This document summarizes a case study about Pfizer's battle to protect its intellectual property rights for Viagra in China. It provides background on China's pharmaceutical market and regulations regarding patent and trademark protection. It describes how Pfizer was granted a Viagra patent in China in 2001, but it was invalidated by local companies in 2004. Pfizer engaged in legal battles over its Viagra trademark and 3D trademark, winning some cases but losing others.
2. infringements.
However, we must admit that IPR only has a history of some 20
years [in
China].
- Wang Jingchuan, commissioner of China’s State Intellectual
Property Office1
In April 1998, Pfizer Inc (“Pfizer”) launched Viagra, a
prescription drug for treating erectile
dysfunction, in the US and Europe with huge success. Chinese
media worldwide started
calling Viagra by a Chinese nickname, “ ” (“Weige”), meaning
“Great Elder Brother”.
One month later, Guangzhou Viamen Pharmaceutical Company
(“Guangzhou Viamen”), a
local company in China, registered “ ” (“Weige”) as its
trademark. Genuine Viagra pills
illegally imported from overseas and locally produced
counterfeits soon began to flood the
market. It was not until July 2000 that Pfizer was approved to
sell Viagra in China, and the
company was officially granted its patent for Viagra in
September 2001. However, this patent
was jointly challenged by 12 local companies within a month
and became invalidated in July
2004. Meanwhile, Guangzhou Viamen had launched its
independently developed erectile
dysfunction drug using the “ ” (“Weige”) trademark and
Viagra’s three-dimensional
trademark (“3D trademark”).
Pfizer appealed for its patent right through the court in Beijing,
and sued Guangzhou Viamen
and its business partners for infringing Pfizer’s unregistered
well-known trademark, “ ”
3. (“Weige”), and its 3D trademark for Viagra. It won the 3D
trademark and patent lawsuits in
December 2006 and September 2007, respectively, but lost in
the “ ” (“Weige”)
trademark litigation in July 2009. These outcomes were not
expected to affect Viagra’s
1 Ma, J. (19 May 2005) “Give Us More Time to Beat Piracy,
Urges Official”, South China Morning Post.
HKU902
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Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
2
meagre sales in China because counterfeiters, who copied from
both Pfizer and its
competitors, had reaped most of the market share since 1998. In
late 2009, Pfizer’s
management was trying to figure out what had gone wrong in its
market entry strategy for
Viagra, how to generate more sales before its patent in China
expired in 2014, and what
should be done to better protect the intellectual property rights
4. (“IPR”) for the new drugs it
would launch in the country.
Market Dynamics of the Global Pharmaceutical Industry
The global pharmaceutical industry was worth approximately
US$740 billion in 2008.2 It was
expected to grow at a compound annual rate of 8% to reach
US$1,043 billion in 2012. North
America was the biggest market, with a share of almost 48%,
followed by Europe (30%) and
Japan (9%).3 However, patent expiration of major drugs and
increased usage of generics was
expected to hamper growth in North America. Asia Pacific was
projected to become the most
lucrative region in the future because of a huge untapped
population and strong economic
growth in major countries.4 Research and development
(“R&D”) investment for drugs was
costly with high risk of failure, and it often took many years
before a new drug could be
launched. The R&D costs for a new drug launched in the US in
1994 2000 were around
US$71 million to US$118 million on average.5 The most
expensive class of new drugs, self-
originated new chemical entities (“SNCEs”), were created
entirely in-house by single drug
companies. The average R&D cost for an SNCE was estimated
at US$802 million.6
To decrease the risk associated with developing new drugs and
to achieve economies of scale,
many drug companies pursued a growth strategy of acquiring
competitors that manufactured
proven drugs. Such industry consolidation resulted in a few
mega-sized global players, such
5. as Pfizer, Sanofi-Aventis, GlaxoSmithKline Plc and
AstraZeneca Plc. These companies
increasingly relied on a few billion-dollar blockbuster drugs to
generate most of their
revenues. For example, Pfizer generated 60.5% of its
pharmaceutical revenues from nine
drugs in 2008 [see Exhibit 1]. To recoup the high R&D costs of
these drugs, a premium
pricing strategy was usually adopted. The resulting high gross
profit margin made
counterfeiting an attractive business. Therefore, most global
drug companies invested
substantial legal resources to protect their IPR through
trademarks and patents.
Trademark Protection for Drugs
A trademark was a visible sign that enabled people to
distinguish the products or services of a
company from those of others. It had to be used on the
company’s products or their packaging,
or in the services7 provided by its suppliers. Possible formats of
a trademark included words,
graphics, letters, numbers, 3D symbols8 and colour
combinations, as well as combinations of
these elements. Besides having trademarks in the form of words
and logos, some key drugs
were designed in specific shapes and colours with a 3D
trademark. Unauthorised use of a
trademark similar or identical to a registered trademark on
similar or identical goods was
2 Pharma and Biotech Industry Reports (May 2008) “Breakdown
of the Global Pharma Market”, http://www.pharma-
reports.com/shop/item.asp?affillink=UFM&itemid=317
(accessed 15 September 2009).
6. 3 PRLog (2 October 2008) “Global Pharmaceutical Market
Forecast to 2012”, http://www.prlog.org/10124036-global-
pharmaceutical-market-forecast-to-2012.pdf (accessed 15
September 2009).
4 Ibid.
5 Public Citizen, “Critique of the DiMasi/Tufts Methodology
and Other Key Prescription Drug R&D Issues”,
http://www.citizen.org/congress/reform/drug_industry/articles.c
fm?ID=6532 (accessed 17 September 2009).
6 This figure was compiled from 68 drugs launched in the US in
the late 1990s by 10 drug companies. See: Ibid; Tufts Center for
the Study of Drug Development (1 November 2001)
“Backgrounder: A Methodology for Counting Costs for
Pharmaceutical
R&D”,
http://csdd.tufts.edu/NewsEvents/RecentNews.asp?newsid=5
(accessed 17 September 2009).
7 For example, the trademark of a courier company appeared on
envelops provided to customers for putting their documents
being couriered.
8 An example of a 3D symbol was Coca-Cola’s contoured
bottle.
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This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
7. 09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
3
deemed trademark infringement. However, a trademark
registered in a particular class of
products might be hijacked for use by another company in a
different product class,9 except
for well-known trademarks. Hence trademark protection for
drugs was not always bulletproof.
Patent Protection for Drugs
Global drug companies usually applied for multiple patents for
a major drug, such as patents
for its chemical ingredients, composition, production process
and applications. After a drug’s
patent expired, cheaper generic versions launched by other
companies would lead to a rapid
drop in its revenue [see Exhibit 2]. Therefore, drug companies
tried to extend patent
protection through product reformulations and upgrades. High
drug prices resulting from
patent protection had triggered heated debates on patent rights
versus patients’ rights of
access to life-saving medications, especially in developing
countries. To make drugs more
affordable to the public, some countries did not grant drug
patents, while others only allowed
short patentable periods or imposed compulsory licensing for
low-priced generic versions.
Differential pricing among countries often resulted in a gray
market with parallel imports,
posing financial threats to global drug companies.
8. China’s Pharmaceutical Industry and IPR Protection for Drugs
China’s population was 1.3 billion people, of which 450 million
lived in cities and roughly
175 million belonged to the middle class.10 In 2008, China’s
drug market was the world’s
fifth-largest,11 with total revenues of US$24.5 billion. It was
expected to grow by 22% per
year to reach between US$68 billion and US$78 billion by
2013, making China the third-
largest market, behind the US and Japan.12 Despite this huge
market size, there was no billion-
dollar blockbuster drug in China. Products of global companies
accounted for about 20% of
drugs sold in the country.13 It was estimated that 97% of drugs
produced by local companies
were generics or counterfeits.14 The proliferation of fake drugs
posed serious threats to public
health and had resulted in reputation damage to legitimate drug
manufacturers. In 2001 alone,
192,000 patients were killed by fake drugs.15
Patent Protection for Drugs in China
The Patent Office of China’s State Intellectual Property Office
(“SIPO”) was responsible for
processing patent applications [see Exhibit 3A]. There were
three types of patents in the
country: invention, utility model and design patents [see Exhibit
4]. A first-to-file system was
adopted as opposed to a first-to-invent system like that of the
US. Patent protection for
pharmaceutical products had only been available since January
1993, after the first
amendment to China’s Patent Law. Drug companies could apply
for method-to-use 16
9. invention patents to protect the IPR of prescription drugs, but
the review process of such
patents required in-depth investigation by SIPO and often took a
few years. In August 2000,
9 For example, a non-well-known trademark for a sleeping pill
that helped people fall asleep much faster might be hijacked by
another company for its pillow products, or by a company that
sold sleeping bags. Because these products would be in a totally
different product category, usage of the same trademark as a
drug would not constitute trademark infringement.
10 Yuan, R. (15 April 2007) “Pharmaceutical Operations
Expand in China”, Genetic Engineering and Biotechnology
News, 27
(8),
http://www.genengnews.com/articles/chitem_print.aspx?aid=209
8&chid=4 (accessed 2 September 2009).
11 The top four countries were the US, Japan, Italy and
Germany.
12 China Daily (24 August 2009) “Pharmaceutical Giants Eye
China’s Booming Market”.
13 Ostrow, N. and Ying, T. (29 September 2004) “Pfizer Fights
Revocation of Viagra Patent by Chinese”, National Post.
14 Wu, Y. and Labwu, Z. (1 November 2007) “Protect Your
Patent Rights in China”, PharmaAsia,
http://www.pharmaasia.com/article-6659-
protectyourpatentrightsinchina-Asia.html (accessed 2 September
2009).
15 In-Pharma Technologist (14 March 2005) “One in Seven
Drugs Fake Worldwide, Claims Report”, http://www.in-
10. pharmatechnologist.com/Industry-Drivers/One-in-seven-drugs-
fake-worldwide-claims-report (accessed 2 September 2009).
16 Such a patent applied to a new use of a pharmaceutical
compound which itself might not necessarily be novel.
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Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
4
China’s Patent Law was amended a second time in order to
comply with the TRIPS 17
agreement of the World Trade Organisation (“WTO”) [see
Exhibits 5A and 5B]. Article 26
of the amendment required information disclosure for invention
patents and utility model
patents [see Exhibit 5C]. Patent protection for specific chemical
compounds was introduced,
but compounds had to be novel in order to qualify for an
invention patent.
