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China Updates Patent Law with New Amendments

by Matt Digan


For the fourth time since the original patent law of China was promulgated in 1984, the National People’s Congress of China approved new amendments on October 17, 2020 that will take effect June 1, 2021. The new amendments primarily concern design patents, pharmaceutical patents, and various changes to damages.[1]


Design Patents

The three significant changes to design patent law in China are that “partial designs” are now permitted, the term of protection for design patents has been increased from 10 to 15 years, and priority claims are not available to applicants. A partial design patent refers to the practice of patenting just a portion of a design, rather than the entire design.[2] Partial designs are already permitted in many other jurisdictions around the world, such as in Europe, Japan, the Republic of Korea, the UK, and the US.[3] Some commentators have noted that China’s extension of design patent protection to 15 years may signal the country’s desire to join the Hague System for the International Registration of Industrial Designs overseen by the World Intellectual Property Organization (WIPO).[4] The final change to the design patent landscape in China is that an applicant may now claim priority within six months from the date on which the applicant first files in China.[5]


Pharmaceutical Patents

The new amendments include a patent term extension for pharmaceutical patents to compensate for the long regulatory review periods that effectively reduce the term of protection for such patents. The maximum term extension is 5 years and no pharmaceutical patent approved under the new law shall have a total term of protection that exceeds 14 years.[6]


Another new addition to the pharmaceutical patent landscape in China is an early dispute resolution mechanism for use when an applicant for a new drug has a dispute with a patent holder. Under the new system, the applicant for the new drug or the patent holder may file a complaint with either the local patent administrative office or the people’s court for a decision on whether the drug-related technical solutions for which the drug is to be approved falls within the scope of protection of the patent rights.[7] Then, in accordance with the decision of the people’s court, China’s equivalent of the Food and Drug Administration (FDA) may decide whether to suspend the approval of the drug.[8]


Damages

In each new round of amendments to the Chinese patent law system, the country has increased the limit on damages in some fashion—the new amendments are no different.[9] First, China has increased the maximum amount of punitive damages for willful infringement to up to five times actual damages.[10]


Second, China has increased statutory damages for patent infringement cases to between ¥30,000 and ¥5,000,000 (the equivalent of ~$4,500 and ~$757,000, respectively).[11] In China, the damages that tend to be awarded in patent infringement cases are statutory damages and not actual damages due to the challenges in proving loss or profit.[12] That being the case, such an increase in statutory damages will likely have a significant practical impact on patent litigation.[13]


Third, and directly related to the previously noted challenges in proving loss or profit, the new amendments grant judges the power to order defendants to disclose damage-related evidence. If the defendant refuses or provides false information, the judge has discretion to decide damages based on the patentee plaintiff’s claim or request.[14] Evidently, in China it has been common practice in patent infringement litigation for defendants to refuse to disclose financial records related to the alleged infringement, so such a change in the law may go a long way in combating that litigation tactic.


Other Changes

Another significant change to China’s patent laws is the introduction of an open licensing system. A patentee can declare and record its intention to open license its patent(s) to any entity or individual with the Chinese National Intellectual Property Administration (CNIPA) and also set the license fees and terms.[15]


Other changes include clarification on the roles of local IP offices under CNIPA and the three specialized IP courts in Beijing, Shanghai, and Guangzhou in enforcing patent rights. Additionally, the amendments have created an option for applicants to request patent term extensions if an application has been pending for more than 4 years since the filing date or if it has been more than 3 years since a request for substantive examination.[16]


[1] See Jian Xu, Ten Highlights of China’s New Patent Law, Gowling WLG (Oct. 21, 2020), https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived; Ningling Wang, Promoting Innovation with Enhanced Protection and Enforcement Measurements under New Chinese Patent Law, Finnegan (Oct. 23, 2020), https://www.finnegan.com/en/insights/blogs/prosecution-first/promoting-innovation-with-enhanced-protection-and-enforcement-measurements-under-new-chinese-patent-law.html; Li Mi, New Amendments to the Chinese Patent Law Revealed, Rouse (Oct. 23, 2020), https://rouse.com/insights/news/2020/new-amendments-to-the-chinese-patent-law-revealed.

[2] Alisa S. Abbott and Robert S. Katz, Protecting and enforcing design rights: United States, World Trademark Review (Dec. 11, 2017), https://www.worldtrademarkreview.com/portfolio-management/protecting-and-enforcing-design-rights-united-states.

[3] Jian Xu, Ten Highlights of China’s New Patent Law, https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived.

[4] See Id.; Li Mi, New Amendments to the Chinese Patent Law Revealed, https://rouse.com/insights/news/2020/new-amendments-to-the-chinese-patent-law-revealed.

[5] Ningling Wang, Promoting Innovation with Enhanced Protection and Enforcement Measurements under New Chinese Patent Law, https://www.finnegan.com/en/insights/blogs/prosecution-first/promoting-innovation-with-enhanced-protection-and-enforcement-measurements-under-new-chinese-patent-law.html.

[6] Jian Xu, Ten Highlights of China’s New Patent Law, https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived.

[7] Ningling Wang, Promoting Innovation with Enhanced Protection and Enforcement Measurements under New Chinese Patent Law, https://www.finnegan.com/en/insights/blogs/prosecution-first/promoting-innovation-with-enhanced-protection-and-enforcement-measurements-under-new-chinese-patent-law.html.

[8] Id.

[9] Jian Xu, Ten Highlights of China’s New Patent Law, https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived.

[10] Id.

[11] Ningling Wang, Promoting Innovation with Enhanced Protection and Enforcement Measurements under New Chinese Patent Law, https://www.finnegan.com/en/insights/blogs/prosecution-first/promoting-innovation-with-enhanced-protection-and-enforcement-measurements-under-new-chinese-patent-law.html.

[12] Jian Xu, Ten Highlights of China’s New Patent Law, https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived.

[13] Id.

[14] Id.

[15] Id.; Ningling Wang, Promoting Innovation with Enhanced Protection and Enforcement Measurements under New Chinese Patent Law, https://www.finnegan.com/en/insights/blogs/prosecution-first/promoting-innovation-with-enhanced-protection-and-enforcement-measurements-under-new-chinese-patent-law.html.

[16] Jian Xu, Ten Highlights of China’s New Patent Law, https://gowlingwlg.com/en/insights-resources/articles/2020/ten-highlights-of-china-s-new-patent-law/#:~:text=China%20will%20introduce%20the%20%22open,patent%20annuities%20can%20be%20waived.