On October 17, the 22nd meeting of the Standing Committee of the 13th National People's Congress passed the decision on amending the Patent Law.  President Xi Jinping signed Presidential Decree No. 55 to be announced.  The newly revised Patent Law will be formally implemented on June 1, 2021.

The interpretation of the revised law can have different perspectives.  This article takes the difference between the two versions of the Patent Law before and after the amendment as the entry point, trying to interpret the changes and causes of the main content of the new Patent Law from the evolution of the revised content.

I. Incorporate a new punitive damages system, increase the statutory damages, and improve the burden of proof

In the newly revised Patent Law, there is a new incorporation of intentional infringement of patent rights.  If the circumstances are serious, the amount of comprensation for damage may be determined from no less than one time and no more than five times of the amount determined according to the aforementioned methods. The amount of compensation is determined to show China’s attitude and determination to strictly protect intellectual property rights in accordance with the law, increase the cost of infringement, make infringers pay a heavy price, and give full play to the deterrence of the law.

At the same time, the upper limit of statutory compensation was raised to 5 million CNY, and the lower limit was raised to 30,000 CNY to implement strict intellectual property protection, significantly increase the cost of violations, and reflect the orientation of increasing patent protection and encouraging innovation.

The evidence rules have been further improved.  When the right owner has tried his best to provide evidence, and the account books and materials related to the infringement are mainly in the hands of the infringer, the people's court can order the infringer to provide it, thereby reducing the burden of evidence on the right owner.

The statute of limitations for infringement of patent rights was changed from two years to three years.  The revised law clarified the jurisdiction of administrative handling of patent disputes, including regulations on levels, regions, same region, and cross-regions.  The national level handles patent infringement disputes that have a significant national impact; local departments handle cases within their own administrative regions; for cross-regional cases, it is handled by relevant departments of the higher-level government.

II．Promote the transformation of patents, strengthen public services for patent information, and incorporate a new patent open licensing system

For Chinese enterprise entities, the new entity in the Patent Law can dispose of the right to apply for patents and patent rights for service inventions and creations in accordance with the law, and promote the implementation and application of related inventions and creations.  The State encourages the company having patent rights to implement property rights incentives, adopting methods such as stock rights, options, and dividends, so that inventors or designers can reasonably share the benefits of innovation.

The timely publication, dissemination and effective use of patent information are of great significance to improve the starting point of innovation, reduce repeated research and development, avoid infringement of the patent rights of others, and promote innovation.  In order to further meet social needs, such as the lack of timely information disclosure such as the re-determination of the scope of rights in the current patent invalidation process, the patent information application and service system has been systematically arranged for the overall arrangement of patent information.  The regulations clarify the responsibilities of the patent administration department under the State Council for the construction of the patent information public service system, stipulate that it provides basic patent data, and clarify the responsibilities of the local patent administration department to strengthen patent public services and promote patent implementation and utilization.

If any company or individual intends to implement an open-licensed patent, it shall notify the patentee in writing and pay the license fee in accordance with the published method and standard of the license fee, and then obtain the patent license. "During the implementation period of the open license, the patentee will be granted a corresponding reduction or exemption of the annual patent fee." "The patentee who implements the open license may negotiate with the licensee and grant an ordinary license, but shall not grant exclusive rights or exclusive permission to the patent."

The open licensing system is an important legal system that promotes the implementation of patent transformation. Its core is to encourage patentees to open their patent rights to the society, promote the connection between supply and demand and patent implementation, and truly realize the value of patents.  This revision of the Patent Law is based on China’s national conditions, drawing on internationally mature experience, and stipulates the open license statement and its effective procedures, the licensee’s procedures and rights and obligations for obtaining an open license, and the corresponding dispute resolution path, with a view to resolving it through government public services about the problem of information asymmetry between the supply and demand sides of patented technology, so as to enable any company or individual to easily obtain patent licenses, reduce transaction costs, and improve patent conversion efficiency.  After the patentee makes an open licensing statement, those who intend to exploit the patent only need to pay according to the standards declared by the patentee, without the prior permission of the patentee, and no need to file the "Patent Licensing Contract".

III．Improve design-related systems

"Appearance design refers to a new design that is aesthetically pleasing and suitable for industrial applications for the overall or partial shape, pattern or combination of the product, as well as the combination of color, shape and pattern."