Under Article 45, a request for invalidating a patent could be
filed with the Patent Re-
Examination Board (“PRB”) of SIPO at any time after it was
granted. Possible grounds for
invalidation included lack of novelty and inventiveness,
11. insufficient information disclosure,
and unsupported patent claims [see Exhibit 5D]. Companies that
disagreed with a ruling by
the PRB could appeal to a court [see Exhibit 3B]. According to
government statistics released
in 2005, one in 10 of such appeals succeeded.18 Pharmaceutical
companies were amongst the
first to engage in patent litigation in China due to the large
financial investments at stake.
However, ineffective IPR protection remained one of the major
concerns for foreign
companies due to lax law enforcement, government
bureaucracy, local protectionism and
corruption in the country. On the other hand, most
pharmaceutical patents in China were filed
by manufacturers of traditional Chinese medicines, and were
often generic-type utility model
patents that did not represent major pharmaceutical innovation
or R&D investment. These
patents were typically approved without substantive review by
SIPO.19
Trademark Protection for Drugs in China
The Trademark Office of SIPO handled trademark applications
and related issues. Under
China’s first-to-file trademark system, a trademark application
would be approved by SIPO,
after which other companies could file an objection with the
Trademark Review and
Adjudication Board (“TRAB”) within three months. Possible
grounds for invalidating a
trademark included lack of distinctiveness, violation of the non-
conflict principle between
trademarks, and direct indication of certain characteristics of
the products [see Exhibit 6].
According to Article 11, paragraph 2 of China’s Trademark
12. Law, the trademark for a
pharmaceutical product was not allowed to indicate the drug’s
potency or superior functions.
Companies that disagreed with a ruling by TRAB could request
judicial review at the court.
Under Article 13 of China’s Trademark Law, a small number of
well-known trademarks were
protected by their first-to-use trademark rights [see Exhibit 7A].
The criteria for being
classified as a well-known trademark depended on a trademark’s
reputation, duration of use,
geographical scope of publicity, history of protection as a well-
known trademark, and other
factors contributing to its reputation. Application for the
recognition of a well-known
trademark could be made only when a trademark dispute
occurred and a request for special
protection of a well-known trademark had been filed with SIPO,
or when a well-known
trademark was recognised by the court in litigation.20 Under
China’s Anti-Unfair Competition
Law, unauthorised use of the trademark and packaging of
another company’s well-known
products, or making false representation as to the manufacturer
and place of origin of the
goods produced by another company, constituted unfair
competition.
If a registered trademark had not been used for three
consecutive years, other companies
could file a request with the Trademark Office for its
cancellation. It was therefore advisable
17 TRIPS was the World Trade Organisation’s Agreement on
13. Trade-Related Aspects of Intellectual Property Rights, which
was
formulated in the 1986–1994 Uruguay Round of multilateral
negotiation. This agreement introduced intellectual property
rules
into the global trading system for the first time.
18 Zamiska, N. (3 June 2006) “Beijing Court Backs Patent
Protection for Viagra”, Wall Street Journal.
19 Hobbs, M. (5 June 2006) “First Global IP Forum in China
Sparks Interest”, Law.com,
http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=900005
549663 (accessed 2 September 2009).
20 Hong Kong Trade Development Council (2005) Practical
Guide to IPR Protection in China: How to Protect Your Brand,
1st
Edition, TDC Research: Hong Kong, pp. 60 61.
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This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
5
14. for a company to retain evidence of using its trademarks in its
products or services in case any
dispute occurred. A mere statement of use was not sufficient to
prevent cancellation of an idle
trademark.21
Pfizer’s Global Launch of Viagra
Pfizer was a research-based global drug company based in New
York. It had achieved rapid
growth through acquisition starting in 2000,22 and in 2004
became the world’s largest drug
company in terms of revenue [see Exhibit 8]. Its R&D expenses
amounted to 15.3 16.8% of
its revenues in 2002 2008.
Viagra: The First Erectile Dysfunction Drug in Pill Form
Erectile dysfunction was one type of male impotence in which
the penis failed to become
erect during sexual intercourse. This symptom was caused by
insufficient increase in blood
flow to the penis due to factors such as cardiovascular
problems, enlarged prostate glands,
taking certain medications, stress, depression and aging.
Smoking and excessive alcohol
consumption also increased the risk of having this problem. It
was estimated that around half
of men over 40 had at least mild or occasional erectile
dysfunction. The percentage of
sufferers increased with age and almost all men over 80 were
affected. Nevertheless, typical
users of related drugs were married men in their early 60s who
wanted to maintain their sex
lives.23
In the early 1990s, Pfizer had been conducting research on a
15. chemical called sildenafil24 for
treating hypertension and other cardiovascular diseases. In
clinical trials, sildenafil failed to
generate the expected results, but some male patients
experienced erection under certain
dosages. Pfizer developed this chemical into an erectile
dysfunction drug named Viagra [see
Exhibit 7B for photo]. Viagra was first launched in the US in
April 1998 at a retail price of
US$10.00 per 50mg pill. Other erectile dysfunction drugs
available were either administered
via injection or applied topically, whereas Viagra was a pill that
could be easily administered
orally. Aided by widespread media coverage and references in
racy comedies on late-night
television, Viagra took the market by storm, with over US$1
billion in sales in 1999 [see
Exhibit 8B]. In November 1999, it accounted for 92% of new
prescriptions for treating
erectile dysfunction in the US.25 Although the total R&D costs
of Viagra exceeded US$1
billion26, any good-sized drug company would be able to
manufacture sildenafil, Viagra’s
active ingredient.
How Viagra Worked and Its Patent Protection
Phosphodiesterase type 5 (“PDE5”) was an enzyme that
constricted blood vessels in the penis.
The active ingredient in Viagra, sildenafil, worked by inhibiting
the activity of PDE5. This
resulted in an increase in blood flow to the penis, facilitating
erection upon sexual stimulation.
Viagra had relatively few side effects and it worked about 70%
of the time.27 After ingestion,
it took 30 minutes for the drug to take effect, after which it
remained effective for around four
16. 21 Ibid, pp. 50 52.
22 Pfizer’s major acquisitions included the Warner-Lambert
Company in 2000, Pharmacia Corporation in 2003 and Wyeth
Pharmaceuticals in 2009. It had also acquired many small- and
medium-sized drug companies and biotechnology firms.
23 Berenson, A. (4 December 2005) “Sales of Impotence Drugs
Fall, Defying Expectations”, New York Times.
24 The full chemical name of this compound was sildenafil
citrate, hereafter referred to as “sildenafil” for simplicity.
25 Keith, A. (March April 2000) “The Economics of Viagra”,
Health Affairs, 19 (2), pp. 147–157,
http://content.healthaffairs.org/cgi/reprint/19/2/147 (accessed 9
September 2009).
26 (2005 1 18 ) “‘ ’ ‘ ’ ”, [Mei, L. (18 January 2005)
“Contentions in the ‘Weige’ Litigation: ‘Battle between
Standards’ is the Critical Force Behind”, China Economic
Weekly],
http://media.163.com/05/0118/13/1ACOT0SR0014180O.html
(accessed 13 August 2009).
27 Berenson, A. (4 December 2005) “Sales of Impotence Drugs
Fall, Defying Expectations”, New York Times.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
17. 09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
6
hours. However, Viagra would not increase sexual desire or
enhance the sexual experience for
normal men. It mainly catered to those who were sexually
aroused but unable to achieve
erection in a natural way. People taking other drugs that
contained nitrates were advised not
to take Viagra, and those over 65 or having certain medical
conditions28 were recommended
to take a low dosage of 25mg for safety reasons.
In June 1993, Pfizer filed a patent (“First Patent”), titled
“Pyrazolopyrimidinones for the
Treatment of Impotence”, in the UK. This patent covered the
whole class of
phosphodiesterase (“PDE”) chemicals, which included
sildenafil, for oral treatment of erectile
dysfunction.29 In May 1994, Pfizer filed a PCT application30
for sildenafil in treating erectile
dysfunction. Because the novel usage of sildenafil was for
cardiovascular disorders, this
patent had to be a “second-use” invention patent. However, this
patent was turned down in
countries including Bolivia, Columbia, Ecuador, Peru and
Venezuela because they did not
allow second-use pharmaceutical patents.31
Meanwhile, other major drug companies began researching
alternative PDE5 inhibitors for
treating erectile dysfunction. In 2000, Lilly ICOS LLC (“Lilly”)
challenged the validity of
18. Pfizer’s First Patent filed in the UK in 1993 because this patent
would prohibit the launch of
erectile dysfunction drugs developed by other drug companies
based on a PDE5 inhibitor
other than sildenafil. Lilly submitted evidence of three research
studies on the effect of PDE
chemicals in relaxing the smooth muscles of blood vessels, all
of which had been published
before Pfizer’s patent application.32 Thus the patent was
invalidated in the UK in November
that year because it was based on knowledge already in the
public domain before it was
granted.33 Pfizer failed in its appeal in the British High Court
in January 2002.34 Another
similar patent also became invalidated by the European Patent
Office, but Viagra was
protected against generic versions in these places by Pfizer’s
patent on the sildenafil chemical
compound. On the whole, Viagra was still patent-protected in
most large markets.
Turbulence Prior to Viagra’s Launch in China
In China, around 74% of men aged 60 69 suffered from erectile
dysfunction [see Exhibits
9A, 9B and 9C]. In 2004, the potential market size of erectile
dysfunction drugs was estimated to
be between US$7.2 billion and US$12.0 billion35.36 According
to Professor Wang Yixin of
28 Such medical conditions included serious liver or kidney
problems, high blood pressure, heart disease and prostate
problems.
See: Viagra.com, “Safety”, http://www.viagra.com/viagra-
19. safety.aspx (accessed 19 September 2009).
29 Castellano, R. (2006) “Patent Law for New Medical Uses of
Known Compounds and Pfizer’s Viagra Patent”,
IDEA Intellectual Property Law Review, 46 (2), pp. 283 315.
30 A PCT application was a single filing of an international
patent application under the Patent Co-Operation Treaty
(“PCT”),
formulated in 1970. A preliminary search would be conducted
by the International Searching Authority to verify the
patentability of the invention submitted in a PCT application,
after which each signatory country would handle the patent
examination and grant procedures independently. China acceded
to this treaty in November 1993.
