The long waited Fourth Amendment of the Chinese Patent Law was eventually passed into law by the Standing Committee of the People's Congress on October 17, 2020. The newly amended Patent Law will take effect as of June 1, 2021.

The main points of the amendment are as follows:

1. Strengthening patent protection

In the recent years, there has been a clear trend towards stronger protection in the Chinese practice of the patent enforcement. That trend is evidently reflected in the amendment. There are quite a few changes concerning strengthening patent protection, which include:

1) The term (protection period) for design patent is extended from 10 years in the current law to 15 years. This is believed to make China ready to join The Hague Agreement Concerning the International Deposit of Industrial Designs.

2) Patent term compensation is available where the patent grant occurs beyond 4 (four) years from the filing date and beyond 3 (three) years from the date of requesting substantive examination, with the exception of any unreasonable delay caused by the applicant's side. This provision is considered as echoing the voice of domestic patent filers for quicker grant of patent rights.

3) So as to make up the time period taken by the regulatory process of a new drug, patent term compensation of up to 5 (five) years is available for a patent concerning the new drug for which marketing authorization has been obtained, provided that the total protection period after the approval of marketing for the new drug is no longer than 14 (fourteen) years. This is the very first time for the Chinese law to make patent term extension available for pharmaceutical patents.

4) The Patent Office (China National Intellectual Property Administration, CNIPA) is empowered to handle patent infringement disputes which are influential country-wide, at the request of an involved party or an interested party. It is noted as the first time for the law to entrust the Patent Office to handle disputes over patent infringement, which handling is supposed to be more speedy and efficient as compared to the judicial track of patent infringement.

5) The acts of willful, serious infringement of a patent right are subject to punitive damages of up to 5 times of regular damages. This provision has been attracting attention of the public ever since it was initially proposed. In fact, 3 (instead of 5) times of regular damages was put forward when the amendment was initially drafted. Notably, the punitive damages provided in the law (5 times of regular damages) are even harsher than in the US practice. Doubtlessly, the amendment makes it possible for patentees to collect relatively high damages when facing willful, severe infringement. However, it is yet to be tested in the future court practice how the legal provisions are applied.   

6) The upper limit of the "statutory damages" (meaning the damages awarded at the handling court's discretion) is lifted to amounting 5 million RMB (equivalent to about USD 745,000) from 1 million RMB, which is currently applied. This is obviously another embodiment of the idea of strengthening patent protection.

7) Limitation of actions for patent infringement actions is extended to 3 (three) years from 2 years, which is currently applied. Also, the starting point of the limitation of actions is now the date on which the patentee or an interested party obtains knowledge of the act of infringement and of the identity of the infringer(s). This change makes it possible to avail patentees assertion of legal rights more practically.

2. Introduction of patent linkage system for pharmaceutical patents

There are new provisions in the amendment that are believed to set forth the framework of China’s patent linkage system for pharmaceutical patents. Again, this is the very first time for the Chinese law to adopt such a system.

1) In the case where, in the regulatory process for drug evaluation and approval, any dispute arises between the applicant for drug marketing authorization and concerned patentee or an interested party over a patent right related to the drug for which regulatory registration is applied for, an involved party may institute legal proceedings in the people's court for requesting a verdict on whether the technical solution related to the drug, for which regulatory registration is applied for, falls with the protection scope of a pharmaceutical patent right owned by a third party. The regulatory authority (National Medical Products Administration, NMPA) may, within prescribed time limit, make a decision on whether to suspend the approval of marketing of the concerned drug in accordance with an effective ruling of the people's court.

2) The applicant for drug marketing authorization and concerned patentee or an interested party may also request the Patent Office (China National Intellectual Property Administration, CNIPA) for an administrative ruling on the dispute over a patent right related to the drug for which regulatory registration is applied.

3) Detailed measures for matters relevant to patent linkage are to be enacted by the regulatory authority (NMPA) in collaboration with the Patent Office.

3. Patentability

1) "Partial design" (meaning a design of a part of a concrete product, but not of the entire product) becomes patentable, in contrast with the current law in which a design application must be for an entire product. This change makes the law more lenient to designers who intend to have the patent protection right on the gist of their designs.

2) The so-called "grace period" (meaning a six-month period during which certain scenarios of disclosure do not constitute novelty-destroying disclosure) is now applicable to the case where the disclosure is for the first time at a time of national emergency state or exceptional circumstances and for the purpose of public interest. This new provision is believed to have been prompted by the current coronavirus pandemic and is aimed at encouraging early publication of technologies needed for the handling of social crisis such as the pandemic.

3) Statutorily unpatentable subject matters now include processes for nuclear transformation in addition to substances obtained by means of such processes, which are already prohibited in the current law. This is merely a confirmation of the current practice.

4. “Open license” of patents

As part of the effort of to promote commercialization of patents, an “open license” mechanism is introduced in the amendment. A patentee may declare to the Patent Office that his patent is licensed to any entities at indicated royalties. Then any parties who are interested in the license may obtain it simply by notifying the patentee and paying the required royalties without any further negotiations with the patentee.  

5. Domestic priority for designs

Domestic priority for design applications is newly introduced. An applicant for a design patent may claim priority from his earlier Chinese application on the same design within 6 months from the filing date of the latter. This is to give the same leniency to domestic design filers as foreigners, who can enjoy conventional priority.