The protection of partial shape is incorporated.  In the practice of design innovation, designers sometimes make subversive overall product designs, but more often they make improved design innovations for certain parts of the product.  Therefore, whether it is from the perspective of enterprise product design innovation or from the perspective of design development rules, partial design innovation of products has become an important way of product design.  At the same time, major countries and regions such as the United States, Japan, Europe, and South Korea all protect partial designs.  As companies continue to "go global", the demand, for Chinese companies to obtain design protection abroad has increased significantly.  The protection of partial designs meets the needs of enterprises and conforms to international common practices.  This will enable Chinese enterprises to make better use of the rules, further develop the international market, and improve their international competitiveness.

The protection period of design patents is extended.  The protection period of design patents was extended to 15 years to meet the needs of enterprises to apply abroad, to meet the diversified needs of innovation entities for protection periods.

The domestic priority system for design patent applications is incorporated.  It is clarified that the applicant who filed a domestic patent application on the same subject within six months from the date when the domestic design first filed a patent application can have priority, thereby reducing application costs and giving the design applicant further improvements opportunities to design and adjust the scope of protection.

All aspects of China's industrial design changes in this amendment are also China's efforts to further integrate with international standards and create conditions for China to join the Hague Agreement Concerning the International Registration of Industrial Designs.

IV．Pharmaceutical industry innovation

A new provision on compensation for the term of pharmaceutical patents has been incorporated.  At this stage, with the development of China's pharmaceutical industry, pharmaceutical companies have gradually increased their R&D investment and innovation capabilities for innovative drugs.  Corresponding system design is required to ensure their enthusiasm for new drug research and development.  At the same time, in order to promote the early listing of foreign new drugs in our country, improve the availability of drugs, and protect public health, it is necessary to establish a drug patent term compensation system based on China’s national conditions and learn from the experience of relevant countries and regions.  Occupying time, for new drug-related invention patents that have been approved for marketing in China, compensation shall be granted for the duration of the patent at the request of the patentee.  The compensation period shall not exceed five years, and the total effective patent right period after the new drug is approved for marketing shall not exceed 14 years.

In the process of drug marketing review and approval, if a dispute arises between the drug marketing authorization applicant and the relevant patentee or interested party due to the patent right related to the drug applied for registration, the relevant party can sue the people’s court and request the drug to be registered.  A judgment shall be made on whether the relevant technical solutions fall within the scope of protection of the patent rights of others’ drugs.  The drug regulatory department of the State Council may, within the prescribed time limit, make a decision on whether to suspend the approval of the listing of relevant drugs based on the effective judgment of the people's court.

The newly-incorporated early resolution procedures for drug patent disputes are designed to resolve potential patent disputes as soon as possible before the relevant drugs are marketed.  Providing alternative dispute resolution channels for relevant parties can better balance the interests of patentees, generic drug companies and the public, improve the availability of drugs, and protect public health.

V．Improve the patent grant system

In order to better respond to emergencies and extraordinary situations such as epidemic prevention and control, promote the timely application of related inventions and creations in disease treatment and other aspects, solve public health problems, and respond to the needs of innovative entities to relax exceptions without loss of novelty, in the case of non-loss of novelty exception, “in the event of a state of emergency or extraordinary circumstances, the first disclosure for the purpose of public interest” is incorporated in this amendment.  This can not only meet the current practical needs of fighting the epidemic, but also leave room for future application in other emergencies or extraordinary circumstances.

Where a patent infringement dispute involves a utility model patent or a design patent, the people’s court or the administrative department of patents may require the patentee or interested parties to issue a document after the patent administration department of the State Council has searched, analyzed and evaluated the relevant utility model or design patent.  The patent right evaluation report made is used as evidence for the trial and handling of patent infringement disputes; the patentee, the interested person or the accused infringer may also actively issue the patent right evaluation report.  It is specifically incorporated in this amendment that the accused infringer can also actively issue a patentability evaluation report, which protects the accused infringer's right to obtain evidence in patent infringement litigation, increases the fairness, flexibility and initiative of the parties in patent infringement disputes, which is conducive to the litigation process.

October 26th, 2020