Explanation on the Amendment of People’s Republic of China (PRC) Patent Law (Draft)

The NPC Standing Committee:

Entrusted by the State Council, I am now explaining the Amendment (Draft) of the Patent Law of People’s Republic of China (PRC).

The Patent Law of People’s Republic of China (PRC) (hereinafter referred to as the current patent law) came into force on April 1, 1985, and was revised twice on September 4, 1992 and August 25, 2000. Since the implementation of the current patent law, it has played an important role in encouraging and protecting inventions, promoting scientific and technological progress and innovation, and promoting China’s economic and social development. With the development of domestic and international situation, it is necessary to further improve China’s patent legal system: First, the report of the 17th National Congress of the Communist Party of China put forward the goal of improving the ability of independent innovation and building an innovative country, and the State Council formulated the Outline of National Intellectual Property Strategy. Therefore, it is necessary to further strengthen the protection of patent rights, encourage independent innovation, promote the implementation of patented technology, promote the transformation of patented technology into real productivity and shorten the transformation period by amending and perfecting the patent law. Second, the Doha Ministerial Conference of the World Trade Organization adopted the Declaration on the Agreement on Trade-related Aspects of Intellectual Property Rights and Public Health (hereinafter referred to as the Declaration), and the General Council of the World Trade Organization adopted the Protocol on Amending the Agreement on Trade-related Aspects of Intellectual Property Rights (hereinafter referred to as the Protocol) to implement the Declaration. The Declaration and the Protocol allow WTO members to break through the restrictions of the Agreement on Trade-related Aspects of Intellectual Property Rights and grant compulsory licenses to exploit pharmaceutical patents under specified conditions. Accordingly, the current patent law needs to be amended. The Convention on Biological Diversity stipulates the use of patent system to protect genetic resources.As a big country with genetic resources, China needs to amend the current patent law to exercise the rights conferred by the Convention.

On the basis of summing up the implementation experience of the current patent law, the Intellectual Property Office drafted the Patent Law of People’s Republic of China (PRC) (revised draft for review), which was submitted to the State Council for approval on December 27th, 2006. After receiving this document, the Legislative Affairs Office twice solicited opinions from 72 central departments and units, 35 local people’s governments, 14 local courts, more than 20 enterprises and institutions, and more than 50 experts and scholars, and also received opinions from relevant foreign government agencies, enterprise associations and international organizations; Went to Guangdong and other places to investigate the patent work of enterprises, the patent administrative law enforcement of local governments and the patent trial of local courts; Held several expert argumentation meetings and two international seminars to discuss major issues such as using the patent system to promote the construction of an innovative country, and the consistency between the revision of the patent law and international conventions; In conjunction with the Intellectual Property Office, the National People’s Congress Education, Science, Culture and Health Committee, the the National People’s Congress Standing Committee (NPCSC) Law Commission, and the High Court, we have repeatedly communicated and coordinated, and on this basis, we have repeatedly studied and revised the draft for submission, forming the "Amendment of the Patent Law of People’s Republic of China (PRC) (Draft)" (hereinafter referred to as the draft). On June 27, 2008, the Legislative Affairs Office and the Intellectual Property Office made a report to the Education, Culture, Health and Science Committee of the National People’s Congress, and then further revised the draft according to the opinions of the members. The draft has been discussed and adopted at the 19th executive meeting of the State Council on July 30th, 2008. The main contents of the draft are as follows:

First, according to the incentive of independent innovation, improve autonomy

The requirements of innovation ability, the current

Modification of Patent Law In order to achieve the goal of building an innovative country, the Science and Technology Progress Law submitted by the State Council to the National People’s Congress Standing Committee (NPCSC) for deliberation and revision in 2007 has stipulated a series of systems and measures in terms of increasing investment in science and technology, integrating scientific and technological resources, stimulating the enthusiasm of scientific research institutions and scientific and technological personnel, and promoting technological progress of enterprises. The draft mainly makes the following amendments to the current patent law from the perspective of using the patent system to stimulate independent innovation:

(1) The contents of "improving the ability of independent innovation" and "building an innovative country" have been added to the legislative purpose. The legislative purpose of the current Patent Law is revised as follows: This Law is formulated in order to protect patent rights, encourage inventions, promote the management and application of inventions, improve the ability of independent innovation, promote scientific and technological progress and economic and social development, and build an innovative country.