31 Andrews, J. (2006) “Pfizer’s Viagra Patent and the Promise
of Patent Protection in China”, Locke Lord Bissell & Liddell
LLP,
http://www.lockelord.com/files/News/ab9ebdd4-621f-4432-
a383-1cae37df9ea1/Presentation/NewsAttachment/c5a9d67e-
bdd9-4c7e-97e9-
1d6efb6314dc/Andrews_Pfizers%20Viagra%20Patent.pdf
(accessed 2 December 2009).
32 The three documents submitted were: J. Rajfer et al. (1992)
“Nitric Oxide as a Mediator of Relaxation of the Corpus
Cavernosum in Respect to Nonadrenergic, Noncholinergic
Neurotransmission”, New England Journal of Medicine; Murray,
K.
(1993) “Phosphodiesterase VA Inhibitors”, Drug News and
Perspectives; Bush, M. (1993) “The Role of the L-Arginine-
Nitric-Oxide-Cyclic GMP Pathway in Relaxation of Corpus
Cavernosum Smooth Muscle”, Ph.D. Dissertation, University of
California, Los Angeles. See: Ibid.
20. 33 CNN (8 November 2000) “Pfizer Loses U.K. Patent”,
http://money.cnn.com/2000/11/08/worldbiz/pfizer/index.htm (6
November 2009).
34 Kyne, P. (8 July 2004) “Pfizer Overturned by China”, Wall
Street Journal.
35 US$1 = Rmb 8.28. From 1994 to July 2005, Rmb had been
pegged to the US dollar at this rate. For simplicity, this rate was
used throughout this business case, though the Rmb had
increased in value against the US dollar since July 2005.
36 (2004 4 12 ) “ ”, [Teng, C. (12 April 2004) “Yi Le Enters
Market with Extra-Low Price. Battle Resumes in China’s Weige
Market”, China News],
http://www.chinanews.com.cn/n/2004-04-12/26/424179.html
(accessed 13 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
7
Shanghai Second Medical University, there were a few key
misunderstandings of erectile
dysfunction in China: that it was not related to health, that it
21. could not be healed, and that
treatment was prohibitively embarrassing. On average, sufferers
who came to hospitals to
seek proper treatment only did so 22 months after onset, and
those who did were just 3 10%
of total sufferers.37 Many patients were inclined to use
unregulated, non-clinical means of
treatment instead. This was due partly to conservative social
attitudes towards sex and sexual
dysfunction, and partly to strong preferences for traditional
Chinese medicines, which were
credited with having fewer side effects than Western drugs. A
wide range of herbal
aphrodisiacs were available as health supplements, containing
ingredients such as snake, the
penis of deer or goats, and the bile of bears.
Pfizer’s Patent Application for Viagra in China
In December 1995, SIPO’s Patent Office began processing
Pfizer’s patent application for
sildenafil in China [see Exhibits 10 and 11]. Two types of forms
were required for
pharmaceutical patent applications in the country: the Right
Request Form ( ),
which explained the functions of the drug’s active chemical
ingredients, and the Patent
Description Form ( ), which contained laboratory data on the
drug’s chemical
ingredients.38 Because patents for specific chemical compounds
were not available in China at
that time, Pfizer applied for a method-to-use invention patent
instead. Its patent application
described nine preferred individual compounds, including
sildenafil citrate, and stated that
these compounds were useful in the treatment of erectile
dysfunction and that one of the
22. preferred compounds induced erections in impotent men.39
Pfizer had filed the patent claims
with the following appropriate wording:40
The use of a compound of formula (I) or a pharmaceutically
acceptable salt
thereof, or a pharmaceutical composition containing either
entity, for the
manufacture of a medicament for the curative or prophylactic
treatment of
erectile dysfunction in a male animal, including man.
- Pfizer’s application to patent Viagra in China41
This patent was a second-use invention patent in which the
compound itself was not a novel
one. Both first-use and second-use patents for pharmaceutical
compounds were allowed under
China’s Patent Law.42 However, because Pfizer had not yet
started local clinical studies for
Viagra, its patent application did not contain relevant clinical
data.
37 (2005 6 21 ) “ ”, 21 [Shi, Y. (21 June 2005) “Four
Pharmaceutical Giants Gather in China’s Market to Compete for
Weige”, 21st Century Business Herald],
http://media.163.com/05/0621/12/1MP5CVEK00141EQ2.html
(accessed 13 August 2009).
38 (2005 1 18 ) “‘ ’ ‘ ’ ”, [Mei, L. (18 January 2005)
“Contentions in the ‘Weige’ Litigation: ‘Battle between
Standards’ is the Critical Force Behind It”, China Economic
Weekly],
http://media.163.com/05/0118/13/1ACOT0SR0014180O.html
23. (accessed 13 August 2009).
39 Wise, M., Wang, Z. and Zhu, J. (12 September 2005)
“Functioning Well”, China Daily.
40 Claims had to be drafted in the form: “Use of sildenafil
citrate in the preparation of pharmaceuticals against male
erectile
dysfunction”, but not in the form “Use of sildenafil citrate for
treatment of male erectile dysfunction”. The latter form was
regarded as a patent on a treatment for disease, and this type of
patent protection was not recognised under China’s Patent Law.
In contrast, the US patent for Viagra directly claimed the
process of the treatment: “A method of treating erectile
dysfunction
in a male animal, comprising administering to a male animal in
need of such treatment an effective amount of a compound of
formula (I).” See: Andrews, J. (2006) “Pfizer’s Viagra Patent
and the Promise of Patent Protection in China”, Locke Lord
Bissell & Liddell LLP,
http://www.lockelord.com/files/News/ab9ebdd4-621f-4432-
a383-
1cae37df9ea1/Presentation/NewsAttachment/c5a9d67e-bdd9-
4c7e-97e9-
1d6efb6314dc/Andrews_Pfizers%20Viagra%20Patent.pdf
(accessed 2 December 2009).
41 Ibid.
42 Ibid.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
24. 2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
8
Media Hype over “ ” (“Weige”) before Viagra’s Launch in
China
Compared to the original translation of Viagra as “ ” [“Mighty
and
Strong”], “ ” [“Weige”, meaning “Great Elder Brother”] is more
subtle
and more imaginative. This name allows users to forget about
their original
health problem, and at the same time addresses the emotional
and
psychological needs43 of women.44
- Comment by a Chinese journalist45
In mid-1996, the US media started to report that Pfizer’s new
impotence drug, Viagra, was
undergoing the final stages of clinical trials and would be ready
for launch soon. 46 The
upcoming launch of Viagra quickly became a hot topic around
the world. In May 1997, Pfizer
filed an application with SIPO for Viagra’s Chinese trademark
to be “ ” (literally,
“Mighty and Strong”). The third Chinese character, “ ”, could
also mean “firm”. Because
the hardness of the penis during erection was one of the major
factors affecting the quality of
25. sexual experience, 47 this trademark was deemed to contain
sexually explicit connotations,
which were generally not allowed by the Chinese authorities. In
addition, it violated Article
11, paragraph 2 of the Trademark Law, which forbade any direct
indication of a drug’s
potency or superior functions. The application was turned down
by SIPO’s Trademark Office.
Pfizer then filed to trademark another name, “ ” (“Wanaike”),
which was pronounced
similarly to “Viagra” but had no particular meaning in Chinese.
This trademark was approved
and used by Pfizer in China, but in Hong Kong48 and Taiwan,
the traditional Chinese version
of “ ” (“Mighty and Strong”) was used instead.
On 30 April 1998, World Journal ( ), a popular Chinese
newspaper in North
America, referred to Viagra by a Chinese nickname, “ ”
(“Weige”), in reporting the
drug’s brisk sales in the US. The name was a near homophone
of “Viagra” that literally meant
“Great Elder Brother”. Chinese people often added “ ” (meaning
“elder brother”) at the end
of someone’s name as a gesture of affection and respect, while “
” (meaning “great”,
“grand” or “competent”) was commonly used in Chinese names.
Chinese-language
newspapers in China and abroad quickly followed suit, using “ ”
(“Weige”) in their
reporting. This name was well received because the subtlety of
its implication of a wonderful
sex life was well in line with conservative Chinese attitudes
towards sex.
Around one month after Viagra’s launch in the US, genuine
26. pills were illegally imported into
China for sale on the black market through sex shops,
nightclubs and local pharmacies. Some
mongers even touted the pills on the streets of major cities such
as Guangzhou and Shenzhen,
43 In China, a woman might refer to her boyfriend, partner or
spouse in a more affectionate way by adding “ ” (“brother”)
after
his name. The “emotional and psychological needs of women”
referred to such an expression of affection by women towards
their spouses.
44 The original comment in Chinese was: “‘ ’ (Viagra ‘ ’
”
45 (2006 4 6 ) “ ‘ ’(Zest) ‘ ’ ” [Commercial Field (6 April
2006) “‘Zest’ from P&G: Plots
of Mythical ‘Sex Appeal’ in Marketing”],
http://www.1628.cn/newview.asp?id=1587 (accessed 13 August
2009).
46 For an example of related news, see: Anita, M. (6 May 1996)
“New Pill May Relieve Impotence”, USA Today.
47 In a global survey, men identified three of the most
important elements of a satisfying sexual experience as the
hardness,
timing, and the ability to maintain an erection. See: Viagra.com,
“About Viagra”, http://www.viagra.com/ (accessed 19
September 2009).
48 Hong Kong, a city in southern China, had been a British
colony before it was handed over to China in July 1997 as a
27. special
administrative region. The city maintained its own set of laws
and judicial system. Companies had to submit separate
applications for patents and trademarks to Hong Kong’s
authorities for protection in the city.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
9
fetching prices as high as US$60 per 50mg pill, a high premium
compared to US$10 for the
same pill being sold in the US.49
Fight among Local Firms to Trademark “ ” (“Weige”)
Between May 1998 and March 1999, a total of 43 local
companies submitted applications to
SIPO’s Trademark Office for the “ ” (“Weige”) trademark.50
Guangzhou Viamen51 (
) was the first company to do so, on 20 May 1998 [see Exhibits
10 and 12].
