China’s New Patent Law

China’s New Patent Law

By Ralf Ho, Matthew Boyd and Caroline Berube
HJM Asia Law & Co LLC

On October 17th, 2020, the law of patents in China underwent a transformation. This has been, in large part, due to China not having revisited and updated its laws on patents since 2008.

In this article, we will explain and summarize some of the most significant additions to the China Patent Law and how this could positively impact inventors and patentees.

The China Patent Law is due to come into force on June 1st, 2021.

Pharmaceutical Industry

Currently, where the owner of new drugs and medicines holds a patent, enforcement for breach of such patent can only usually be achieved following the introduction of a generic branded drug or medicine to the market.

This issue has now been addressed in the China Patent Law by permitting a process which is known as ‘Patent Linkage’.

Patent linkage will ensure that a potential competitor seeks approval from the medical and science authorities. For example, for the creation of a generic brand of drug, the Chinese authorities will also assess whether the generic brand of drug will infringe any existing patented drug before the generic brand drug is introduced to the market.

This will greatly assist pharmaceutical companies wishing to have advance notice of any potential breaches of their patents before they could be financially diluted in the market by an infringing competitive brand.

Design Patents

Under the China Patent Law, the scope of protection for design patents has been extended. This extension will now allow not only full design patents to be registered but also partial design patents.

This will therefore allow for enforcement by partial design registration holders even if another person changes a design in another way but still infringes the partial element of the protected design.

Whilst this measure has already been in place for many years in Europe, the US and Japan, it is very welcoming to the see China’s Patent Law being brought on an even level in this respect.

Additionally, design and partial design patents, once registered, will be granted for a term of fifteen (15) years (this is above the current ten (10) year period under the current China Patent Law).

Enhanced Compensatory Regime

Owners of patents will now be awarded more generous compensation where a breach of a patent has been proven.

This will be achieved in one of two ways :

1. Firstly, a new measure to permit what are known as ‘punitive’ damages will be introduced. This means, not only will the owner of the patent receive ordinary compensation, but they will also receive additional compensation in cases where the party breaching the patent does so in a willful manner; and
2. Secondly, where it may be difficult for the patent holder to calculate the exact amount of monetary damage which has occurred for breach of its patent, the Chinese authorities will now be able to award a significantly higher level of what are known as ‘statutory’ damages than has been the case up until now.

The below table illustrates the level of compensation under the current patent law and what is proposed under the new patent law :

As well as a welcome broadening of the damages a patent holder can receive, the China Patent Law also allows the Chinese authorities to order a defendant to produce all necessary financial records to calculate the amount of damage which the patent holder has incurred due to the breach of its patent.

Currently, this is not possible in China.

Extension of Patent Periods

Once of the issues applicants face (notably in the pharmaceutical and biosciences sectors) when registering an invention patent can be the length of time taken between submission of the application and review of the application to the actual date in which the patent is granted.

Not only does this cause delay, but it also has a negative financial effect on the value of the patent when it is finally granted.

To mitigate against this, the China Patent Law will now provide a mechanism whereby applicants who have waited at least four (4) years from the date of application for a drug invention patent or three (3) years from the date of requesting substantive examination of an drug invention patent, may be granted an extended period if and when the patent is granted for up to five (5) years – provided the total period of the patent does not exceed fourteen (14) years.

Conclusion

The passing of the China Patent Law has been many years in the making, having been revised more than a decade ago, in 2008.  Many of the amendments outlined in this article will be welcomed by patent applicants and holders of existing patents alike.

Since the China Patent Law will only come into force on June 1st, 2021 it is likely that we will only know the full details of how the new mechanics introduced will operate in practice.