(2) Improve the standard of patent authorization. The current patent law adopts the "relative novelty standard" on the conditions of patent authorization, that is, the invention-creation applying for the patent right for invention and utility model has not been publicly published at home and abroad, nor has it been publicly used at home or known to the public in other ways; The design for which the patent right for design is applied has not been published at home and abroad, nor has it been used publicly in China. According to this regulation, although some unpublished technologies have been publicly used abroad or have been sold with corresponding products, as long as no one has publicly used them or sold them in China, patents can be granted in China, which leads to low patent quality in China. This is not conducive to encouraging independent innovation, but also hinders the application of existing foreign technologies in China. To this end, the draft adopts the "absolute novelty standard": inventions and creations that stipulate that patents are granted are not known to the public at home and abroad. In order to further improve the quality of design patents, the draft stipulates that no patent right shall be granted to the design that mainly plays the role of logo in plane printed matter.

(3) The provision that China patents must be applied for before applying for patents in foreign countries is deleted. According to the current patent law, an invention made in China must apply for a patent in China before applying for a patent in a foreign country. In order to encourage foreign countries to apply for patents and improve China’s international competitiveness, the draft stipulates that any unit or individual can apply for patents for inventions and creations completed in China, thus canceling the restriction that it must apply for China patents first; At the same time, considering that some patent applications may involve China’s national security and need to be subject to confidentiality review, the draft stipulates that inventions and creations completed in China should be subject to confidentiality review in advance by the patent administration department of the State Council.

(4) Giving the patentee of a design the right to promise to sell. Promising to sell is a promise to sell goods by advertising, displaying on store shelves or at trade fairs. The current patent law does not stipulate the promise of sales right in the patent right of design. Considering that design is an advantageous field in China, it is beneficial for China to improve the level of patent protection for design, and the draft adds the right to promise to sell in the design patent. After such modification, the patentee of a design can stop others from promising to sell the patented product by advertising, displaying it on the shelves of shops or at trade fairs without his permission.

(5) It is clear that the compensation for patent infringement should include the cost of the right holder’s rights protection, increase the punishment for illegal acts, and increase the provisions on statutory compensation. From the practice of patent protection, if the cost of the patentee’s rights protection is not compensated, it will not be able to make up for the losses suffered by the obligee due to infringement. In order to protect the reasonable interests of the patentee more effectively, the draft adds a provision that the compensation for patent infringement should include the reasonable expenses paid by the right holder to stop the infringement. At the same time, in order to crack down on patent violations, the amount of fines for counterfeiting other people’s patents will be increased from 3 times to 4 times of illegal income; If there is no illegal income, the fine will be raised from 50,000 yuan to 200,000 yuan, and the fine for impersonating a patent will be raised from 50,000 yuan to 200,000 yuan. In addition, in order to improve the efficiency of judicial protection, the draft also stipulates that: in litigation activities, if it is difficult to determine the loss of the right holder, the benefits obtained by the infringer and the patent license fee, the people’s court may determine to give compensation of more than 10,000 yuan and less than 1 million yuan according to the type of patent right, the nature and circumstances of the infringement.

(six) to increase the provisions of evidence preservation before litigation. In order to prevent the infringer from transferring or destroying the evidence before the patentee files a lawsuit, the draft adds a provision: In order to stop the patent infringement, the obligee may apply to the people’s court for evidence preservation before filing a lawsuit if the evidence may be lost or difficult to obtain later.

