McDermott Will & Emery has a strategic alliance with MWE China Law Offices, a separate law firm based in Shanghai. For more information on the topics covered in this China Law Alert, please contact MWE China Law Offices partners John Z.L. Huang and Kevin Qian.
On 27 December 2008, the Sixth Session of the Standing Committee of the 11th National People’s Congress of China approved the Amendment to the Patent Law (New Law). This New Law is the third amendment and will be effective on 1 October 2009. The previous amendments occurred in 1992 and 2000. The New Law involves many changes and additions—both procedural and substantive—intended to protect the legitimate rights of patent owners, and encourage and enhance innovations. Below are some noteworthy modifications or additions to the New Law.
Applications Filed for Foreign Patents on Invention-Creations Made in China
Article 20.1 of the New Law provides that where any entity or individual（including companies solely invested by foreign investors, and their joint ventures or research institutes set up under Chinese law） intends to file an application in a foreign country for a patent for its domestic invention-creation, the entity or individual shall apply for confidential examination with the patent administrative organ under the State Council.
The New Law also provides a penalty in Article 20.4 that no patent right shall be granted in China for an invention or utility model which has been filed for a patent in another country in violation of the above Article 20.1. Furthermore, in the same article, the New Patent Law cancels the provision that a Chinese entity or individual that applies for a patent in a foreign country must appoint a foreign-related agency to act as its agent. Thus, the entity or individual may now directly apply for a patent in a foreign country, subject to confidential examination.
One Invention-Creation for Two Applications
The Patent Law stipulates in Article 9 that only one patent right is granted to an identical invention-creation. However, the New Patent Law provides that where one applicant files on the same day for both a utility model patent and an invention patent for an identical invention-creation, the applicant may be granted an invention patent if the applicant declares waiver of the granted patent of the utility model before its patent expiration.
Adoption of International Absolute Novelty
The current Patent Law requires that the invention-creation for patent application has not been internationally disclosed in a publication or disclosed by means of use within China. But the New Law in Article 22 adopts the standard of absolute novelty as internationally accepted and cancels the territorial restrictions on the disclosure by means of use. The New Law also provides that novelty means that the invention or utility model shall not belong to prior arts and the design for patent shall not belong to prior designs. It specifies the definitions of prior arts and prior designs—prior arts or prior designs refer to the technologies (designs) well known within or outside China prior to the filing date.
Applications for Design Patent
A limitation is placed on the patentable subject matter of the design. Under Article 25.6, no patent right shall be granted to two-dimensional designs made of patterns, colors or their combination for the purpose of indication.
Further additions were made to the granting of a patent right for a design. It is provided in Article 23.2 that a design for which the patent right may be granted shall be one obviously different from any prior designs or combination of prior designs.
Only one application needs to be filed for associated designs. According to Article 31.2, one application may be filed relating to two or more similar designs incorporated in one product, or relating to two or more designs for products of the same category that are sold or used in a package.
A brief explanation may be used to construct the claims of a design patent. In Articles 27 and 59.2, the New Law requires that a brief explanation of the design be incorporated in the documents in the application filed by the applicant for a patent for design. The New Law further stipulates that the extent of the protection of the patent right for design shall be determined by the patented design incorporated on the product as shown in the drawings or photographs, and the brief explanation that may be used to explain the patented design.
Offering for sale a product incorporating a patented design is added as an act of infringement. According to Article 11.2, after the grant of the patent right for a design, no entity or individual may exploit the patent without the authorisation of the patentee—in other words, make, offer for sale, sell or import the design patented product for production or business purposes. Offering for sale is added to indicate that the display or showing of a product for business purposes would also be considered an act of infringement.
Patent Applications for Invention-Creations Based on Genetic Resources (Articles 5 and 26)
The New Law adds relevant provisions relating to the patent application for invention-creations made by relying on genetic resources. No patent will be granted for an invention-creation made by relying on a genetic resource which is acquired or used in violation of laws and administrative regulations, and the applicant shall state the direct source and original source of the said genetic resource in the patent application documents.
Strengthening of Protection of Patent
In Article 65 of the New Law, the amount of damages for infringing a patent right shall be calculated to the losses suffered by the patentee or the profits gained by the infringer out of infringement. If it is too difficult to determine either the losses of patentee or the profit gained by the infringer, the appropriate royalties for licenses for the said patent may be applied mutatis mutandis. If it is still difficult to determine the losses of the patentee, the profits gained by the infringer and the royalties for licenses for the said patent, the scope of the damages amount for infringement which can be ruled by a people’s court is modified from RMB 10,000 to RMB 1 million. The New Law also provides that the amount of damages shall include reasonable expenses paid by the patentee to stop the infringing acts.
The New Law provides in Article 67 that in order to stop the infringing acts, the patentee or interested person may apply to a people’s court for preservation of evidence before filing the suit under the circumstances that the evidence may get lost or will be hard to acquire afterwards.
Where the infringement relates to a patent for utility model or patent for design, the people’s court or the authority for patent work may request that the patentee or interested person furnish a patent right evaluation report made by the patent administrative organ under the State Council based upon search, analysis and evaluation, as evidence for trial or in dealing with the patent infringement disputes (Article 61).
In patent infringement litigation, if an accused infringer proves that the technology or design in dispute belongs to prior arts or prior designs, the exploitation does not constitute infringement (Article 62).
Addition of the “Bolar Exception”
The creation, use or import of a patent pharmaceutical product or patented medical device shall not be deemed an infringement if it provides information necessary for regulatory examination and approval, and the creation and import of the patent pharmaceutical product or patented medical device is solely for that purpose (Article 69).
Modifications to the Compulsory License System
Article 50 states that for the purpose of public health, the Patent Administration Department under the State Council may grant a compulsory license to make a patented pharmaceutical product and to export it to the relevant country or region that satisfies the provisions of relevant international treaties entered into by China.
Article 52 involves the compulsory license related to semiconductor technology, requiring that its exploitation be limited to the purpose of public interest and the conditions provided in Article 48(2) of this law (which relates to anti-monopoly conduct).
Article 53 provides that the exploitation of compulsory license shall be mainly for the purpose of supplying the domestic market.
Cancellation of Designation of Foreign-Related Agency
Pursuant to the provisions of the current Patent Law, if a foreigner, foreign enterprise or any other foreign organisation without any habitual residence or business place in China intends to file a patent application or handle patent affairs in China, it shall entrust a patent agency designated by the patent administrative organ under the State Council (a foreign-related agency) to deal with such matters, according to Article 19. But the New Law modifies the patent agency as designated by the patent administrative department of the State Council to the lawfully established patent agency which cancels provisions on the designation of the so-called foreign-related agency.
The New Law is intended to strengthen patent protections in China and to enhance economic development. The Implementation Regulation of the Patent Law are expected to be released in the future, and will be covered in future China Law Alerts.