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Waves of Changes in Chinese Patent Law and Regulations–Part IV

publication date: Jan 31, 2008
 | 
author/source: Charles C. Liu, PhD, JD and Jeanne J. Liu

Editors note: This article was prepared by Charles C. Liu, PhD, JD, Partner, Director of US Practice, Unitalen Attorneys at Law, and Jeanne J. Liu. It was originally published in China Intellectual Property, 20:44-51 (2007) and appears here with the authors’ permission. Unitalen, the largest private IP law firm in China (see website), is a partner of ChinaBio® Accelerator

This is the last of four installments, which have been appearing on a weekly basis. In this section, Dr. Liu and Ms. Liu cover the subjects of “Patent Misuse and Unfaithful Proceedings,” “Compulsory Licenses,” “Disclosure of Genetic Resources” and “Designation of Patent Firms to Handle Foreign-Related Matters.” If you missed them, you may click on the following to read Part I, Part II and Part III.



INTRODUCTION

The Chinese Patent Law, since its enactment on March 12, 1984 (effective April 1, 1985) was previously revised on September 4, 1992 (effective January 1, 1993) and on August 25, 2000 (effective July 1, 2001). The draft of the third revision of the Patent Law (“Patent Law (Draft Revision 2006)”) is expected to be finalized in 2008 after the current 2000 version has been effective for eight years.

The draft of the third revision was released for comments on July 31, 2006 by the State Intellectual Property Office (“SIPO”) and was further revised and submitted as a draft for review to the Judicial Committee of the State Council on December 27, 2006. It should be pointed out that the SIPO released its revised administrative guidelines, i.e., the Patent Examination Guidelines (“Examination Guidelines (Revised 2006)”) on July 1, 2006. Also, a revision of the Implementing Rules of the Patent Law (“Patent Rules”) is expected to follow this revision of the Patent Law. Task forces were set up earlier this year to conduct research and to prepare an initial draft for the third revision of the Patent Rules.

In this article, certain issues that are pertinent to foreign businesses and practitioners are summarized. The presentation here is mainly based on the Patent Law (Draft Revision 2006) to provide a general picture of the proposed law changes and also touches upon certain practical issues mentioned in the Examination Guidelines (Revised 2006).


* * *


PATENT MISUSE AND UNFAITHFUL PROCEEDINGS

To protect the legitimate interests of the public, the Patent Law (Draft Revision 2006) adopts provisions on prior art defense and malicious prosecution. For the prior art defense, the draft states that in a judicial or administrative proceeding for patent infringement if the defendant can forward sufficient evidence showing that the patented subject matter falls within the scope of the prior art, the defendant’s conduct shall be held as not constituting infringement.

The draft further provides that where a patent owner knew that his patented art belongs to a prior art, but nevertheless unfaithfully brought an action against another party in an administrative or judicial proceeding for patent infringement, the patent owner will be held liable to the alleged infringer for damages caused by the unfaithful accusation.

Addressing the issue of unfaithful proceedings, the draft also provides that if a patent owner, through his conduct, expression or silence, caused another party who practices the patented invention to reasonably believe that the patent owner was not and would not claim the patent rights, but the patent owner later brought an action against the other party before a court or patent administration, the patent owner’s claim will be deemed as against the principle of faithfulness and honesty. Thus, the patent owner will be held to have no right for compensation for the period prior to the date of the action and not have the right to ask the court or patent administration to order the other party to cease practicing the invention.


COMPULSORY LICENSES

The Patent Law (Draft Revision 2006) also includes significant changes to provisions on compulsory licenses of patents for the purpose of protecting the legitimate interests of the public. The draft provides that the patent administration may grant a compulsory license, upon request, for the use of a patented invention or utility model if the patent owner, without any legitimate reason, has not practiced or adequately practiced the patented invention for three years after issuance of the patent, or if the patent owner’s practice of the patented invention is deemed by the authority as unfairly excluding or restraining competition.

To implement China’s commitment under the Doha Declaration on the TRIPS Agreement on Public Health adopted by the WTO Ministerial Conference in 2001, the Patent Law (Draft Revision 2006) addresses the issue of compulsory licenses for limited purposes, such as for state emergencies or public interest. The draft stipulates that public health crises caused by epidemics constitute a state emergency, and the prevention, treatment, and control of the spread of epidemics all fall under the public interest banner. The draft also addresses the issue of compulsory licenses to provide that the manufacturing and export of patented pharmaceuticals that treat epidemics to help underdeveloped countries that do not have any, or sufficient capacity to manufacture pharmaceuticals to treat epidemics.


DISCLOSURE OF GENETIC RESOURCES

China is rich in genetic resources and traditional knowledge. For the third revision of the patent law, much of the discussion focused on the protection of genetic resources in China.

For the first time under Chinese patent law, the draft of revision introduces special measures to protect genetic resources. It is stipulated in the draft that the source of a genetic resource should be disclosed in the specification of a patent application if the accomplishment of the invention relies on the acquisition and use of the genetic resource.

In the draft, it is further stipulated that no patent shall be granted to an invention if acquisition or use of the genetic resource for the accomplishment of the invention violates relevant laws and regulations. Detailed requirements for the disclosure of genetic resources are expected to be worked out later in the revision process of the Patent Rules.


DESIGNATION OF PATENT FIRMS TO HANDLE FOREIGN-RELATED MATTERS

The current Chinese Patent Law, since its enactment in 1984, has a special clause which empowers the state patent administration to designate certain patent agencies to handle foreign-related maters for patent prosecution. According to such clause, any domestic Chinese applicants who intend to file patent applications abroad or any foreign applicants who intend to file patent applications in China have to entrust a Chinese patent agency designated by the state patent administration. It is obvious that such governmental designation as defined in the patent law becomes obsolete and unfair.

Under the Patent Law (Draft Revision 2006), however, the above requirement of designation will no longer be required. Thus, foreign applicants may entrust any legally formed patent agency in China to represent their patent applications in China, and on the other hand, domestic Chinese applicants may entrust any legally formed patent agency in China which ultimately works together with a foreign law firm, or even directly entrust a foreign patent firm to file their patent applications in a foreign country.


* * *

Now, the wave front of the ongoing changes in Chinese Patent Law and regulations has touched the shore of the system of patent prosecution and enforcement in China. While we, as either innovative entrepreneurs or patent practitioners, surf the waves of change, we should listen to the waves and look to waters ahead and further more than the shores we wish to reach. We will continue to watch the ongoing process of the third revision of the Patent Law and Patent Rules, and further revision of the Patent Examination Guidelines.



 

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