Second, according to the need to promote the popularization and application of technology,

The amendments to the current patent law (1) stipulate that the co-owners of the patent right may exploit the joint patent alone or license others to exploit it by ordinary license. In order to protect the legal rights of co-owners of joint patents and promote the implementation of joint patents, the draft stipulates that the right to apply for a patent or the patent right shall be jointly owned by two or more units or individuals, and if the co-owners have an agreement on the exercise of the rights, such agreement shall prevail. If there is no agreement, the co-owner may exploit the patent alone or license others to exploit it by ordinary license; Where another person is licensed to exploit the patent, the royalties collected shall be distributed among the co-owners. Except in the circumstances specified in the preceding paragraph, the exercise of the joint patent application right or patent right shall obtain the consent of all the co-owners. The so-called general license means that while the licensee is implementing the patented technology, the co-owner can also implement or license others to implement the patented technology.

(2) If the technology specified for implementation belongs to the existing technology, it does not constitute infringement of the patent right. According to the current patent law, in a patent infringement case, the defendant thinks that the patent right is invalid and must file a request for invalidation with the Patent Reexamination Board; After the Patent Reexamination Board declares the patent right invalid, the court can decide that the defendant does not constitute patent infringement. In order to prevent malicious use of the known existing technology to apply for a patent, hinder the implementation of the existing technology, and help the implementers of the existing technology get rid of the patent infringement disputes in time, the draft adds a provision that in a patent infringement dispute, if the accused infringer has evidence to prove that the technology he implements belongs to the existing technology, it does not constitute patent infringement. Accordingly, the accused infringer does not need to file a request for invalidation with the Patent Reexamination Board, and the court can directly determine that the accused infringer does not infringe.

(3) adding circumstances that are not regarded as infringement. Drawing lessons from the practices of the United States, Canada, Australia and other countries, the draft adds one item in the case that it is not regarded as infringement: in order to provide the information needed for administrative examination and approval, the unit or individual that intends to manufacture drugs or medical devices manufactures patented drugs or patented medical devices.

3. According to the provisions of international treaties, especially the new provisions of international treaties after China’s accession to the World Trade Organization,

The first amendment to the current patent law is that the Protocol to Amend the Agreement on Trade-Related Aspects of Intellectual Property Rights stipulates that compulsory licenses can be granted for the manufacture and export of patented drugs to specific countries or regions for public health purposes. The so-called compulsory license refers to the license made by the state administrative organ under legal conditions, allowing qualified units and individuals to exploit other people’s inventions or utility model patents. According to the provisions of the Protocol, the draft adds the following provisions: for the purpose of public health, the patent administration department of the State Council may grant compulsory license to manufacture and export drugs patented in China to the following countries or regions: (1) the least developed countries; (2) Members who do not have the manufacturing capacity of the drug or have insufficient manufacturing capacity, and have fulfilled the relevant procedures in accordance with the relevant treaties of the World Trade Organization to which People’s Republic of China (PRC) is a party. In addition, the Agreement on Trade-related Aspects of Intellectual Property Rights stipulates that the patentee’s behavior of excluding or restricting competition can be protected by compulsory licensing. Accordingly, the draft also adds a provision that the the State Council Patent Administration Department may grant the applicant a compulsory license for acts that are determined by judicial and administrative procedures to exclude or restrict competition.

Second, the Convention on Biological Diversity stipulates that the utilization of genetic resources should follow the principles of national sovereignty, informed consent and benefit sharing, and clearly stipulates that the patent system should help achieve the goal of protecting genetic resources. At present, developing countries rich in genetic resources such as India and Brazil and developed countries such as Switzerland, Norway and Denmark have protected genetic resources through patent legal systems. China is a big country with genetic resources. In order to prevent illegal theft of genetic resources in China for technical development and patent application, the draft adds provisions: for inventions and creations completed by relying on genetic resources, the applicant shall state the direct source and original source of the genetic resources in the patent application documents; If the original source cannot be declared, the reasons shall be explained. It is also clear that if the acquisition or utilization of genetic resources violates the provisions of relevant laws and administrative regulations, no patent right will be granted.

In addition, the draft also makes textual amendments to some provisions of the current patent law.

Please review whether the Amendment to the Patent Law of People’s Republic of China (PRC) (Draft) and the above explanation are appropriate.