China has, on 17th October 2020, approved the fourth amendment to the China Patent Law (“CPL”), which will take effect on 1st June 2021. It has been more than 10 years since the last amendment made in 2008, thus there will be a number of remarkable changes and the brief summary of the highlights are as follows:
A. DESIGN PATENTS
There are two significant changes to design patents in China:
(i) Partial design allowed
“Partial designs” is formally introduced in China which it is in line with international practice such as in the USA, Europe, UK, Japan, and Korea. A significant boost in design filing activity can be expected due to the allowance of this new category of design patents.
(ii) Design patent term extended to 15 years
The term of design protection has extended from 10 years to 15 years. This shows that China is prepared to join the Hague system, which stipulates a minimum of 15 years protection term for member countries.
B. PHARMACEUTICAL PATENTS
Another significant change is in the area of pharmaceutical patents:
(iii) 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 a pharmaceutical patent term compensation period of a maximum of 5 years. In relation to new drugs being granted regulatory approval to be put on the market, the total patent term shall not exceed 14 years.
(iv) Preliminary pharmaceutical patent linkage system
China will be introducing a patent linkage system for pharmaceutical patents. The patentee and the regulatory approval conductor can now 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 also work with the CNIPA to make detailed guides on the patent linkage system, with the specific guidelines still to come.
C. INCREASED PATENT DAMAGES
The amendments in China patent law to increase damages has reflected China’s determination to increase patent protection:
(v) Punitive damages up to 5 times original damages
China has introduced the possibility of up to 5 time’s original damages as punitive damages for blatant willful patent infringement where it can provide strong deterrent for willful or persistent patent infringers.
(vi) Statutory damages up to RMB 5 million
Nonetheless, statutory damages have been increased from RMB 1 million to RMB 5 million. Since statutory damages are currently granted in most of the 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 in statutory damages has significant practical value in patent litigation practice in China.
(vii) Evidence disclosure obligation relating to damage calculation
As mentioned above, it can be difficult to prove damages in patent infringement proceedings as the defendants often refuse to disclose their financial records. The new CPL has introduced a preliminary evidence disclosure obligation where the judge can now order the defendant to disclose damage-related evidence. If the defendant refuses to disclose or provides false information, the judge will have the discretion to decide damages based on the patentee’s claim or request.
D. OTHER NOTABLE CHANGES
(viii) Open license system
China will also introduce the “open license” system where 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.
(ix) 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 in addition to the popular court option with the three specialized IP courts in Beijing, Shanghai, and Guangzhou.
(x) Patent term extension due to delay in patent examination
If patent examination is unreasonably delayed, the patentee can now request for 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.
In conclusion, the upcoming changes will have an impact on all areas of patent prosecution, enforcement, and exploration in China.
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