China Patent System Overview


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China Patent System Overview

  1. 1. China Patent System OverviewMichael J. WiseManaging Partner China Region,Life Sciences Industry Co-ChairNovember 28, 2012
  2. 2. Outline Evolution of modern Chinese patent law Chinese patent law and examination basics Risks in and progress of the Chinese patent system Dual systems for IPR enforcement in China
  3. 3. Chinese Patent Law Evolution 1st Patent Law effective April 1, 1985 1st Amendment effective January 1, 1993(protected NCE & doubled term) 2nd Amendment effective July 1, 2001(TRIPS amendments) 3rd Amendment effective October 1, 2009(file China first, safe harbor, genetic resourcedisclosure, compulsory licensing) 4th Amendment in process
  4. 4. Chinese Patent Law Evolution:4th Amendment Highlights Goal is to improve patent enforcement Discovery: criminal punishment for defendantsfailing to provide, transferring, manufacturing, ordestroying evidence requested by the court Damages: administrative agency has the right todetermine and award damages in patent dispute Treble damages for willful infringement
  5. 5. Chinese Patent LawThree Types of Chinese Patents Invention Patents (US utility patent equivalent) 20-year patent term Utility Model Patents (no US equivalent) 10-year patent term Design Patents (US design patent equivalent) 10-year patent term Patent term is measured from filing date
  6. 6. Chinese Patent LawNon-patentable Subject Matter Transgenic patents and animals Methods of diagnosing disease Methods of treatment Business methods Many software applications
  7. 7. Chinese Patent LawInventor Reward & Remuneration The entity that is granted a patent right shall awardto the inventor a reward Upon exploitation of the patented invention-creation,shall pay the inventor a reasonable remuneration Based on the extent of spreading and application ofthe invention-creation and the economic benefitsyielded (Article 16) Recommended that employers establish policies bycontract
  8. 8. Compulsory LicenseMarket BehaviorUpon the request of any entity or individual which isqualified for exploitation, a compulsory license maybe granted where: the patentee within 3 years from the issue of thepatent, and within 4 years from the filing of thepatent has not exploited or has not sufficientlyexploited the patent, or the patentee exercise of the patent right isconfirmed through judicial proceedings as amonopolistic act, to eliminate or reduce negativeinfluence of such act on competition. (Article 48)
  9. 9. Compulsory License“Not Sufficiently Exploited” Where patentee and licensee exploits the patent ina manner or on a scale that fails to meet domesticdemands on patented product or method. (Rule 73)
  10. 10. Compulsory LicenseEvidence for Request An organization or individual that applies for acompulsory license in accordance with Item (1) ofArticle 48 or Article 51 of this Law shall provideevidence to prove that they have, under reasonableconditions, proposed a request to the patentee forbeing licensed to exploit the patent, but fails toobtain such license within reasonable time period.(Article 54)
  11. 11. Compulsory LicensePublic Interest Where a national emergency or any extraordinarystate of affairs occurs, or where the public interestso requires SIPO may grant a compulsory license to exploit theinvention or utility model patent (Article 49)
  12. 12. Compulsory LicenseExport Patented Drugs For the purpose of public health, with regard topatented drugs, the SIPO may grant a compulsorylicense to manufacture such drugs and export themto countries or regions that conform to the provisionsof relevant international treaties to which thePeoples Republic of China has acceded. (Article50)
  13. 13. Compulsory LicensePatent Drugs Broadly Defined Drugs entitled to patent right referred to in Article 50of the Patent Law shall mean any patented productin the field of medicine that is needed to solve publichealth problems or any product that is directlyobtained in accordance with a patented process,including: the active ingredients entitled to patent right thatare needed for the manufacture of the product; and the diagnostic supplies required for the useof the product. (Rule 73)
  14. 14. Compulsory LicenseImprovement Patent If a latter patent had made significant technologicaladvancement with remarkable economicsignificance, compared with a former patent, and theexploitation of the latter relies on the exploitation ofthe former, the SIPO may, upon the application ofthe latter patentee, grant a compulsory license toexploit the former invention or utility model. (Item 1,Article 51)
  15. 15. Compulsory LicenseImprovement Patent Cross License Under the circumstance that a compulsory licensefor exploitation is granted in accordance with thepreceding paragraph, the SIPO may, uponapplication by the former patentee, grant acompulsory license to exploit the latter Patent. (Item2, Article 51)
  16. 16. No Compulsory LicensesHave Been Granted in China In a high-profile example from 2003 SARS, aChinese company applied for a Compulsory licensefor the Roche-owned drug Tamiflu, but thegovernment denied the request.