It also applied for more than 10 other trademarks at the same
time, including “ ” (“Great
28. Elder Sister”), “ ” (“Great Man”) and “ ” (“Great Lady”). 52
Hunan Dourui
Pharmaceutical Company Limited ( ) and Shenyang Feilong
Company ( ) (“Shenyang Feilong”) came second and third,
respectively.53 It
was not until 12 August 1998 that Pfizer applied for this
trademark in China, though it had
filed for another version of this trademark in traditional Chinese
characters54 at Hong Kong’s
Trademark Office on 29 May 1998.55
While SIPO was still processing the applications for the “ ”
(“Weige”) trademark,
Shenyang Feilong made a false announcement on 25 December
1998 that it had obtained the
trademark right for “ ” (“Weige”) and launched its own
independently developed
impotence drug with the “ ” (“Weige Kaitai”) trademark in 27
cities and provinces.
The company also spent a substantial amount of advertising
dollars on marketing this drug.
As a result, rather than referring exclusively to Viagra, “ ”
(“Weige”) quickly became a
metonym for the entire category of erectile dysfunction drugs in
China. In response, Pfizer
declared that the company had no relation to this drug and
would explore any possible
trademark infringement. On 29 March 1999, the China State
Food and Drug Administration
(“CSFDA”) issued an urgent notice banning all fake drugs being
sold as “ ” (“Weige”),
stating that “ ” (“Weige”), with the English name “Viagra”, was
a drug produced by
Pfizer and that, except those products under clinical trial in
certain hospitals, all drugs
claiming to be “ ” (“Weige”) in the market were fake. 56 This
29. order was initially
interpreted as targeting counterfeits of Viagra in China, and was
unrelated to Shenyang
Feilong’s product. As a result, this ban effectively boosted the
sales of (Weige
Kaitai) to a new high. However, the CSFDA issued another
urgent notice on 16 April 1999
ordering Shenyang Feilong to recall all products identified as “
” (“Weige Kaitai”)
within a month.57 As of this date, US$7.2 million worth of this
drug had been sold.58
49 (2005 10 17 ) “ ” [China Tobacco Net (17 October 2005)
“Battle Over Weige”],
http://manage.16888.com.cn/200510/20051017175356_1.htm
(accessed 13 August 2009).
50 (2002 8 16 ) “‘ ’ ” [China News (16 August 2002) “First
Trial for ‘Weige’ Trademark. Local Version of New Drug for
Erectile Dysfunction is Coming Soon”],
http://edu.beelink.com.cn/20020816/1185459.shtml (accessed
13 August 2009).
51 Guangzhou Viamen was jointly owned by China
Pharmaceutical University ( ) and Sinopharm Group (
). See: Ibid.
52 (2003 8 5 ) “‘ ’ ”, [Li, W. and Bai, Y. (5 August 2003)
“Fight
between Local and Foreign Companies for Weige is Poised to
Restart”], WCC Daily,
http://www.wccdaily.com.cn/2003/08/05/2003080552257423832
66.htm (accessed 13 August 2009).
30. 53 (2005 10 17 ) “ ” [China Tobacco Net (17 October 2005)
“Battle Over Weige”],
http://manage.16888.com.cn/200510/20051017175356_1.htm
(accessed 13 August 2009).
54 There were two sets of Chinese characters. Simplified
Chinese characters were used on the Chinese mainland, while
traditional
Chinese characters were used in Taiwan, Hong Kong and
Macau.
55 Pfizer’s trademark application in Hong Kong was approved
on 7 September 1999.
56 (2006 12 30 ) “
” [Peking University Center for Legal Information (30
December 2006) “Pfizer Inc Sued Beijing Health
New Concept Pharmacy and Others for Unfair Competition and
Infringement of Unregistered Well-Known Trademark”],
http://vip.chinalawinfo.com/Case/displaycontent.asp?Gid=1175
15760&Keyword=%BB%D4%C8%F0 (accessed 19
September 2009).
57 O’Neill, M. (17 April 1999) “Beijing Slaps Ban on Leading
Viagra-Style Drug”, South China Morning Post.
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Wang, San Francisco State University from January 2018 to
May
2018.
31. 09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
10
Court Battles over Viagra’s Patent and Trademark
In July 2000, the CSFDA granted Pfizer permission to sell
Viagra in China. The drug was
priced at US$11.80 per 50mg pill and US$15.50 per 100mg pill
[see Exhibit 13]. However,
Viagra was classified by China’s Ministry of Health as a
controlled substance, which
prohibited advertising and restricted the drug’s sales to certain
types of hospitals. Only a few
doctors in specific hospital wards were allowed to prescribe the
drug [see Exhibit 14].
Challenge by Local Firms of Pfizer’s Patent
In September 2001, Pfizer’s patent for Viagra was approved by
SIPO. By that time, more than
20 local drug companies in China had been conducting research
on producing sildenafil. It
was estimated that Viagra’s patent would cost these companies
US$2.9 billion in market
share.59 However, a manager at Pfizer’s Beijing office said that
this estimate was exaggerated,
because China only contributed less than 0.5% of Viagra’s
worldwide sales of US$1.3 billion
in 2000.60 Within a month after Pfizer’s patent was granted, 12
leading local drug companies
jointly challenged its validity for failing to fulfill the novelty
requirement in Article 22 of
China’s Patent Law [see Exhibit 5C]. They claimed that
sildenafil had been a known
chemical ingredient for a long time, and that Viagra had been
32. developed from a medicine for
heart disease and high blood pressure.61 This argument was
deemed unsound because Pfizer’s
patent was a second-use invention patent, which did not require
that the chemical compound
itself be newly discovered.
Guangzhou Viamen Granted the “ ” (“Weige”) Trademark
On 21 June 2002, Guangzhou Viamen’s application for the “ ”
(“Weige”) trademark was
approved by SIPO. The intangible brand equity of this
trademark was estimated by analysts to
be between US$85 million and US$120 million.62 Pfizer filed
an objection to this trademark
approval with TRAB in mid-September. In response, Guangzhou
Viamen’s spokesperson said
that the translation of “Viagra” into “ ” (“Weige”) by the local
media did not imply that it
was Pfizer’s legal trademark, and that Guangzhou Viamen’s
ownership of this trademark was
in full compliance with China’s law.63 TRAB upheld the
decision of the Trademark Office in
granting Guangzhou Viamen the right to the trademark.
In September 2003, Guangzhou Viamen started selling its
independently developed erectile
dysfunction drug with the “ ” (“Weige”) trademark. The drug’s
active ingredient was
phentolamine mesylate,64 which could relax the smooth
muscles surrounding blood vessels to
increase blood flow. Shanghai Dongfang Pharmaceutical
Company Limited (
) (“Shanghai Dongfang”) was authorised to manufacture this
drug, while Beijing
33. Health New Concept Pharmacy ( ) (“Beijing Health”) was
licensed as the drug’s distributor. The pill’s appearance and the
shape of its packaging were
very similar to Viagra’s blue, diamond-shaped 3D trademark,
which was granted to Pfizer by
58 Ibid.
59 Asiainfo Daily China News (6 September 2002) “Patent
Right of Viagra in Dispute”.
60 Ibid.
61 Ang, A. (6 Dec 2002) “Local Firms Seeking to Overturn
Patent for Viagra in China”, Associated Press.
62 (2003 9 22 ) “ ‘ ’ ”, [Ho, S. and Huang, D.
(22 September 2003) “Pfizer Raises Objection. ‘Weige’
Trademark Falls Back into Uncertainty”, Information Times],
http://finance.anhuinews.com/system/2003/09/22/000448627.sht
ml (accessed 13 August 2009).
63 (2003 8 5 ) “‘ ’ ”, [Li, W. and Bai, Y. (5 August 2003)
“Local–
Foreign Fight for Weige is Poised to Restart”], WCC Daily,
http://www.wccdaily.com.cn/2003/08/05/2003080552257423832
66.htm (accessed 13 August 2009).
64 In the US, phentolamine mesylate was approved by the Food
and Drug Administration for use as an anti-hypertension
medication administered through intravenous and intramuscular
injection. See: National Institutes of Health, “Phentolamine
Mesylate”,
http://dailymed.nlm.nih.gov/dailymed/drugInfo.cfm?id=1013
(accessed 9 September 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
34. Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
11
SIPO on 28 May 2003. A two-dimensional logo derived from
this 3D trademark was also
used on Guangzhou Viamen’s website. Guangzhou Viamen
aimed to achieve sales of
US$48.3 million in the first year. Viagra’s estimated revenue in
China was US$9.7 million in
2002, while its counterfeits generated sales of around US$48.3
million in the same year.65
Invalidation of Pfizer’s Patent
From the very beginning, when Pfizer applied for the patent,
their
application had shortcomings. The application didn't include
sufficient data
and clinical examples.
- Li Shunde, deputy director of the intellectual property centre
at the
Chinese Academy of Social Sciences66
In September 2002, the PRB began investigating a request filed
by 12 local companies to
invalidate Pfizer’s patent. During the re-examination hearings,
these companies cited the
35. same evidence used by the British High Court in invalidating
Pfizer’s First Patent filed in the
UK, and submitted the following reasons to support their
request for invalidating Pfizer’s
patent for sildenafil in China:67
• The technical solution of the patent possessed neither novelty
nor inventiveness in light of
the references they had obtained.
• The amendments to the claims went beyond the original
disclosure of the specification.68
• On 17 June 2002, the House of Lords in England had declared
the patent right of Viagra
filed by Pfizer to be invalid.
However, there had been no prior publication indicating
sildenafil’s possible usage in treating
erectile dysfunction, which might challenge the novelty or
inventiveness of the technical
solution of Pfizer’s patent in China. Moreover, this patent only
covered sildenafil, and not the
whole class of PDE chemicals as in the First Patent. This made
it difficult to use previous
research studies on PDE, which had been used as evidence in
the patent invalidation case in
the UK, to attack Pfizer’s patent for sildenafil in China.69 The
only disputable item left was
the patent’s clarity and sufficiency of disclosure.
In July 2004, the PRB officially invalidated Pfizer’s patent for
Viagra due to insufficient
information disclosure on sildenafil in Pfizer’s patent
application, specifically the lack of
concrete experimental data for this chemical. Under Article 26,
paragraph 3 of China’s Patent
36. Law [see Exhibit 6], the patent required description of “the
invention or utility model in a
manner sufficiently clear and complete, so as to enable a person
skilled in the relevant art of
technology to carry out.” SIPO ruled that the description for
sildenafil in Pfizer’s patent did
not satisfy this criterion.70
Pfizer had originally planned to launch 15 novel drugs in China
over the next five years,
including drugs for treating major illnesses such as
cardiovascular, neurological and
infectious diseases and arthritis. Upon SIPO’s ruling, Pfizer
expressed its hesitation to make
65 (2003 9 22 ) “ ‘ ’ ”, [Ho, S. and Huang, D.
