China’s New Patent Law

16 November 2020

China’s New Patent Law

Twelve years from the third amendment of China’s patent law, the fourth amendment was approved by the Standing Committee of the National People's Congress on October 17, 2020 - which will come into effect on June 1, 2021. Simply put, the new amendment covers the following: Easier enforcement and stronger protection of patent rights; More harmonized practice between CNIPA and USPTO in three aspects (design patent, drug patent linkage, and patent term adjustment); and easier to license granted patent (new open license system).

“The amendment newly introduces provisions regarding Open Patent Licenses, setting out mechanisms and procedures whereby patent owners can publish, through the CNIPA, their intentions to license their patents to any interested party,” says Rui Wang, Partner, Wanhuida Intellectual Property. “Annuities will be reduced or waived during the license period. For the companies with a large number of patents, a heavy burden of the patent annual fee has to be undertaken each year. It would provide a possibility of reducing or exempting the annual fee. The amendment also introduces punitive damages which encourage patentees to fight against infringement for their own benefit. On the other hand, companies would also be more prudent in order to avoid potential infringement disputes.”

She adds, “Moreover, the amendment encourages companies to share the benefits resulted from service inventions with the inventors, such as equities, options, and profit-sharing, etc. Nevertheless, companies might find such expense as an additional expense of research. Compared to statutory reward, the employers would exercise much more caution for equities, options and profit-sharing as a reward. Since the reword by means of the above is not compulsory, the actual influences it might bring about are still in doubt. As for “partial design” system introduced in this amendment, we may predict a growth of partial design applications which were not allowed before the amendment. This stands especially true for companies in the industry of GUIs. Since such regulation would be new to the Chinese Patent Law, companies might firstly seek insights in experience/practice of other jurisdictions. It will take some time to revise Implementation of the Patent Law and the Patent Examination Guidelines so as to align with the amendment of Patent Law. We hope these regulations and rules may provide more details and guides for future practice.”

According to Stephen Yang, Managing Partner, IP March, two types of applicants will like the new law, in particular, the companies pursuing design applications (as the partial design will be allowed) and drug companies (as patent term extension and linkage system will be available.

“Enforcement has been less than ideal in China, not only for foreign companies but for domestic companies as well,” he says. There has been a push from the business world for a strong patent protection system. Therefore such amendments are needed. In fact, the amendment process started many years ago and multiple versions of drafts were published. In the last year or so, phase one China-US trade agreement was reached and this requires China to change some provisions in the law. Therefore, we see some new changes which were not present in the previous drafts, such as patent term adjustment.”

He adds that some of the concepts present in the previous draft versions of the amendment were taken out in the final version, such as joint infringement, especially the provisions related to online infringement.

“It is not clear why the provisions were not included,” he says. “But I think the desire to address these issues will arise again in the future. Apart from these, I expect the new law will be largely welcomed by the IP community in China and around the world.”


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