone to implement his patent, and clarifies the payment method and rate of the license fee, the patent administrative department under the State Council shall make an announcement and implement open licensing. Anyone interested in an open-licensed patent may obtain a license after he notifies the patentee in written statement and pays the license fee in accordance with the announced payment method and rate.

(III) Improve the patent granting system.

(1). Establish a domestic priority system for patent application for design. Relevant provisions are as follows: Any applicant who files a patent application for design of the same subject matter within six months from the date of filing his first patent application for design in China may enjoy the priority of the first-filed application for design.

(2). Optimize the priority claiming procedure. The time limit for the patent applicant to submit a copy of the first patent application documents is relaxed. “Where any applicant claims the right of priority, he shall submit a written declaration when the application is filed and submit a copy of the first patent application documents within three months” is amended to read “Where any applicant claims the right of priority, he shall submit a written declaration when the application is filed and submit a copy of the first patent application documents within sixteen months from the date of filing his first patent application for invention and utility model”.

(3). Extend the term of patent right for design. Adapting to the need for China to accede to the Hague Agreement on the protection for designs, the term of patent right for design is extended from the ten years to fifteen years.

We at China Sinda are closely following the development and will provide further updates in this regard.

Please let us know if you have any questions.