(22 September 2003) “Pfizer Raises Objection. ‘Weige’
Trademark Falls Back into Uncertainty”, Information Times],
http://finance.anhuinews.com/system/2003/09/22/000448627.sht
ml (accessed 13 August 2009).
66 Zamiska, N. (3 June 2006) “Beijing Court Backs Patent
Protection for Viagra”, Wall Street Journal.
67 Beijing Sanyou Intellectual Property Agency (2002) “Case to
Invalidate the Patent Right of Viagra on Trial”, Sanyou IP
Newsletter, 13 (4).
68 The original filing of Pfizer’s patent application did not
contain laboratory data of sildenafil. Such data were added
through
amendments at a later stage.
69 Castellano, R. (2006) “Patent Law for New Medical Uses of
Known Compounds and Pfizer’s Viagra Patent”, IDEA-
37. Intellectual Property Law Review, 46 (2), pp. 283–315.
70 Wise, M., Wang, Z. and Zhu, J. (12 September 2005)
“Functioning Well”, China Daily.
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This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
12
future investment in the country, saying: “[Pfizer] is extremely
disheartened by this recent
action. The company noted that appropriate intellectual property
protection is essential to
these plans.”71 This ruling also triggered grave concern among
other foreign companies with
investments in China. The American Chamber of Commerce
said in its statement: “Domestic
competitors have violated the issued patent and sold their
products illegally. The overall
impression left by this decision is that China is not committed
to enforcing existing patents
and can invalidate them at will to ensure the protection of
domestic drug manufacturers.”72
Local drug companies, of which around 15 were capable of
38. producing sildenafil, took SIPO’s
ruling as a green light for generic versions of Viagra, and at
least six companies filed
applications with SIPO for related production licenses in the
same month.73 If approved, the
retail price of the generics was expected to be around US$2.70
per 50mg pill,74 equal to that
of low-end counterfeits without any sildenafil [see Exhibit 13].
The production of a generic
pill cost US$0.12 in China,75 making the net profit very
attractive. This high-profile patent
invalidation case and its impacts were widely reported in the
local media. In the following
month, prescription restrictions for Viagra were significantly
relaxed by the authorities and
Pfizer was permitted to sell the drug through local pharmacies
[see Exhibit 14], though these
measures failed to significantly increase Viagra’s meagre sales
in the country.
Pfizer’s Defence of Viagra’s Patent
The information they say we didn't submit was not asked for at
the time we
were granted the original patent. We think we have a strong
case.
- Bryant Haskins, a spokesperson for Pfizer76
In September 2004, Pfizer defended its patent right by filing a
court case against SIPO with
the Beijing First Intermediate People’s Court (“BFIPC”). Such a
move was not common
among foreign companies due to concerns of publicly
challenging government bodies. SIPO
insisted that its ruling was in line with similar decisions made
by the British High Court and
39. the European Patent Office.77 Regarding Pfizer’s appeal
through the court, Liu Zhurong of
Diao Ao pharmaceutical group said: “Pfizer has monopolised
the Chinese market for three
years. If the patent case cannot be dealt with quickly, Chinese
producers will suffer.78 The
foreigners will profit from that.”79
In its legal defence for Viagra, Pfizer had hired Xu Guowen ( ),
a legal expert who had
previously worked at SIPO, to be its attorney. Xu argued the
case in terms of a change in
legal standards due to the second amendment to China’s Patent
Law in August 2000. The
requirement for sufficient information disclosure in Article 26
was newly added. Before this
amendment, the laboratory data claimed to be missing in
Pfizer’s patent description were not
required, and this patent had been granted without them. Xu
said: “‘No ex post facto
legislation’80 ( ) is a fundamental legal principal. If SIPO had
completed the
71 Kynge, J. (7 July 2004) “China Overturns Pfizer”, Financial
Times.
72 Collier, A. (20 July 2004) “Patent Blow for Pfizer as
Impotence Drug Gets Cold Shoulder”, South China Morning
Post.
73 Kynge, J. (7 July 2004) “China Overturns Pfizer”, Financial
Times.
74 Ibid.
75 Ibid.
76 Sanford, J. (8 21 November 2004) “Knock-Off Nation”,
Canadian Business, 77 (22), pp. 67 70.
77 MIP Week (11 July 2004) “China Deals Blow to Viagra
Patent”, http://www.managingip.com/Article/1258783/China-
40. deals-
blow-to-Viagra-patent.html (accessed 18 September 2009).
78 During Pfizer’s appeal of SIPO’s ruling through the court, its
patent for Viagra remained valid and local companies were
prohibited from launching generic versions of the drug.
79 Kynge, J. (7 July 2004) “China Overturns Pfizer”, Financial
Times.
80 Ex post facto legislation was retroactive application of a new
law to acts committed in the past or the legal status of facts and
relationships that existed prior to the enactment of the law. In
most common law jurisdictions and countries with a well-
established bill of rights or a written constitution, ex post facto
law was prohibited or highly restricted.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
13
patent evaluation process before the new standard was
available, then the old standard should
be followed.”81
41. Influence through Diplomatic Channels on Pfizer’s Patent Case
A foreign diplomat following Pfizer’s case warned that the US
and European Union might
retaliate with tariffs aimed at China’s domestic pharmaceutical
industry if Pfizer lost its patent
for Viagra, and several high-level US officials had raised the
case in meetings with Chinese
leaders.82 In January 2005, when the US secretary of
commerce, Donald Evans, visited China,
he said in a public speech that the PRB’s stated grounds for
invalidating Pfizer’s patent
indicated that the process for obtaining patents was not
transparent or predictable, and this
made China a risky market for innovation.83 In April the same
year, the Office of the US
Trade Representative (“OUSTR”) released its 2005 Special 301
Report, in which China was
elevated to the Priority Watch List due to “serious concerns
about China’s compliance with
its WTO TRIPS obligations”.84 The report stated that “China’s
inadequate IPR enforcement is
resulting in infringement levels at 90% or above for virtually
every form of intellectual
property.” 85 In OUSTR’s 2005 annual report on intellectual
property enforcement,
“counterfeit pharmaceuticals” was cited as a major area of
infringement in China.86
Waging Two Trademark Lawsuits
In October 2005, Pfizer sued Guangzhou Viamen, Shanghai
Dongfang and Beijing Health in
the BFIPC for unfair competition and infringement of its
unregistered well-known trademark,
“ ” (“Weige”). Evidence used by Pfizer to support its claim to
the unregistered well-
known trademark in China included the company’s two “ ”
42. (“Weige”) trademarks,
granted in Hong Kong and Taiwan in September 1999 and
January 2002, respectively. Pfizer
also submitted to the court news clippings in China and
overseas that used “ ” (“Weige”)
to refer to Viagra, and a photocopy of the urgent public notice
issued by the CSFDA on 29
March 1999 that referred to “ ” (“Weige”) as a drug produced
by Pfizer. Meanwhile,
Pfizer had filed another lawsuit against Guangzhou Viamen,
Shanghai Dongfang and Beijing
Health for infringing Pfizer’s 3D trademark with their (Weige)
erectile dysfunction drug,
seeking compensation of US$6 million.
Court’s Rulings on Pfizer’s Patent and Trademark Cases
On 2 June 2006, the BFIPC overturned SIPO’s ruling and
upheld Pfizer’s patent for Viagra in
China. Wang Wei, a lawyer for the Chinese drug companies,
commented: “Of course, I’m
upset, but it’s reasonable. If I were them, I would not appeal.
It’s too difficult to predict the
consequences of the appeal.”87 Some of the local drug
companies appealed to the Beijing
High People’s Court, which upheld the ruling of its lower court
in September 2007. This
ended the seven-year litigation on Pfizer’s patent.
On 25 December 2006, the BFIPC ruled that the (Weige)
product manufactured by
Shanghai Dongfang and sold by Beijing Health had infringed
Pfizer’s 3D trademark. It issued
81 (2005 1 18 ) “‘ ’ ‘ ’ ”, [Mei, L. (18 January 2005)
43. “Contentions in the ‘Weige’ Litigation: ‘Battle between
Standards’ is the Critical Force Behind It”, China Economic
Weekly],
http://media.163.com/05/0118/13/1ACOT0SR0014180O.html
(accessed 13 August 2009).
82 Kyne, P. (8 July 2004) “China Overturns Pfizer for
Impotence Drug Viagra”, Globe and Mail.
83 Barraclough, E. (October 2007) “Pfizer Victorious over
Viagra in China”, Managing Intellectual Property.
84 Ibid.
85 Tech Law Journal (29 April 2005) “USTR Releases 2005
Special 301 Report”,
http://www.techlawjournal.com/topstories/2005/20050429.asp
(accessed 24 August 2009).
86 Hobbs, M. (5 June 2006) “First Global IP Forum in China
Sparks Interest”, Law.com,
http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=900005
549663 (accessed 2 September 2009).
87 Zamiska, N. (3 June 2006) “Beijing Court Backs Patent
Protection for Viagra”, Wall Street Journal.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
44. 14
a permanent injunction to these companies to stop producing
and selling this product, and
ordered Shanghai Dongfang88 to pay Pfizer US$38,000 in
damages.89 However, there was not
sufficient evidence to claim that Guangzhou Viamen had
instructed these two companies in
their infringement acts. In January 2007, the BFIPC rejected
Pfizer’s claim that Guangzhou
Viamen’s “ ” (“Weige”) trademark had infringed Pfizer’s
unregistered well-known
trademark and that it constituted unfair competition. Pfizer filed
an appeal at the Beijing High
People’s Court, which upheld the decision of its lower court in
April 2008.90 Guangzhou
Viamen indicated that the company was open to negotiation
with Pfizer on using the “ ”
(“Weige”) trademark. Some media outlets reported that
Guangzhou Viamen had been
conducting secret talks with Eli Lilly and Bayer on possible sale
of this trademark at an
exorbitant price, but that these two companies were not
sufficiently interested. 91 Pfizer
continued its fight at the Supreme Court, but lost this final
appeal in July 2009.92 This ended
Pfizer’s 11-year trademark dispute with local companies that
had started in mid-1998.
