On October 17, the 22nd Session of the Standing Committee of the 13th National People's Congress(NPC) approved the newly amended patent law, which will be effective on June 1 next year. The amendment, which had been drawing keen attention from foreign and Chinese innovators and the public at large since its start,aims to step up protection over the legitimate interests of patent holders, boost innovators' confidence in patent protection, and fully arouse an innovative spirit throughout society. We have assembled some of the most frequent asked questions and will continue our series of reports on this topic.

Spotlight Ⅰ:

Why was the law revised in the first place?

What is behind the revision?

China has been attaching great importance to IP protection. At present, The Chinese economy is at a critical moment of shifting growth mode, optimizing economic structure and changing growth momentum. Innovation is the primary driving force leading development. The enhancement of IP protection and independent innovation capacity has become China's inherent need to accelerate the shifting of economic growth mode and implementation of the innovation-driven development strategy. The current patent law of China became operational in 1985 and was amended three times in 1992, 2000 and 2008 respectively, having played an important role in encouraging and protecting inventions and inspiring innovation. As the situation evolved, there were some new challenges in the patent field. There was a gap between what the law offered and what patent right holders expected. Right holders were hamstrung by restricted access to discovery, high litigation cost and low damages. Cross-region infringements were on the rise and abuse of rights happened from time to time. Other outstanding issues included low patent transfer rate, asymmetric supply and demand of data on patent licensing and insufficient transfer services. Patent examination and grant systems had yet to be improved to meet the demand of joining relevant international treaties and further bring convenience to inventors and designers. Accordingly, it was necessary to revise the patent law.

In 2014, the then-State Intellectual Property Office commenced this fourth version and would see its draft approved by an executive meeting of the State Council on December 5, 2018. The newly amended patent law was adopted at the 22nd Session of the 13th NPC and will be officially enacted in next June.

The amendment implements the spirit of the instructions of the Party Central Committee and the State Council and aims to effectively solve the problems in practice, being of great significance in protecting legitimate interests of right holders, boosting innovators' confidence in patent protection and fully stimulating innovative vitality in society.

Spotlight Ⅱ:

What are the main changes in the amendment?

The changes are mainly in three aspects. First, protection over the legitimate interests of patent holders are reinforced. Patent infringers will pay a deeper price for their acts under the provisions of one to five times of punitive damages for malicious or intentional infringement and the upper limit are driven up to five million yuan. Other changes on protection include clearer requirements on burden of proof and enforcement by local patent administrations, additions of the principle of good faith, supplementary protection certificates (SPCs) and early resolution procedure for pharmaceutical patent disputes. Second, provisions designed for refining service invention, adding a patent open license system and facilitating commercialization of patents are described, all for better use of patents. Third, some of the rules concerning the system for granting patents are also amended, including the criteria for the grace period of novelty of designs and updates on the system of evaluation reports on patentability.

Spotlight III:

What are the relevant measures to further strengthen intellectual property protection?

In an attempt to tackle the lingering problems in patent enforcement, such as low damages and poor effect, some changes are made in the amendment.

First, to show China's attitude and determination to strictly protect intellectual property rights, raise the cost of infringement, and show deterrent power of law, the newly revised patent law adds punitive damages, allowing courts to award damages up to five times over right holders' losses, or infringers' benefits or reasonable patent royalties for malicious infringement.

Second, the new law drives up the statutory damages, raising the maximum to five million yuan and the minimum to 30,000 yuan in order to heighten IPR protection and significantly increase the cost of violations, which reflects the guidance of strengthening patent protection and innovation encouragement.

Third, the revision further improves the rule of evidence for patent cases. According to new law, when a right holder has exhausted all efforts in proving, and the infringer is in possession of infringement-related ledgers and documents, the court may order the infringer to furnish them, which reduced the burden of proof on obligee.

In addition, the amendment improves the relevant system of administrative protection and adds the principle good faith to further elevate both the effect and efficiency of patent protection.

Spotlight Ⅳ

What are the changes in promoting patent commercialization and use?

 A considerable part of patent applications in China haven't been well commercialized and used after authorization at present. Facilitating patent commercialization and use is a way to achieve market value of patents as an intangible asset and provide tangible support for creative development of the real economy. In a bid to accelerate patent commercialization and use and improve patent commercialization service, the newly revised patent law adds some relevant contents.

First, service invention system is refined. The legal system of service invention is the basic for adjusting the distribution of rights and benefits of units and inventors. It plays an important role in mobilizing the innovation enthusiasm of units and their R&D personnel and promoting the transfer and transformation of inventions. The new law adds provisions that the relevant entity treats patent rights of a service invention-creation in accordance with the law and the nation encourages those granted patent rights to implement property right incentive, further motivating the creation, promotion and exploitation of inventions and making technological innovation benefit society.

Second, public service of patent information is reinforced. Timely release, dissemination and effective use of patent information is of great significance for improving the starting point on innovation, reducing repeated R&D, avoiding infringement of other's patent rights and promoting innovation. Provisions designed for patent information are described, clarifying that the patent administrative department of the State Council is responsible for establishing public service system of patent information and providing the basic patent data and local patent administrative departments intensify work on patent information public service, patent commercialization and use.

Third, a patent open license system is added. The open license system is an important legal system to promote the transformation and implementation of patent, the core of which is to encourage the patentee to open the patent right to the society, promote the connection between supply and demand and patent implementation, which could truly realize the value of patents. Based on the basic national conditions and sophisticated international experience, the amended law installs provisions of the elements of open license statement and its being effective, the procedures, rights and duties of a licensee to obtain an open license and corresponding dispute settlements methods, in an attempt to solve information asymmetry problems sourced from patent supply and demand parties, to enable any entities and individuals to gain a patent license conveniently, lower transaction cost and improve patent commercialization efficiency.

Spotlight V：

Are there any changes on improving the design system?

Chinese companies are getting better in designing in the past few years and design applications filed in China are spiking to a world high now, both begging for heightened protection. The amendment improves the design system to cater such need.　　

First, partial design is under protection now. When making new product designs, designers sometimes create all-new, revolutionary ones. On more occasions, they just make minor touches to some part of current designs. Innovation on a part of a current design is an important type of product design. Partial design is already patentable in the U.S., Japan, Europe, the Republic of Korea and other major patenting destinations. With an increasing number of Chinese companies are venturing out, their need for design protection at these places is also on the rise. Protection of partial design aligns with such need and international practice, enabling Chinese companies to better maneuver under different legislations, survive and excel in oversea markets.

Second, protection term of design patents is extended. The new term is 15 years, fitting Chinese companies' need for filing overseas and innovators' diversified needs on protection term and pave way for China's accession to the Hague Agreement concerning the International Deposit of Industrial Designs.

Third, domestic priority is available for design patent. If a design application of the same subject is filed within 6 months from the date on which the initial application was filed, the applicant may claim priority of the initial application. This will lower filing costs and afford design applicants an opportunity to further improve their designs and change protection scope.

Source: CNIPA