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Publication

March 16, 2009Client Alert

The Third Amendment of People’s Republic of China Patent Law

On December 27, 2008, the People’s Republic of China Patent Law was amended for the third time (the “amended Patent Law”). The amended Patent Law will take effect on October 1, 2009.

Significant changes in the amended Patent Law are summarized as follows:

TOPIC

BRIEF SUMMARY OF CHANGES

COMMENTS

Novelty and Patentability

(Article 22 and Article 23)

To be patentable, among other things, a technology must have “novelty”, which requires that:

  • The invention, utility model or design does not belong to prior technology or prior design; and
  • No application has been filed before the application date for the same invention, utility model or design and no application has been recorded in any published patent application document or patent Official Gazette.


“Prior technology” or “prior design” refers to any technology or design that was known to the public in China or in any other foreign country before the application date.

  • The legal concepts of “prior technology” and “prior design” are added to the amended Patent Law.
  • It will be more difficult to obtain a granted patent in China, and the quality of patents should improve.

Patent Application of Inventions Created Upon Genetic Resources

(Article 5 and Article 26)

  • No patent right shall be granted for any invention created upon genetic resources if the acquisition or use of such genetic resources violates the relevant laws or administrative regulations of the country; and
  • The applicant of any invention created upon genetic resources shall indicate the direct and original source of the genetic resources in the application documents. If the original source of said genetic resources cannot be indicated, the applicant shall state reasons why.
  • The legal concept of “genetic resources” in the context of invention is addressed, which indicates the Chinese government’s resolution to identify and protect genetic resources.

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BRIEF SUMMARY OF CHANGES

COMMENTS

Simultaneous Filings of Invention and Utility Model Patents

(Article 9)

  • If the same applicant applies on the same day for an invention patent and for utility model patent covering the same invention, and if the granted utility model patent has not yet expired, in order for the invention patent to be granted, the applicant must expressly abandon the granted utility model patent.
  • The strategy of filing both invention patent and utility model patent applications for the same invention has been in practice before the current amendment to the Patent Law. The underlying reason is that a utility model patent will issue more quickly than an invention patent and provide earlier protection.

Joint Right to Apply for Patent and Joint Patent Right

(Article 15)

  • If no agreement is concluded between the co-owners of the right to apply for patent or the co-owners of the patent right, any co-owner may use the patent alone or grant to others a non-exclusive license to use the patent; if the patent is licensed to others, the royalty received therefrom shall be allocated among all co-owners.
  • The co-ownership of the right to apply for patent and the co-ownership of the patent right are addressed for the first time.

“First Filing” Requirement in China

(Article 20)

Prior to the current amendment, the Patent Law required that the patent application for any invention or utility model created in China must be first filed in China before being filed in any foreign country. The amended Patent Law now provides that:

  • The patent application for any invention or utility model created in China may be first filed in a foreign country.
  • Before first filing in a foreign country a patent application covering an invention or utility model created in China, a report for confidential examination shall be filed with the patent examination department of the State Council.
  • It is uncertain from the amended Patent Law whether a design created in China may be first filed in a foreign country.
  • It is also uncertain how long the process for confidential examination will take before an applicant can first file outside of China.

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BRIEF SUMMARY OF CHANGES

COMMENTS

Barred Design Patent Application

(Article 25)

No patent right shall be granted to two dimensional printed products composed of designs of patterns, colors or combination which mainly serve identification purposes.

Compulsory License

(Article 48 to Article 58)

  • Individuals may now request a compulsory license.
  • A compulsory license may be requested if it has been three years since the grant of the patent and also has been four years since the application for the patent, and the patentee has not enforced or has not sufficiently enforced the patent with no justified reasons.
  • A compulsory license may be granted if use of the patent by the patentee is determined as a monopoly act according to the laws and regulations.
  • A compulsory license may be granted for the purpose of public health to manufacture pharmaceutical products to be exported to countries or regions stipulated in international treaties to which PRC is a member.
  • A compulsory license may be granted regarding semi-conductor technologies for the purpose of public interest or of eliminating or reducing monopoly.
  • The application of a compulsory license shall be mainly limited to the domestic market.
  • The amended Patent Law provides additional grounds for the grant of a compulsory license.
  • Due to vague terms, the government has broad discretion in granting a compulsory license, and this may harm the legitimate interests of patentees who could now become subject to a compulsory license.
  • The terms relating to the time for requesting a compulsory license (3 years from grant and 4 years from application) may violate the Paris Convention for the Protection of Industrial Products.

Patent Enforcement

(Article 59 to Article 70)

  • An offer to sell a product covered by a design patent shall constitute patent infringement.
  • Not only the patentee but also interested parties may be asked by the court or the patent administration department to submit an evaluation report on the validity of the patent right.
  • The fine for passing off a patent is increased and could be up to four times of the illegal earnings or, if there are no illegal earnings, up to RMB 200,000.


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BRIEF SUMMARY OF CHANGES

COMMENTS

Patent Enforcement

(Article 59 to Article 70)

(continued)

  • Patent infringement damages shall include the reasonable cost the patentee incurred for the purpose of stopping infringement; if it is difficult to determine the patentee’s loss, infringer’s gain or the royalty fee, the People’s Court may have the discretion to grant damages between RMB 10,000 to RMB 1,000,000, depending on the nature and circumstances of infringement.
  • A design patentee now has right to take a legal action to prevent others from advertising or displaying in stores or at trade shows any product infringing a design patent.
  • The “cost of infringement” is significantly increased because of the increase of fines for passing off a patent and of patent infringement damages which may be awarded.

Patent Filing Agent Qualification to Represent Foreign Clients

(Article 19)

Previously, only certain patent filing agents designated by the State Council could represent foreign clients in filing and prosecuting patent applications before the Chinese Patent Office. The amended Patent Law now provides that:

  • Any legally established patent filing agent may represent any foreigner, foreign enterprise or other foreign organization.
  • There will be an increased number of patent filing agents who are now able to serve foreign clients.

 

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