Competition Faced by Pfizer in China
Competing Prescription Drugs from Bayer and Eli Lilly
In 2003, two competing drugs that acted as PDE5 inhibitors
were launched in Europe and the
US: Levitra from Bayer AG93 (“Bayer”) and Cialis from Eli
45. Lilly and Company94 (“Eli Lilly”)
[see Exhibit 15]. These products partly contributed to a decline
in Viagra’s global sales in the
following two years [see Exhibit 8A]. Viagra’s relative global
market share among the three
drugs dropped gradually to 50% in 2008 [see Exhibit 16]. Bayer
claimed that Levitra was the
strongest PDE5-inhibiting drug in the market, and that its 10mg
pill had the same potency as
Viagra’s 50mg pill.95 Cialis was effective up to 36 hours after
consumption, as compared to
four hours for the other two drugs. Cialis was nicknamed “the
weekend pill” because it
remained effective from Friday night till Sunday morning.
Leveraging this key differentiator,
Cialis became the top prescription drug for erectile dysfunction
in 22 countries as of
December 2006, including France and Mexico.96 In 2007, a
once-a-day version of Cialis was
launched in the US and subsequently in Europe. This product
allowed the patient to have
sexual activity any time throughout the dosing period, further
enhancing the drug’s
competitive edge.
88 Shanghai Dongfang had filed for bankruptcy before this
ruling.
89 (2006 12 27 ) “
” [Peking University Center for Legal Information (27
December 2006) “Pfizer Inc Sued Beijing Health New Concept
Pharmacy and Others for Trademark Infringement”],
http://vip.chinalawinfo.com/Case/displaycontent.asp?Gid=1175
15757&Keyword=%BB%D4%C8%F0 (accessed 19
September 2009).
46. 90 (2008 4 9 ) “ ‘ ’ ”, [Ho, S. (9 April 2008) “Pfizer Loses in
Final
Appeal of ‘Weige’ Court Case”, Information Times],
http://news.xinhuanet.com/legal/2008-
04/09/content_7943689_1.htm
(accessed 13 August 2009).
91 (2008 8 ) “ ” [Information Times (August 2008)
“Litigation between Pfizer and Guangzhou Viamen Not Yet
Finished. Attempt to Change Hands for the Weige Trademark”],
http://www.xmtm.cn/open_view.asp?id=9126&Type_num=18
(accessed 13 August 2009).
92 (2009 07 10 ) “ ”, [Zhang, Q. (10 July 2009) “Local–
Foreign Fight for Weige
Concluded”, Nanfang Daily],
http://www.chinanews.com.cn/cj/cj-cyzh/news/2009/07-
10/1769212.shtml (accessed 7 October
2009).
93 Levitra was manufactured by Bayer and was co-marketed by
Bayer and GlaxoSmithKlein Plc, hereafter referred to jointly as
“Bayer” for simplicity.
94 Cialis was initially developed by Lilly ICOS LLC, a joint
venture between Eli Lilly and a biotechnology start-up ICOS
Corp.
Eli Lilly acquired ICOS Corp in early 2007, hereafter referred
to jointly as “Eli Lilly” for simplicity.
95 (2005 6 21 ) “ ”, 21 [Shi, Y. (21 June 2005) “Four
Pharmaceutical Giants Gather in China’s Market to Compete for
Weige”, 21st Century Business Herald],
http://media.163.com/05/0621/12/1MP5CVEK00141EQ2.html
(accessed 13 August 2009).
47. 96 Stevens, S. (13 July 2007) “Eli Lilly Getting Ahead of
Rivals”, UKMedix Health News,
http://www.ukmedix.com/cialis/cialis-
lilly-once-day.cfm (accessed 10 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
15
In China, Bayer launched Levitra in November 2004 and gained
sales permission for retail
channels in January 2006. Eli Lily started selling Cialis in the
country in June 2005 and
entered into 5,000 local pharmacies in February 2007. As of the
end of 2008, the once-a-day
version of Cialis had not yet launched, but was expected to in
the near future. These products
threatened to erode Viagra’s market share. One comparative
advantage of Viagra was its
longest market history and safety record among the three drugs.
It had gone through 103
research studies and had been used by 23 million people
worldwide by mid-2005.97 These
factors had boosted the confidence of doctors in prescribing
48. Viagra to their patients.
On the other hand, the male urino-genital system and the
mechanisms for erection involved
very complicated and fragile biochemical processes.
Manipulation of these processes by any
type of PDE5 inhibitor might result in a number of side effects
such as headache, flushing,
difficulty in breathing and blurred vision. According to a review
of 49 published studies on
Viagra, data on potential long-term harm from taking Viagra
were still lacking.98 Researchers
found that men who took Viagra were 56% more likely than
those given a placebo to
experience any side effect. They concluded by saying: “More
efforts should be directed
toward achieving an optimal balance between the degree of
effectiveness and safety of
sildenafil use in men with erectile dysfunction. For example,
consideration of flexible dosing
regimen of sildenafil to minimize the occurrence of adverse
events may be an option.”
Counterfeits and Herbal Aphrodisiacs with Drug Analogues
Actually, the existing erectile dysfunction drugs, whether
imported or
domestically produced, have a practical problem of being too
expensive.
Such high prices enable the “black-market Weige” 99 to take
up a large
market share.
- Lu Shengfeng, distributor of the erectile dysfunction drug Yi
Le in southern China100
In 2004, around 70 80% of erectile dysfunction drugs consumed
49. in China were
counterfeits,101 and a conservative estimate of the market for
counterfeit Viagra in the country
was over US$240 million [see Exhibit 8C],102 while Viagra’s
revenue in China was estimated
at a mere US$12.1 million that year. 103 In April 2008, Sun
Minjie, chief executive of
Guangzhou Viamen, said that even though his company had won
its “ ” (“Weige”)
trademark litigation, almost the entire erectile dysfunction drug
market had been lost to
counterfeiters, who were the real competitors of both his
company and Pfizer [see Exhibit
17]. 104 Erectile dysfunction drugs of both local and foreign
companies were targeted for
counterfeiting. Guangzhou Viamen failed to achieve its original
sales target, despite using the
97 Ibid.
98 This review was conducted by researchers from the Ottawa
Health Research Institute in Ontario, Canada. The results were
published in the medical journal Urology in October 2009. See:
Reuters (8 October 2009) “Long-Term Risks of Viagra Use
Unclear”.
99 In this context, “Weige” was used to refer to erectile
dysfunction drugs in general.
100 (2004 4 12 ) “ ”, [Teng, C. (12 April 2004) “Yi Le Enters
Market with Extra-Low Price. Battle Resumes in China’s Weige
Market”, China News],
http://www.chinanews.com.cn/n/2004-04-12/26/424179.html
(accessed 13 August 2009).
50. 101 (2004 7 2 ) “ ED ” [China Economic Times (2 July 2004)
“Pharmaceutical Giants Fight for the Erectile Dysfunction
Market. Foreign Weige Encounters Chinese-Style Versions”],
http://www.chinapharm.com.cn/html/hyyw/13401020040701.ht
ml (accessed 13 August 2009).
102 (2004 4 12 ) “ ”, [Teng, C. (12 April 2004) “Yi Le Enters
Market with Extra-Low Price. Battle Resumes in China’s Weige
Market”, China News],
http://www.chinanews.com.cn/n/2004-04-12/26/424179.html
(accessed 13 August 2009).
103 Ibid.
104 (2008 4 9 ) “ ‘ ’ ”, [Ho, S. (9 April 2008) “Pfizer Loses in
Final
Appeal of ‘Weige’ Court Case”, Information Times],
http://news.xinhuanet.com/legal/2008-
04/09/content_7943689_1.htm
(accessed 13 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
16
51. “ ” (“Weige”) trademark. As for Viagra, Cialis and Levitra,
counterfeiters not only
supplied their fake copies for local use but also for the entire
global market.
Another phenomenon in China was the increasing number of
herbal health supplements that
contained the active ingredients (or their drug analogues) of
prescription drugs for erectile
dysfunction.105 In surveys conducted by the health authorities
in several Chinese cities in 2002,
more than 80% of men’s health supplements were found to
contain some undeclared
sildenafil. 106 Many older men were more comfortable taking
these traditional Chinese
medicines than foreign-branded pills. In 2007, another survey in
Hong Kong of 26 men’s
health supplements found that one product (4%) had undeclared
sildenafil, while 14 products
(54%) contained drug analogues of sildenafil and verdenafil
(Levitra’s active ingredient).107
However, these products had not gone through stringent drug
testing, and their adverse effects
were largely unknown and unpredictable. Their hidden active
ingredients also posed health
threats to people with certain medical conditions, such as heart
disease.
Battles Ahead
China’s drug market was so huge that no global pharmaceutical
company could afford to
ignore it. Pfizer had made a major investment of US$500
million in China for production
facilities in Dalian, Suzhou and Wuxi, as well as an R&D centre
in Shanghai.108 However,
52. since SIPO had awarded Pfizer a domestic patent for Viagra in
September 2001, the sales
volume of this drug remained small in China. The invalidation
of and successful appeal for
this patent had not made a big difference because of the
prevalence of counterfeits. Moreover,
Viagra’s Chinese trademark failed to generate the expected
brand recognition in China. Some
websites even illegitimately used the combined name “ ”
(“Wanaike-Weige”) to
promote Viagra, and to distinguish the genuine pills from other
erectile dysfunction drugs
claiming to be “ ” (“Weige”) on the black market.109
After Pfizer’s setback in the final appeal for the “ ” (“Weige”)
trademark in July 2009, its
management was trying to figure out what had gone wrong in its
market entry strategy in
China for Viagra, how to generate more sales before its patent
expired in 2014, and whether it
should negotiate with Guangzhou Viamen over using the “ ”
(“Weige”) trademark. With
ambitious plans to launch a large number of novel drugs in
China in the coming years, what
more could be done to protect the IPR of these products and to
ensure financial success? How
could Pfizer prevent its future patents from being invalidated
due to insufficient clinical data
in patent applications?
105 Drug analogues were compounds with chemical structures
similar to the active ingredients of the original drugs.
106 Rosenthal, E. (23 April 2002) “An Age-Old Quest Could Be
at an End: Chinese Hail Viagra”, New York Times.
