Author: Zhang Siyu Partner, Senior Patent Agent
The Patent Law of the People's Republic of China came into effect in 1985 and has been amended three times in 1992, 2000, and 2008. The work of the fourth amendment of the Patent Law started in 2012 and lasted for 8 years, during which the draft amendment of the Patent Law was adjusted several times. On October 17, 2020, the 22nd meeting of the Standing Committee of the 13th National People's Congress adopted the Decision on Amending the
1. Amendments to the provisions on strengthening the protection of patent rights (Article 71, 74)
1. Increase the statutory damages ceiling and floor
In our country, due to the lack of a system similar to the discovery of evidence, the patentee often faces the dilemma that although the infringement of the defendant can be identified, the evidence related to the amount of damages is held by the defendant, and the plaintiff has no way to obtain the actual loss caused by the defendant's infringement or the benefit obtained by the defendant due to the infringement, and there is a lack of evidence about the patent license usage fee, so according to the provisions of the Patent Law, the judge can only determine the amount of damages according to the statutory compensation. According to the statistics in recent years, in most of the civil infringement litigation cases of patents in our country, the judge applies the statutory compensation to determine the amount of damages. Therefore, it is very important to improve the amount of statutory compensation in order to improve the amount of damages in our country's patent litigation and better protect the interests of the patentee.
The fourth amendment to the Patent Law significantly increased the amount of statutory damages, raising the original range from 10,000 to 1,000,000 yuan to 30,000 to 5,000,000 yuan. This upper limit of 5 million yuan is consistent with the provisions in the Trademark Law, the Anti-Unfair Competition Law, and the Copyright Law, reflecting China's determination to strengthen intellectual property protection; the lower limit of 30,000 yuan takes into account the actual situation and capacity of smaller infringing entities (such as sales entities).
2. Introduction of a system of punitive damages
In recent years, the people's courts at all levels and relevant government departments have found that it is no longer sufficient to determine the amount of compensation based solely on the "principle of making good" in patent civil infringement litigation. Therefore, for the first time, the fourth amendment of the Patent Law introduced the system of punitive damages, stipulating that for the intentional infringement of patent rights, if the circumstances are serious, the amount of compensation can be determined at more than one time and less than five times the amount of loss, which is consistent with the provisions on punitive damages for intellectual property rights in the Civil Code, which came into effect on January 1, 2021. The upper limit of five times is also higher than the three times in the United States and is the highest multiple among the patent laws of various countries in the world. Punitive damages can not only compensate for the losses of the patentee but also greatly deter intentional infringers, which is conducive to maintaining a social environment that respects the technological innovation and intellectual property protection and ensuring a good social and economic order.
In accordance with Article 71, the application of punitive damages mainly involves two issues: how to determine the subjective intent of the infringer, and how to define "serious circumstances". The circumstances that may constitute "intention" may include: implementing the same infringement with the same subject or changing the subject, deliberately copying the patent (for example, infringing on multiple rights claims of the same patent of the patentee or multiple patents of the patentee, copying the patent products marked by the patentee, etc.), deliberately concealing the facts of infringement or destroying relevant evidence, refusing to take remedial measures for the infringement, etc. These circumstances can be used to determine the malice of the infringer. And mainly engaging in infringement, infringement with large profits, large scale, long duration, many times, may be identified as constituting "serious circumstances".
3. The burden of proof shifts
As mentioned above, due to the lack of an evidence disclosure system, patentees often find it difficult to obtain evidence on damages that is usually within the possession of the defendant. To address this issue, the 2016 amendment of the Patent Law incorporated the provisions of the Supreme People’s Court’s Interpretation (II) on the Application of Law in the Trial of Disputes over Infringement of Patent Rights (promulgated on April 1, 2016), which are widely welcomed by patentees, into Article 71. In certain cases, this provision shifts the burden of proof for evidence on damages to the defendant, i.e., when the plaintiff has already tried its best to provide evidence, and the books and records related to the infringement are mainly in the possession of the defendant, the court may order the defendant to provide books and records related to the infringement; if the defendant does not provide or provides false books and records, the court may determine the amount of compensation based on the plaintiff’s claims and the evidence provided. Moreover, Article 71 amended the phrase “the preliminary evidence of the benefits obtained by the infringer has been provided by the right holder” specified in the aforementioned judicial interpretation to “the right holder has already tried its best to provide evidence”, further reducing the burden of proof and the triggering conditions for the transfer of the burden of proof for the right holder.