  17. 17. Chinese Patent ExaminationMade in China, File in China First Chinese entity or individual Invention made in China Shall file for patent first in China (Article 20) Violation of Article 20 and disclosure of an importantState secret may lead to disciplinary sanction orcriminal liability (Article 71)
  18. 18. Chinese Patent ExaminationSIPO Foreign Filing Secrecy Review Request in advance by filing a detailed descriptionof the technical solution Request with or after a Chinese application butbefore a foreign application PCT application in China is an automatic request Patent Law Implementation Rules, Rule 8
  19. 19. Chinese Patent ExaminationInvention Patent Claim Amendments Permissible voluntary at request for substantive examination voluntary within 3 months after notification of entry intosubstantive examination responsive to defects raised in an office action Impermissible removing or changing a technical feature whichbroadens the scope of an independent claim amending a claim to lack unity with the initially claimedsubject matter a new claim directed to a technical solution notpresented in the initial claims
  20. 20. Chinese Patent ExaminationDivisional Practice Divisional application is available No terminal disclaimer practice All voluntary divisionals must be filed within 2months of the allowance of the parent application After the deadline, no voluntary divisionals, must beresponsive to a unity of invention objection
  21. 21. Patent Risks in China Patents remain a relatively new concept Patent law poorly understood Partners frequently lack patent protection Commingling of government & business complicatesIP issues Local protectionism can inhibit patent enforcement Chinas Courts tend not to award large damagesand pretrial injunctive relief FCPA issues
  22. 22. China Patent System Progresses Goal: become innovation society by 2020 Government promotes patenting Domestic entities utilize the patent system Judiciary becoming more transparent Domestic entities not favored in patent suits
  23. 23. China Patent System Progresses:Government Promotes IP 12th Five-Year Nat’l Economic Plan includes IP Transition "made in China" to "invented in China" SIPO commissioner Tian Lipu:The creation, application, protection and management ofself-reliant IPR will be promoted with focus on scientificdevelopment, accelerating economic transformationdevelopment and building an innovation country. Government subsidizes patenting costs at thenational, provincial, city and district levels
  24. 24. China Patent System Progresses:More Transparent Judiciary Publication of IP cases by China’s SupremePeoples Court has become routine First publication of "Intellectual Property Protectionby Chinese Courts in 2009" by the SupremePeoples Court Supreme Peoples Court interpretation of ChinasPatent Law concerning patent infringement casesissued in December 2009
  25. 25. China Patent System Progresses:More Domestically Owned PatentsIn 2011: China received 1.63 million patent applications,526,000 of which were for invention patentapplications. For the first time, the domestically owned validinvention patents exceeds 50% of the total validinvention patents in China.
  26. 26. China Patent System Progresses:Patent Applications Received by SIPO02000004000006000008000001000000120000014000001600000180000019971999200120032005200720092011ForeignDomestic
  27. 27. China Patent System Progresses:Patent Granted by SIPO02000004000006000008000001000000120000019971999200120032005200720092011ForeignDomestic
  28. 28. Issued US PatentsOriginating from China05001000150020002500300035004000199719981999200020012002200320042005200620072008200920102011
  29. 29.  Administrative process Local level & jurisdiction Judicial process Typically an intermediate Court National jurisdiction Key differences Speed Sophistication Damages Validity is decided by Patent Re-examination BoardDual System for IP Enforcement
  30. 30. IP Protection In China Progresses:More Cases, More $$In 2011: The administrative IPR enforcements involved morethan 3.4 billion RMB (~600M USD) of infringingproducts. The criminal proceedings involved over 500 billionRMB (~80 billion USD) of infringing products Patent administrative enforcement increased 65.5% Patent judiciary enforcement increased ~35%