107 Poon, W., Lam, Y., Lai, C., Chan, A. and Mak, T. (October
53. 2007) “Analogues of Erectile Dysfunction Drugs: an Under-
Recognised Threat”, Hong Kong Medical Journal, 13 (5), pp.
359 363.
108 Yuan, R. (15 April 2007) “Pharmaceutical Operations
Expand in China”, Genetic Engineering and Biotechnology
News, 27
(8),
http://www.genengnews.com/articles/chitem_print.aspx?aid=209
8&chid=4 (accessed 2 September 2009).
109 For an example of these websites, see: http://www.viagra-
weige.cn/ (accessed 1 November 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
17
EXHIBIT 1: PFIZER DRUGS WITH GLOBAL REVENUES
OVER US$1 BILLION IN 2008
RevenueDrug Function
US$
million
54. As a Percentage of the
Total Pharmaceutical
Revenue (%)
1. Lipitor To lower cholesterol 12,401 28.07
2. Lyrica For epilepsy 2,573 5.82
3. Celebrex For arthritis and pain 2,489 5.63
4. Norvasc For Hypertension 2,244 5.08
5. Viagra For erectile dysfunction 1,934 4.38
6. Xalatan/Xalacom For glaucoma and ocular
hypertension
1,745 3.95
7. Detrol For overactive bladder 1,214 2.75
8. Zyvox For bacterial infection 1,115 2.52
9. Geodon/Zeldox For schizophrenia and bipolar
disorder
1,007 2.28
Sub-total of the top 9 drugs 26,722 60.49
Total revenue from the Pharmaceutical Division 44,174 -
Source: Pfizer Inc (2008) “Annual Report”.
EXHIBIT 2: EFFECT OF PATENT EXPIRATION ON THE
GLOBAL REVENUES OF
TWO SELECT PFIZER DRUGS
Revenue from Neurotonin
(for epilepsy)
Revenue from Zoloft
(for depression)
55. Year Ended
31 December
US$ million % Change US$ million % Change
1998 - - 1,836 21.83
1999 913 - 1,997 8.77
2000 1,334 46.11 2,140 7.16
2001 1,751 31.26 2,366 10.56
2002 2,269 29.58 2,742 15.89
2003 2,702 19.08 3,118 13.71
2004 2,723 0.78 3,361 7.79
2005 639 (76.53) 3,256 (3.12)
2006 496 (22.38) 2,110 (35.20)
2007 431 (13.10) 531 (74.83)
2008 387 (10.21) 539 1.51
Note: The patent of Neurotonin in the US expired in 2005 and
the patent of Zoloft in the US
expired in 2006.
Source: Pfizer Inc (2004 2008) “Annual Report”; Pfizer Inc
(2000, 2002) “Form 10-K”,
http://www.pfizer.com (accessed 18 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
56. 18
EXHIBIT 3A: ROLES OF SIPO AND THE COURT FOR
PATENT AND TRADEMARK
PROTECTION
Role State Intellectual Property Office Court
Process
Applications
• The Patent Office of SIPO
processes patent applications and
grants patents.
• The Trademark Office of SIPO
processes trademark applications
and grants trademarks.
Handle
Request for
Invalidation
• The Patent Re-examination Board
of SIPO handles and rules on
requests for invalidating patents.
• The Trademark Review and
Adjudication Board of SIPO
handles and rules on requests for
invalidating trademarks.
• The court of first instance conducts
judicial review of the rulings by the
Patent Re-examination Board on
patent invalidation, and of the
57. rulings by the Trademark Review
and Adjudication Board on
trademark invalidation.
• The court of second instance handles
appeals on rulings made by its lower
court.
Handle
Infringement
• Resolves straight-forward cases of
patent and trademark disputes
through administrative means.
• Resolves more complicated cases
of patent and trademark disputes
through civil litigations.
• Handles criminal litigations for
cases of egregious infringement.
EXHIBIT 3B: COURT SYSTEM FOR PATENT AND
TRADEMARK LITIGATION IN CHINA
Role of the Court Type of Court Number
Amount of Claims
Smaller than
Rmb 100 million1
Amount of Claims
Greater than
Rmb 100 million
Supreme Court 1 Supervision Court of second instance
58. High Court 31 Court of second instance Court of first instance
Intermediate Court Around 4002 Court of first instance Not
involved
County Court Around 2700 Not involved Not involved
1 Rmb 100 million = US$12 million at an exchange rate of
US$1 = Rmb 8.28.
2 This referred to the total number of intermediate courts in
China, of which only 50 handle patent
litigations.
Source: Gao, L. (19 May 2006) “Getting to Grips with China: A
Business Imperative for the 21st
Century”, Association of Corporate Counsel,
http://webcasts.acca.com/handouts/Dr._Lulin_Gao_Slides.pdf
(accessed 19 September 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
19
EXHIBIT 4: TYPES OF PATENTS IN CHINA
Types1 Nature and Requirement Duration2
59. Invention
Patent
Applicable to “any new technical solution relating to a
product, a process or improvement”. In depth investigation
has to be conducted by SIPO on the novelty, inventiveness,
and usefulness of the innovation before a patent is granted,
which may take up to a few years.
20 years
Utility Model
Patent
Applicable to “any new technical solution relating to the
shape, the structure, or their combination, of a product which
is fit for practical use”. Relative to the invention patent, less
information is required in the patent application. With
properly done paperwork, a patent is usually granted after
limited investigation by SIPO, which can be as quickly as one
year after the filing. The majority of patent applications in
China are for utility model patents.
10 years
Design Patent Applicable to “any new design of the shape,
pattern, color, or
their combination, of a product, which creates an aesthetic
feeling and is fit for industrial application”. With properly
done paperwork, a patent is usually granted after limited
investigation by SIPO.
10 years
1 China’s invention patent and design patent were similar to the
utility patent and design patent in
60. the US, respectively. China’s utility model patent was
somewhere between the utility patent and
design patent of the US. There was no equivalent of the plant
patent, which covered distinct and
new plant varieties, available in the US.
2 The duration was calculated from the date of filing an
application.
Source: Babel, T. (30 April 2008) “Patents in China Is There
Any Real Protection?”, ipFrontline,
http://www.ipfrontline.com/depts/article.asp?id=18723&deptid=
3 (accessed 2 September 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
20
EXHIBIT 5A: MAJOR AMENDMENTS TO CHINA’S 1984
PATENT LAW
Amendment
Date
Effective
61. Date
Major Changes Related to Pharmaceutical Companies
4 Sept 1992 1 Jan 1993 • Patent protection for pharmaceutical
products was first
included in the Patent Law.
25 Aug 2000 July 2001 The law was updated to meet the TRIPS
requirements of WTO.
• Article 26 on the requirement of adequate information
disclosure was added.
• Patentable subject matters for pharmaceutical products were
expanded to include specific chemical compounds.
27 Dec 2008 1 Oct 2009 The law was updated to heighten the
patent-granting threshold
[see the first bullet below] and to adopt a tougher stance on
restraining counterfeits.1
• The novelty requirement for invention patent and utility
model patent has been tightened. Before a patent application
is submitted, an innovation must not be publicly disclosed,
used or known worldwide, instead of just in China as
stipulated in the previous version of the patent law.
• China can grant mandatory licensing for manufacturing and
exporting patented medicines according to international
conventions.
• Only one patent will be granted for one innovation.
Applicants can still apply both invention patent and utility
model patent simultaneously, but have to give up the utility
patent granted earlier when the invention patent is approved.
62. 1 For more information, see: Cai, R., Liu, S. and Moore, K. (23
February 2009) “Elevating
Standards: China’s Newly Amended Patent Law”, Davis Wright
Tremaine LLP,
http://www.dwt.com/LearningCenter/Advisories?find=66335
(accessed 2 September 2009).
EXHIBIT 5B: PATENTABLE SUBJECT MATTERS FOR
PHARMACEUTICAL PRODUCTS
UPDATED IN THE SECOND AMENDMENT TO CHINA’S
PATENT LAW IN 2000
1. New pharmaceutical compounds, preparations, compositions
2. Processes of producing pharmaceuticals
3. Use of chemical and natural substances in the production of
pharmaceuticals
4. New medical use or indication of a known compound or
preparation
5. Micro-organisms
6. Biotechnologies
7. Methods of obtaining new varieties of animal or plant
Source: Wu, Y. and Labwu, Z. (1 November 2007) “Protect
Your Patent Rights in China”,
PharmaAsia, http://www.pharmaasia.com/article-6659-
protectyourpatentrightsinchina-Asia.html
(accessed 2 September 2009).
For the exclusive use of P. Fung, 2018.
63. This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
21
EXHIBIT 5C: ARTICLES 22 AND 26 OF CHINA’S PATENT
LAW, AMENDED IN 2000
Article 22.
Any invention or utility model for which patent right may be
granted must possess novelty,
inventiveness and practical applicability.
Novelty means that, before the date of filing, no identical
invention or utility model has been
publicly disclosed in publications in the country or abroad or
has been publicly used or made
known to the public by any other means in the country, nor has
any other person filed
previously with the Patent Administration Department Under
the State Council an application
which described the identical invention or utility mode1 and
was published after the said date
of filing.
Inventiveness means that, as compared with the technology
64. existing before the date of filing,
the invention has prominent substantive features and represents
a notable progress and that
the utility model has substantive features and represents
progress.
Practical applicability means that the invention or utility model
can be made or used and can
produce effective results.
Article 26.
Where an application for a patent for invention or utility model
is filed, a request, a
description and its abstract, and claims shall be submitted.
The request shall state the title of the invention or utility model,
the name of the inventor or
creator, the name and the address of the applicant and other
related matters.
The description shall set forth the invention or utility model in
a manner sufficiently clear and
complete so as to enable a person ski11ed in the re1evant field
of technology to carry it out;
where necessary, drawings are required. The abstract shall state
briefly the main technical
points of the invention or utility model.
The claims shall be supported by the description and shall state
the extent of the patent
protection asked for.
Note: Article 22 was the same as the former version of Patent
Law, while article 26 was newly
added.
65. Source: People’s Republic of China (August 2000) “Patent Law
of the People’s Republic of
China”, http://www.rucipr.com/ArticleView.aspx?id=773
(accessed 21 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
22
EXHIBIT 5D: POSSIBLE GROUNDS FOR INVALIDATING A
PATENT IN CHINA
Ground Patent
Law
Detail Reason for Patent Invalidation
Article 5 No patent right shall be granted for any invention-
creation
that is contrary to the laws of China or social morality, or
that is detrimental to public interest.