The increased statutory damages, punitive damages, and the relevant provisions on the transfer of the burden of proof all help to increase the amount of damages awarded in patent civil infringement litigation, better protect the interests of patentees, and pose a greater deterrent to infringers.
4. Statute of limitations
The Civil Code General Provisions, which came into effect on October 1, 2017, has changed the general limitation period from two to three years. In response to this, the fourth amendment to the Patent Law has made corresponding amendments in Article 74, changing the limitation period for infringement of patent rights to three years as well, and changing the starting point of the limitation period from "the day on which the infringement is known or should be known" to "the day on which the infringement is known or should be known, and the infringer is known or should be known", to be consistent with the relevant provisions in the Civil Code General Provisions and the Civil Code.
Second, amendments to the provisions on utility models (Article 2, 29, 42).
1. Protection of local designs
Before, our country only protected the overall appearance design of products, not the local appearance design of products. The "Patent Examination Guidelines" listed "the local design of products that cannot be divided or cannot be sold or used separately, such as the heel of socks, the brim of hats, and the handles of cups" in the " Situations where no design patent is granted". In practice, copycats often only copy the most characteristic individual local designs of the appearance design in order to avoid patent infringement, or combine the local designs in the product, because of the lack of protection for local appearance designs, the patent holder often has no way to deal with such copying behavior. In addition, for the appearance design patent of the graphical user interface, since it can only protect the overall appearance design of the product containing the graphical user interface, its protection scope is also greatly reduced. To solve this problem, our country introduced the protection of local appearance designs in the "Patent Law" amended for the fourth time.
In the practice of the United States, Europe, Japan and other countries and regions where partial design can be protected, the parts of the product that are claimed to be protected can be represented by solid lines in the line drawing, and the parts that are not claimed to be protected can be represented by dotted lines, or the parts that are not claimed to be protected can be blurred in the photo or rendering. After the partial design is protected, the patent applicant who submits a patent application for the design in China, claiming the priority of the application in these countries and regions, does not need to process such dotted parts or blurred parts again, so as to obtain a similar scope of protection as the prior application.
The number of design patent applications in our country has always been at the top of the world in recent years, with the number of applications in 2019 reaching about 712,000, and the total number of valid design patents also reached about 2.72 million. It is foreseeable that after the introduction of partial design, the number of design patent applications will further increase. Since the design patent application in our country is authorized after a preliminary examination, and there is no substantive examination, it is easier for designs with fewer design elements to be authorized without meeting the authorization conditions, or a large number of partial design applications with the same or substantially the same design are authorized. The number of civil infringement litigation of design patents may also increase accordingly, and the number of design patent litigations has already ranked first among the three types of patents in recent years (about 60%). Therefore, it is necessary to be vigilant against the risk of patent abuse brought by partial design, and it is worth considering to learn from the United States, Japan and South Korea to carry out a certain degree of substantive examination for design applications, especially partial design applications, so as to prevent damage to the public interest and waste of judicial resources.
2. The protection period of design patents is extended to 15 years.
In order to provide better protection for the design of appearance, the fourth amendment to the Patent Law extended the protection period of the design patent of appearance from 10 years to 15 years, which is also in line with the protection period stipulated in the Hague Agreement Concerning the International Registration of Industrial Designs, which China plans to join. The agreement currently has about 70 contracting countries around the world, and seeking protection for the design of appearance overseas through the agreement can greatly save the applicant's application time and cost.
