Ten highlights of China's new patent law

21 October 2020

On 17 October 2020, China approved the fourth amendment to the China Patent Law (CPL), which will take effect on 1 June 2021. It has been 12 years since the last amendment made in 2008, so there a number of notable changes. Below is a brief summary of the highlights of the new CPL.



Design patents

There are two significant changes to the design patent in China via design patent term extension and the introduction of partial designs.

1. Partial design allowed

"Partial designs" is formally introduced in China. This is in line with international practice such as in the USA, Europe, UK, Japan and Korea. A significant boost of design filing activity can be expected due to allowance of this new category of design patents.

2. Design patent term extended to 15 years

The term of design protection has extended from 10 years to 15 years. This signals that China is under preparation to join the Hague system, which stipulates a minimum of 15 years protection term for member countries.

Phamarceutical patents

Another significant change is in the area of pharmaceutical patents through patent term compensation and introduction of patent linkage system.

3. Pharmaceutical patent term extension

To compensate for the long regulatory approval period which effectively reduces the patent protection term for pharmaceutical patents, the new CPL has introduced pharmaceutical patent term compensation. The total compensation period is a maximum of 5 years. For new drugs being granted regulatory approval to be put on the market, the total patent term shall not exceed 14 years.

4. Preliminary pharmaceutical patent linkage system

China will be introducing a patent linkage system for pharmaceutical patents. According to the new CPL, the patentee and the regulatory approval conductor can bring a patent infringement dispute before the court or the local patent administrative office. China's pharmaceutical regulatory body (China's FDA) can make a decision on whether to suspend the regulatory approval process for said medicine based on the judgment from the court or local patent office. China's FDA will work with the CNIPA to make detailed guides on the patent linkage system, with the specific guidelines still to come.  

Increased patent damages

A constant theme in the amendments to China patent law has been to increase damages, which reflects China's determination to increase patent protection. In the new CPL, there are measures related to punitive damages, the upper limit for statutory damages, and evidence disclosure obligations.

5. Punitive damages up to five times original damages

China has introduced the possibility of up to five times original damages as punitive damages for serious willful patent infringement. Given some of the blatant counterfeiting and infringement activities taking place, the introduction of punitive damages up to five times the original damages can provide strong deterrent for willful or persistent patent infringers.

6. Statutory damages up to RMB five million

Statutory damages have been increased from RMB one million to RMB five million (c.a. USD 750K). Since statutory damages are currently granted in the majority of successful patent infringement cases rather than actual damages or an accounting of profits due to the high evidentiary standard to prove loss or profit, such an increase has significant practical value in patent litigation practice in China.

7. Evidence disclosure obligation relating to damage calculation

 As mentioned above, it can be difficult to prove damages in patent infringement proceedings because defendants frequently refuse to disclose financial records. The new CPL has introduced a preliminary evidence disclosure obligation. The judge can order the defendant to disclose damage related evidence. If the defendant refuses to disclose or provides false information, the judge will have discretion to decide damages based on the patentee's claim or request.

Other notable changes

8. Open license system

China will introduce the "open license" system. The patentee can declare and record its intention to "open license" its patents to any entity or individual with the China Patent Office, and set the license fees and terms for public records.  During the open license period, the patent annuities can be waived. Although the system of open license is promoted in the new CPL, it remains to be seen if this will be attractive to companies in the marketplace - whether licensor or licensee.

9. Administrative protection of patents

China has always operated the "dual protection" regime for IP rights, i.e. infringement can be brought to either the court or the local IP office. The new CPL   set out in detail the scope of administrative protection for patents. In particular, the China IP office (CNIPA) will have authority to deal with nation-wide patent infringement cases. Given the sophistication and authority of CNIPA, itmay be worth exploring this option, in addition to the popular court option with the three specialized IP courts in Beijing, Shanghai, and Guangzhou.

10. Patent term extension due to delay in patent examination

If patent examination is unreasonably delayed, the patentee can request patent term compensation. For an invention patent application, which has been pending for more than 4 years since the filing date, or more than 3 years since the request for substantive examination, the applicant is entitled to request patent term compensation due to the delay in patent examination, except where the delay has been caused by the applicant itself.

Conclusion

In conclusion, it has been 12 years since the last amendments to CPL, and the upcoming changes will have an impact on all areas of patent prosecution, enforcement, and exploration. Particularly noteworthy amendments are, for example, partial designs, patent term extensions, pharmaceutical patent linkage, punitive damages, increased statutory damages, and open license systems.


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