1. Non-
patentable
66. subject matter
Article 25 No patent right shall be granted for scientific
discoveries,
rules and methods for mental activities, methods for
diagnosis or treatment of diseases, animal and plant
varieties, and substances obtained by means of nuclear
transformation.
Article 22 An invention or a utility model patent does not
possess
novelty, inventiveness and practical applicability.
Novelty means that the subject matter has not been
previously disclosed in publications in China or abroad, has
not been publicly used or made known to the public by any
other means in China, and has not been filed for an identical
patent in China.
Inventiveness means that the invention has prominent
substantive features and represents notable progress, while
the utility model has substantive features and represents
progress.
2. Lack of
novelty,
inventiveness
or practical
applicability
Article 23 A design patent is identical or similar to another
design that,
before the date of filing, has been publicly disclosed in
publication in China or abroad, or has been publicly used in
China, or is in conflict with the prior lawful right another
person.
67. 3. Insufficient
information
disclosure
Article
26.3
The description of an invention or utility model patent is not
sufficiently clear and complete to enable a person skilled in
the relevant field of technology to carry it out.
4. Mismatch
between patent
claims and the
subject matter
Article
26.4
The claims of a patent are not supported by the description
being filed.
Source: Compiled from China’s Patent Law (August 2000).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09
127. 1)
.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
24
EXHIBIT 7A: EXAMPLES OF WELL-KNOWN
TRADEMARKS OWNED BY FOREIGN
COMPANIES IN CHINA AS OF JANUARY 2006
Country of
Origin
Foreign-Owned Well-Known Trademarks in China
US Barbie ( ), Band-Aid ( ), Gillette ( ), Sprite ( ), Disney (
), McDonald’s ( ), Du Pont ( ), Hyatt ( ), American
Standard ( ), Wrigley’s ( ), Monistat ( ), Caile ( ), the M-
shaped logo of Motorola, Wal-Mart ( ), Honeywell ( )
France Lancome ( ), Montagut ( ), YSL / Yves Saint Laurent, a
floral
logo for clothes.
128. Netherlands Cartier( ), F1 Formula 1, Philips ( )
UK The logo of Jaguar, De Beers ( )
Switzerland Tudor ( ) and logo, Tissot ( , Rolex ( )
Japan Nissan ( ), YKK, Nippon ( )
Germany Boss1
Italy Ferrari ( )
British Virgin
Islands
Shangri-La ( )
1 This referred to the brand of Boss for clothes.
Source: Gao, L. (19 May 2006) “Getting to Grips with China: A
Business Imperative for the 21st
Century”, Association of Corporate Counsel,
http://webcasts.acca.com/handouts/Dr._Lulin_Gao_Slides.pdf
(accessed 19 September 2009).
EXHIBIT 7B: PHOTO OF VIAGRA PILLS
Pills of Viagra with its colour and shape registered for a 3D
trademark
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
129. 09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
25
EXHIBIT 8A: GLOBAL REVENUES OF PFIZER
Revenue (US$ million) Net Income R&D Expenses Year
Ended
31
December
Company
Total
From
Pharmaceutical
Division
US$
million
% of
Total
Revenue
US$
million
% of
Total
Revenue
130. 2002 32,294 28,275 9,126 28.26 5,208 16.13
2003 44,736 39,425 3,910 8.74 7,487 16.74
2004 48,988 46,121 11,361 23.19 7,513 15.34
2005 47,405 44,269 8,085 17.06 7,256 15.31
2006 48,371 45,083 19,337 39.98 7,599 15.71
2007 48,418 44,424 8,144 16.82 8,089 16.71
2008 48,296 44,174 8,104 16.78 7,945 16.45
Note: From 2005 2008, 91.4 93.4% of Pfizer’s total revenue
came from its pharmaceutical
division, with the rest generated from the animal health division
and other corporate income.
Source: Pfizer Inc (2004 2008) “Annual Report”.
EXHIBIT 8B: GLOBAL REVENUES OF PFIZER FROM
VIAGRA
Revenue from Viagra Year Ended
31 December US$ million % Change
1998 788 -
1999 1,016 28.93
2000 1,344 32.28
2001 1,518 12.95
2002 1,735 14.30
2003 1,879 8.30
2004 1,678 (10.70)
2005 1,645 (1.97)
2006 1,657 0.73
2007 1,764 6.46
2008 1,934 9.64
Source: Pfizer Inc (2004 2008) “Annual Report”; Pfizer Inc
(2000, 2002) “Form 10-K”,
http://www.pfizer.com (accessed 18 August 2009).
131. EXHIBIT 8C: ESTIMATED SALES OF VIAGRA AND ITS
COUNTERFEITS IN CHINA
Estimated Sales of Viagra Estimated Sales of Viagra’s
Counterfeits Year
US$ million Rmb million US$ million Rmb million
2002 9.7 80 48.3 400
2004 12.1 100 241.5 2,000
Source: (2003 9 22 ) “ ‘ ’ ”,
[Ho, S. and Huang, D. (22 September 2003) “Pfizer Raises
Objection. ‘Weige’ Trademark Falls Back into
Uncertainty”, Information Times],
http://finance.anhuinews.com/system/2003/09/22/000448627.sht
ml
(accessed 13 August 2009); (2004 4 12 ) “ ”,
[Teng, C. (12 April 2004) “Yi Le Enters Market with Extra-Low
Price. Battle Resumes in China’s Weige
Market”, China News], http://www.chinanews.com.cn/n/2004-
04-12/26/424179.html (accessed 13 August
2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
132. 26
EXHIBIT 9A: PERCENTAGE OF MEN WITH ERECTILE
DYSFUNCTION IN CHINA
Age Range Percentage of Men with Erectile Dysfunction
40 to 49 32%
50 to 59 36%
60 to 69 74%
Source: (2004 4 12 ) “ ”,
[Teng, C. (12 April 2004) “Yi Le Enters Market with Extra-Low
Price. Battle Resumes
in China’s Weige Market”, China News],
http://www.chinanews.com.cn/n/2004-04-
12/26/424179.html (accessed 13 August 2009).
EXHIBIT 9B: POPULATION OF MEN OVER 40 YEARS OLD
IN CHINA IN 2007
Age Range Estimated Population of Men (in millions)
40 49 110
50 59 80
60 69 45
70 79 36
80 89 7
90 and over < 1
Source: US Census Bureau (2007) “Population Pyramids for
China”,
http://www.census.gov/ (accessed 1 September 2009).
EXHIBIT 9C: PER-CAPITA MONTHLY INCOME FOR
URBAN HOUSEHOLDS AND
133. FARMERS IN MAINLAND CHINA IN THE FIRST HALF OF
2008
US$1 Rmb
Per-capita monthly disposable income 162.3 1,344
Urban Households Per-capita monthly consumption
expenditure 110.5 915
Farmers Per-capita monthly cash income 49.8 421
1 US$1 = Rmb 8.28.
Source: National Bureau of Statistics of China (25 July 2008)
“Income and Expenditure of Urban
Households Surged in the First Half Year”,
http://www.stats.gov.cn (accessed 28 August 2009);
National Bureau of Statistics of China (25 July 2008) “Per
Capita Cash Income of Farmers Kept
Growth in the First Half Year”, http://www.stats.gov.cn
(accessed 28 August 2009).
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
27
134. EXHIBIT 10: TIMELINE OF MAJOR EVENTS
* This application was rejected by SIPO and Pfizer later applied
for the “ ” (Wanaike)
trademark.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
28
EXHIBIT 11: MAJOR EVENTS IN PFIZER’S PATENT
DISPUTE
Date Legal Proceedings and Other Patent-Related Events
13 May 1994 Pfizer files a PCT application1 for sildenafil.
8 Dec 1995 The Trademark Office of China’s SIPO started to
process Pfizer’s patent
application.
July 2000 Pfizer was granted permission to sell Viagra in China
by China State
Food and Drug Administration.
20 Apr 2001 Pfizer received the notice of patent allowance.
135. 19 Sept 2001 Pfizer was granted the domestic patent for
sildenafil in China by SIPO.
Late Sept 2001 12 local drug companies jointly challenged the
validity of Pfizer’s patent
due to its lack of novelty and inventiveness.
Sept 2002 The Patent Reexamination Board (“PRB”) of SIPO
started to investigate
the patent invalidation request by the 12 local drug companies.
5 July 2004 PRB invalidated Pfizer’s patent.
10 July 2004 SIPO issued a statement a statement saying that
the drug did not conform
to Article 26 of China’s Patent Law, which required description
of the
drug “in a manner sufficiently clear and complete so as to
enable a person
skilled in the relevant field” to manufacture it. SIPO insisted
that its
action was in line with similar decisions taken by the UK High
Court and
the European Patent Office. Many local drug companies started
to apply
to SIPO for production licenses for generic versions of Viagra.
8 Sept 2004 Pfizer sent a formal request to SIPO to reconsider
its ruling.
28 Sept 2004 Pfizer filed an appeal to Beijing First Intermediate
People’s Court
(“BFIPC”) for a judicial review of PRB’s ruling.
2 Jun 2006 BFIPC revoked PRB’s decision and upheld Pfizer’s
patent. Some of the
local drug companies filed an appeal in the same month to
136. Beijing High
People’s Court.
7 Sept 2007 Beijing High People’s Court upheld the ruling of its
lower court and
ended the seven-year litigation on Pfizer’s patent for Viagra.
For the exclusive use of P. Fung, 2018.
This document is authorized for use only by Pak Yiu Fung in
Doing Business in Greater China Spring 2018 taught by Lihua
Wang, San Francisco State University from January 2018 to
May
2018.
09/463C Viagra in China: A Prolonged Battle over Intellectual
Property Rights
29
EXHIBIT 12: MAJOR EVENTS IN PFIZER’S TRADEMARK
DISPUTE
Date Legal Proceedings and Other Trademark-Related Events
May 1997 Pfizer applied to SIPO’s Trademark Office for
Viagra’s Chinese trademark as
“ ” (Mighty and Strong). This application was turned down,
hence Pfizer
later applied for the “ ” (Wanaike) trademark.
30 Apr 1998 A Chinese newspaper in the US referred to Viagra
as “ ” (Weige).
20 May 1998 Guangzhou Viamen applied to SIPO for the “ ”