On 17 October 2020, the National People’s Congress Standing Committee approved China’s new patent law, which will come into force on 1 June 2021. This is the fourth time that China’s patent law has undergone significant changes, with previous amendments in 1992, 2000, and 2008. The new law has the potential to strengthen IP protection and encourage globally harmonized practices. Some notable changes include:

• patent term adjustment and extension;
• patent linkage system for pharmaceutical patents;
• portion claiming in industrial design protection (i.e. claiming only certain features of an article for protection);
• increased term for industrial design protection;
• increased statutory damages for infringement; and
• an open-licensing patent system.

Patent Term Adjustment and Extension

Article 42 of China’s new patent law provides (i) patent term adjustment to compensate for unreasonable delays that occur in granting the patent and (ii) patent term extension to compensate for unreasonable delays during pharmaceutical product marketing approvals.

In particular, patent term adjustment may be possible to compensate for unreasonable delays caused by the Chinese National Intellectual Property Administration (“CNIPA”). Also, patent term extension of up to five years may be available for innovative drugs, provided that the patent term does not exceed 14 years after receiving regulatory approval.

Patent term adjustment is not available in Canada but patent term extension of up to two years has been available since 2017 for patents pertaining to new medicinal ingredients or new combinations of medicinal ingredients for human or veterinary use.  Canada will have to add provisions relating to patent term adjustment to comply with its obligations under the Canada-US-Mexico Free Trade Agreement.

Patent term adjustment and extension can be particularly important for pharmaceutical patents because it often takes a long time to bring a drug to market.

Patent Linkage System for Pharmaceutical Patents

 Article 76 of China’s new patent law adds a patent linkage system for pharmaceutical patents that ties together the granting of regulatory approval with a consideration of patent rights. This Article provides that the CNIPA and the National Medical Products Administration (“CFDA”) will work together to tie the regulatory approval of generic medications to the patent status of the original brand-name product. In particular, the regulatory drug marketing review and approval process may be suspended when there is a dispute about whether a generic version would infringe upon the relevant pharmaceutical patent. Likewise, a generic company may request an administrative ruling from the Patent Administration Department of the State Council on the validity of a pharmaceutical patent.

On 29 October 2020, the Supreme People’s Court issued a draft patent linkage judicial interpretation for comment. The draft interpretation suggests that the Beijing IP Court will have jurisdiction over patent linkage cases even if an administrative proceeding has commenced. The court may consolidate lawsuits involving the same patent or the same generic medication. During a court proceeding, the parties involved are under a duty of confidentiality with respect to trade secrets. Available remedies may include preliminary injunctions and damages.

Portion Claiming in Industrial Design Protection

 Article 2(4) clarifies that portion claiming is available for industrial design protection. The wording “the whole or a part of” is added to the definition of design. This adjusts the protectable scope of a design to permit protection for the most interesting features of an article as opposed to the entire article.

Portion claiming has been permitted in many major jurisdictions, including Canada, Europe, Japan, Korea, and the United States, and so this change helps to harmonize design practice in China with the practice in other countries.

Increased Term for Industrial Design Protection

Article 42 increases the term of a Chinese design patent from 10 to 15 years from the filing date. This change prepares China’s IP regime for its accession to the Hague Agreement Concerning the International Registration of Industrial Designs (“Hague System”).

Canada’s industrial design regime underwent similar changes in 2018 to allow Canada to join the Hague System.

Increased Statutory Damages for Infringement

Article 71 includes provisions for punitive damages for intentional patent infringement. The punitive damages will be more than one but less than five times a determined compensatory amount. The compensatory amount may be determined based on either the actual loss suffered by the patentee or the profit gained by the alleged infringer.

Also, Article 71 raises the upper limit of statutory damages for patent infringement from RMB 1,000,000 to RMB 5,000,000.  This is to be contrasted with the Canadian system, where statutory damages are not an available remedy for patent infringement.

Open-Licensing Patent System

 Articles 50 to 52 introduce an open-licensing patent system to encourage the commercial utilization of patents. Under the open-licensing patent system, a patentee may write to the CNIPA (i) to declare that the patentee is willing to license any entity or individual to exploit the patentee’s patent rights and (ii) to specify the payment method and royalty amount. The CNIPA will then make a public announcement to encourage uptake of the open license. The patentee may withdraw the open license declaration at any time although the withdrawal will not affect the validity of the already granted open license(s).

Concluding Remarks

To implement China’s new patent law, new patent regulations and examination guidelines are currently being drafted. It is an exciting time to monitor the changing landscape of China’s patent regime and plan strategies that take advantage of such changes.

**This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca) a division of LexisNexis Canada Inc.