Key Points of the New Amendments to the Chinese Patent Law

Key Points of the New Amendments to the Chinese Patent Law January 2021

China’s National People’s Congress approved the amendments for the China Patent Law on 17 October 2020, which will come into force on 1 June 2021. Kirwin Lee summarises several key changes brought by these amendments.

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China’s National People’s Congress approved the amendments for the China Patent Law on 17 October 2020, which will come into force on 1 June 2021. This is the fourth time the Chinese patent law was revised, and the amendments contain significant changes of the patent system in China.

The latest revisions aim to address three key aspects: to strengthen the protection of the legal rights and interests of patentees, to promote the implementation and use of patents, and to improve the patent examination system. We have summarised below several key changes brought by these amendments.

(1) Strengthened Protection of Patentee Rights (General) Increasing Statutory Damages According to the new Patent Law, the maximum amount of statutory damages that can be awarded to a patentee has been increased from RMB 1m to 5m (~ GBP 567k), and the minimum amount has been increased from RMB 10,000 to 30,000.

This is favourable news for patentees, as for a majority of successful patent infringement cases statutory damages are granted instead of actual damages or an account of profits, partially due to the difficulties in providing loss or profit (or royalties).

Introducing Punitive Damages The new amendments also introduce the possibility of up to five times of the original damages (based on the losses incurred to the patentee, the profits gained by the defendant, or multiples of reasonable patent royalties for the patent in question) as punitive damage in cases of serious willful patent infringement.

The introduction of punitive damages is expected to provide a strong deterrent for intentional and incessant patent infringers.

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Haseltine Lake Kempner | Update 2021

“This amendment appears to be a swift response to the current situation surrounding COVID-19” Shifting Evidence Disclosure Obligation to Defendants As mentioned above with respect to statutory damages, it can be difficult to prove damages in patent infringement proceedings, sometimes due to the unwillingness of the defendant to provide financial documentation. Under the new Patent Law, a court can order the defendant to disclose financial evidence related to the calculation of damages.

If the defendant refuses to comply, the judge has discretion to determine damages based on claims and evidence submitted by the patentee.

(2) Increased Protection for Design Patents Protection of Partial Designs The concept of “partial designs” is formally introduced by way of the new amendments. This provides applicants with much more freedom and flexibility in design protection, as certain design features can be protected more conveniently without being restricted by commonplace features existing in the same product.

This change brings the Chinese system in line with the design protection practice offered in many other jurisdictions, such as in Europe and the UK. We can certainly expect a consequential rise in design filing numbers following this change.

Extension of Design Patent Term The term for design patent protection has been extended from 10 years to 15 years. It is believed that this new provision signifies that China is prepared to join the Hague Agreement, which stipulates a minimum of 15 years protection term for member countries.

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(3) Increased Protection for Pharmaceutical Patents Patent Linkage System The amended Patent Law introduces a patent linkage system which aims to allow early resolution of patent disputes between patentees and generic companies during the drug review and approval process. According to the amendments, a patentee can bring a patent infringement dispute before the court or the local patent administrative office if they believe the subject matter of a drug market authorisation application falls within the scope of the patent. The National Medical Products Administration (i.e. China’s pharmaceutical regulatory body) can decide on whether to suspend the regulatory approval process based on the effective judgement from the court or local patent administrative office.

Patent Term Extension due to Delays in Examination The new amendments further enable CNIPA to adjust the term of a patent to compensate for unreasonable delays in the patent examination process, at the request of the patentee. This adjustment is possible only if the patent is granted after at least four years from the filing date, and at least three years after the filing of the request for substantive examination.

Patent Term Extension and Adjustment

Implementation of Open License

In order to compensate for delays caused by the long regulatory approval period, with the amended Patent Law it will be possible to obtain patent term extensions for pharmaceutical patents.

Upon request by the patentee, a compensation term may be granted for a patent covering a new drug that has been approved to be put on the market, for a maximum of 5 years. The total effective patent term after the new drug is approved shall not exceed 14 years.

Under the new patent open license system, a patentee can declare their intention to “openly license” their patents to any interested party with the CNIPA, as well as set the license fees and terms for public records. To encourage participation in the open license system, annual fees will be reduced or waived during the license period. This change aims to improve the commercialisation rate of granted patents in the country and to increase the efficiency of patent licensing processes.

(4) Other Noteworthy Changes New Exceptional Condition for Novelty Grace Period The amended Patent Law adds “[a] first disclosure for the purpose of public interest in the event of a state of emergency or an extraordinary situation in the country” as one of the exceptional circumstances under “disclosures not causing loss of novelty”.

This amendment appears to be a swift response to the current 3

situation surrounding COVID-19, as it was specifically proposed to “meet the current needs of fighting the pandemic” (COVID-19), more particularly to “better respond to emergencies and extraordinary situations such as epidemic prevention and control” and “promote the timely application of related inventions and creations in disease treatment”.

Haseltine Lake Kempner | Update 2021

Contact us Kirwin Lee Senior Associate klee@hlk-ip.com

Daniel Chew Partner dchew@hlk-ip.com

Li Min (Ellie) Chief Representative China Office lmin@hlk-ip.com