3. Domestic priority system for the design patent.
The domestic priority system, which was previously applicable only to patent applications for inventions and utility models, was amended for the fourth time, adding the domestic priority system for patent applications for designs, with a priority period of 6 months. Taking into account the shorter examination cycle for patent applications for designs, a patent applicant may re提交 an application to overcome defects within the priority period after the first application is rejected or deemed to be withdrawn, and claim the priority of the first application, enjoying the priority date. In addition, for a patent applicant who has submitted a patent application for a design for a related product and then adjusted the design of the product, if the application is submitted again with a similar design, there is a risk of duplicate authorization in the later application, while using the domestic priority system for designs, a new design application can be submitted based on the two designs before and after, and claim the priority of the first application, enjoying the priority date. Adopting such an application strategy, the applicant does not need to wait until the full design of the product is completed before submitting a patent application.
Three, amendments to provisions concerning the patent linkage system for pharmaceuticals (Article 76).
Similar to the Hatch-Waxman Act in the United States, the fourth amendment of the Patent Law introduced the patent linkage system as an early resolution mechanism for pharmaceutical patent disputes in Article 76, which links the approval process for generic drug marketing with the original drug patent, avoiding the infringement of the original drug patent after the marketing of generic drugs, leading to the suspension of generic drug production and causing damage to public interests. This patent linkage system, along with the Bolar exception and the patent protection period extension system introduced in the following text, will become an important part of China's pharmaceutical patent protection system.
In accordance with Article 76, during the process of drug registration, the patentee or the person with a legitimate interest in a patent related to the drug technology may file a lawsuit with the people's court or request administrative adjudication from the State Intellectual Property Office to determine whether the drug-related technical scheme falls within the scope of protection of the patent right; the applicant for drug registration may also file a lawsuit with the people's court to confirm non-infringement, or request administrative adjudication from the State Intellectual Property Office. The State Drug Administration may decide to suspend the approval of drug registration based on the effective judgment of the people's court.
Article 76 further stipulates that the State Council's drug supervision and administration department (i.e., the State Drug Administration) and the State Council's patent administrative department (i.e., the State Intellectual Property Office) shall formulate specific interconnection measures for the resolution of disputes over drug patent rights during the drug registration application stage and the drug registration approval stage, to be submitted to the State Council for approval before implementation. On September 11, 2020, the State Drug Administration and the State Intellectual Property Office had already solicited public opinions on the "Interim Measures for the Implementation of the Early Resolution Mechanism for Drug Patent Disputes (Draft for Soliciting Opinions)" for the public. According to the provisions of this draft for soliciting opinions, for the court judgments or administrative rulings of the State Intellectual Property Office that have not yet taken effect and determine that the drug falls within the scope of protection of the patent right, the State Drug Administration will also suspend the approval of the drug for marketing. On October 29, 2020, the Supreme People's Court solicited public opinions on the "Provisions on the Application of Law in the Trial of Civil Cases Involving the Review and Approval of Drug Marketing (Draft for Soliciting Opinions)", the main issue it aims to solve is the legal application issue of Article 76 of the Patent Law.
4. Amendments to the provisions on the adjustment and extension of the patent protection period (Article 42)
1. Introducing a patent protection period adjustment system
In accordance with Article 42 of the Patent Law as amended for the fourth time, if a patent for invention is granted more than three years after the date of the request for substantive examination and more than four years after the date of the filing of the patent application for invention, the patentee may request compensation for the patent term due to unreasonable delay in the authorization process of the invention patent, excluding unreasonable delays caused by the applicant. It is foreseeable that this provision will significantly reduce the number of invention patent applications with a longer examination period.
2. Introducing a patent protection extension system
Since the substantive examination process for invention patents related to pharmaceuticals usually takes longer than that for other technological fields, and the marketing of pharmaceuticals also has to go through a long clinical trial and administrative approval procedure, the relevant patent protection period may have been exhausted by the time the pharmaceutical is officially launched. To ensure that the original research-based pharmaceutical company has a long enough patent protection period to obtain a reasonable profit, Article 42 also introduces a system of extension of the patent protection period for pharmaceuticals, that is, in order to compensate for the time occupied by the review and approval of new drug marketing in China, for new drug invention patents that obtain marketing approval in China, the State Intellectual Property Office may, at the request of the patentee, grant a period of compensation; At the same time, in order to balance the relationship between the original research-based pharmaceutical enterprises, the generic drug enterprises, and the public interest, the compensation for the time occupied by the marketing approval review of new drugs is subject to a dual limit that the compensation period does not exceed five years and the total effective patent period after the marketing of new drugs does not exceed fourteen years.
