Examining the Patent Law’s fourth amendment

By Cui Chengzhe, Sanyou Intellectual Property Agency
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The Decision on Amending the Patent Law was deliberated on and adopted at the 22nd Session of the Standing Committee of the 13th National People’s Congress, and the amended Patent Law will be officially implemented on 1 June 2021.

崔成哲, Cui Chengzhe, Patent agent, Sanyou Intellectual Property Agency
Cui Chengzhe
Patent agent
Sanyou Intellectual Property Agency

The philosophy behind the revision to the Patent Law mainly involves three aspects:

(1) strengthening patent protection;

(2) promoting the implementation and application of patents; and

(3) improving the patent granting system.

Strengthening protection

At present, there is a gap between the effect of patent protection and patentees’ expectations, with such issues as difficulty in adducing evidence, high cost, minimal damages, etc., plaguing the defence of patent rights. With a view to increasing the punishment for infringement and making infringers pay a heavy price, the Patent Law introduces the following provisions.

(1) Adding a punitive damages system. Both the recently amended Trademark Law and Copyright Law add punitive damages provisions. Against a background of strengthening the protection of intellectual property, punitive damages of not less than one time, and not more than five times, are provided for instances of willful infringement of patent rights in which the circumstances are serious.

(2) Increasing the measure of statutory damages. The measure of statutory damages for patent infringement is increased from “not less than RMB10,000 (US$1,500) and not more than RMB1 million” to “not less than RMB30,000 and not more than RMB5 million”. The upper and lower limits on the measure of statutory damages have been a subject of repeated discussion during the legislative process. Originally, statutory damages were meant to be an alternative calculation method used only when the measure of damages for infringement was difficult to calculate. However, statutory damages have been applied for more than 90% of cases in judicial adjudication practice, such that the issue has drawn concern from various circles.

(3) Revising the sequence in which the basic methods for calculating infringement damages are applied. In the process of this revision, the court system reflected that both the losses incurred by rights holders and the benefits derived by infringers are difficult to calculate, and if it is necessary to consider the rights holder’s losses and the infringer’s benefits in sequence, this unnecessarily increases the burden. Considering current adjudication practice, the new Patent Law abolishes the sequence of application of the two.

(4) Perfecting the rules of evidence. To resolve the issue of “the difficulty in adducing evidence” in patent infringement litigation, and reducing the burden of proof of patents, the Trademark Law was drawn upon, providing that, “for the purpose of determining the measure of damages, the People’s Court may, where the rights holder has used its best efforts to adduce evidence, and the account books and information relating to the infringement are mainly in the infringer’s possession, order the infringer to provide such account books and information relating to the infringement. If the infringer fails to provide the same, or provides fraudulent account books or information, the People’s Court may determine the measure of damages by referring to the rights holder’s claims and the evidence provided by it.”

The Patent Law additionally: Extends the term of protection for design patents to 15 years; adds a system of patent term compensation for delays in the examination of invention patents; provides for compensation in the patent right term for the time taken for the review and approval of the marketing of new drugs, and adds a procedure for early settlement of pharmaceutical patent disputes; perfects the system of administrative protection of patents; and sets out the principles of good faith and prohibition of abuse of rights.

Implementation and application

With a view to resolving the issue of insufficient patent transformation, the Patent Law introduces the following provisions.

(1) Improving the provisions for service inventions. Certain institutions of higher education and research institutes have explored agreeing with their scientific researchers in advance on sharing the patent application rights for, and patent rights in, service inventions, and actively guided the market transformation, achieving fine results by doing so. However, some experts fear that this could lead to an erosion of state-owned assets. To address this, it is expressly provided that “the entity may lawfully dispose of its right to file for a patent for, and its patent rights in, its service inventions”, and entities that have been granted patents are encouraged to implement property right incentives.

(2) Adding a system of open licences for patents. By expressly providing that a patentee can voluntarily declare in writing to the State Council’s patent administrative department that a patent is open for licensing, the concern that open licences become a way to compel foreign patentees to transfer their technology is eliminated. Furthermore, with a view to encouraging patentees to voluntarily submit open licensing declarations, the annual patent fee payable may be reduced or exempted for the “term of implementation of the open licence”.

The amended Patent Law further requires the State Council’s patent administrative department to strengthen development of the patent information public service system, and publish patent information in a complete, accurate and timely manner.

Perfecting the patent granting

(1) Perfecting the design patent system. Considering that partial designs have gradually become an important means of design innovation, and drawing on the patent laws of Europe, the US, Japan and other developed countries, the amended Patent Law adds the partial design protection system.

(2) Perfecting the relevant provisions for novelty grace periods. In response to the covid-19 pandemic, certain innovative entities urgently disclosed their inventions/creations relating to the struggle against the covid-19 pandemic. However, as such disclosures do not fall into the statutory circumstances under which novelty is not lost, such inventions/creations faced the predicament of not receiving patent protection. To resolve this, it is provided that, if within six months from the filing date, “in case of a national emergency or exceptional circumstances, it is first disclosed for the public interest”, novelty is not lost.

(3) Perfecting the patent right evaluation report system. It is provided that where a patent infringement dispute involves a utility model or design, the patentee, a materially interested party, or the alleged infringer may issue a patent right evaluation report at its own initiative.

From the above-mentioned revisions it can be seen that, by summarising years of practical experience and drawing on foreign patent laws, the Patent Law, as amended for the fourth time, is of great significance for safeguarding the lawful rights and interests of patentees and promoting innovation.

Cui Chengzhe is a patent agent at Sanyou Intellectual Property Agency

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