The patent owner should note that neither the adjustment of the patent protection period nor the extension of the patent protection period happens automatically, and both require the patent owner to make a proactive request.
5. Amendments to the provisions on the prohibition of abuse of patent rights (Article 20)
The fourth amendment of the Patent Law stipulates in Article 20 that the application for a patent and the exercise of the rights of a patent shall be conducted in accordance with the principle of good faith and honesty; the abuse of patent rights to the damage of public interests or the legitimate rights and interests of others is prohibited; the abuse of patent rights to exclude or restrict competition and to constitute a monopoly shall be dealt with in accordance with the Anti-monopoly Law of the People's Republic of China.
The principle of honesty and good faith and the principle of prohibition of abuse of rights are both basic principles of our civil law. By explicitly emphasizing these two basic principles in the Patent Law, it will be conducive to better regulating dishonest and滥用 patent rights, such as the behavior of fabricating or forging technical solutions and experimental data for patent applications, the behavior of defrauding government subsidies through improper patent applications, the behavior of malicious litigation based on utility models or designs that obviously do not meet the conditions for authorization or are known to be invalid, and the abuse of patent rights by initiating a large number of patent litigations or administrative investigations against the same competitor beyond the legitimate maintenance authority.
As for anti-monopoly, the Anti-monopoly Law of our country, the Guiding Opinions on Anti-monopoly in the Field of Intellectual Property of the State Council Anti-monopoly Committee, and the Provisions on the Prohibition of the Abuse of Intellectual Property Rights to Exclude or Restrict Competition of the Administration for Industry and Commerce have regulated the monopoly behavior of the abuse of patent rights that cause the consequences of excluding or restricting competition. The connection between the Patent Law and the Anti-monopoly Law in Article 20 above will enable the courts to directly apply the provisions of the Patent Law in the subsequent trial of the relevant patent monopoly cases.
Article 6. Amendments to the Provisions on the Patent Open License System (Articles 50, 51, 52)
According to statistics, the rate of transformation of scientific and technological achievements in our country is less than 30%, which is far below the level of developed countries. In order to improve this situation, the fourth amendment of the Patent Law introduced the patent open licensing system, aiming to reduce the cost and risk of patent licensing transactions, improve transaction efficiency, and overcome the problem of asymmetric information between the supply and demand sides of patent licensing.
Compared to enterprises, China's universities may be more enthusiastic about the patent open licensing system. In China, although universities own a large number of patents, the rate of transformation of scientific and technological achievements and the rate of patent industrialization are far lower than that of enterprises. The main reason is that universities lack the relevant resources and channels for patent trading and are not familiar with the situation of the patent trading market. However, the patent open licensing system can solve this problem well. Universities can use the public platform provided by the State Intellectual Property Office to release information about patents they hope to license openly, and there is no need for patent licensing negotiations. In addition, the reduction of patent annual fees during the implementation period of open licensing can also effectively reduce the cost of maintaining patent rights for patent owners.
For the specific provisions at the implementation level that are not clearly stipulated in the fourth amendment of the Patent Law, the legislative body and the State Intellectual Property Office will clarify them in the subsequent issued "Detailed Rules for the Implementation of the Patent Law" and "Guidelines for the Examination of Patents".
In the twelve years between the third and fourth amendments to China's Patent Law, China has become the country with the highest number of patent applications in the world. Global technological innovators all regard China as one of the most important countries for patent applications, and the desire to implement patent rights and conduct patent transactions in China is also increasing. The fourth amendment to the Patent Law was made to adapt to such trends, aiming to provide stronger patent protection for patentees from around the world.