Editor's note: This article was prepared by Charles C. Liu, PhD, JD, Partner, Director of US and Canada Practices, Unitalen Attorneys at Law, and Jeanne J. Liu. In this article, the authors provide new information to update their earlier published article: “Waves of Changes in Chinese Patent Law and Regulations,” which was published originally in China Intellectual Property, 20:44-51 (2007) and subsequently appeared online in a series of four installments in January 2008 at ChinaBio® Today (see article). Unitalen, the largest private IP law firm in China (see website), is a partner of ChinaBio® Accelerator.

In this article, the authors' attention is focused on the trend in the recent changes shown by comparing Draft Revision 2008 to Draft Revision 2006. The major issues of the changes include: Willful infringement, misuse of patent rights and unfaithful accusation, inventions made in China, and empowerment of patent administration. The first two topics appear in this installment, and the remaining issues will be covered in an article appearing next week.

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On June 18, 2008, China and the United States wrapped up their fourth round of Strategic Economic Dialogue in Annapolis, Maryland. Co-chaired by visiting Chinese Vice-Premier Wang Qishan and U.S. Secretary of Finance Henry Paulson, both sides reached important agreements on cooperation in energy security, environment sustainability, financial and macro economic management, and trade and open markets.

During the two-day talks, both sides also exchanged views on issues of common interests such as global financial turbulence and intellectual property rights. On June 17, 2008, China’s Vice-Premier Wang Qishan also published an article “China’s IPR Regime” in the Wall Street Journal. In that article Mr. Wang addressed China’s National IP Strategy Outlines as the outlines were released by the State Council on June 5, 2008.

In the National IP Strategy Outlines, five strategic points are presented:

1. Expedite legislative process to revise IP laws and regulations for protection of patents, trademarks and copyrights, and for protection of genetic resources, traditional knowledge, folk arts, and geographical marks;
2. Strengthen IPR enforcement through administrative proceedings and, especially, judicial actions to heighten penalties and deterrence against wrongful actions and to improve the effectiveness of IPR protection;
3. Ensure legitimate and proper use of IP rights and prevent misuse of IP rights to balance the interests between IP owners and the general public and encourage fair competitions;
4. Promote IP creation and use by stimulating enthusiasm for invention and innovation, implementing incentive-based IP policies, and encouraging business entities to participate in competitive IP practice; and
5. Foster IP-oriented culture by launching extensive educational programs to encourage innovation, by promoting the principle of honesty and credibility and condemning acts of plagiarism, piracy or counterfeiting, and by enhancing IPR awareness among the general public.

The Chinese government is urging an expedited revision of the nation’s IP laws and regulations, and a strengthening of its IP enforcement system. The third revision of Chinese patent law has been a hot issue for patent practitioners in China and around the world. The draft of the third revision was released for comments on July 31, 2006 by the State Intellectual Property Office (SIPO), and it was further revised and submitted as a draft for review to the legislative office of the State Council on December 27, 2006 (Draft Revision 2006), and a more recent draft was released by the legislative office of the State Council for comments on February 28, 2008 (Draft Revision 2008).

Partially due to the nationwide preparation for the Beijing 2008 Olympic Games, it is unlikely that the finalization of the revision of Chinese patent law will occur this year as expected earlier. Instead, after the Beijing 2008 Olympic Games in August, the process of the revision will resume at full speed. A draft is expected to be submitted later this year to the National Congress, and a final draft is expected to be delivered in 2009 after the legislative review by the Standing Committee of the National Congress.

It is worthwhile to notice the dynamic changes between various drafts of the revision. This article is to provide updated information as a follow up to the authors’ earlier published article: “Waves of Changes in Chinese Patent Law and Regulations,” which was originally published in China Intellectual Property, 20:44-51 (2007) and subsequently appeared online in a series of four installments in January 2008 at ChinaBio® Today (see article). In that article, based on the Draft Revision 2006, we summarized major issues of the law revision, which are pertinent to foreign businesses and practitioners.

In this article, our attention will be focused on the trend in the recent changes shown in the Draft Revision 2008, in comparison with the Draft Revision 2006. The major issues of the recent changes in the drafts include: Willful infringement, misuse of patent rights, unfaithful accusation, inventions made in China, and empowerment of patent administration.

To address the issue of willful infringement, the Draft Revision 2006 states that if a judgment is made, the patent administration has the power not only to order the infringing party to stop the infringement, but also to confiscate the illegal gain and impose a fine upon the infringing party, and further that the fine could be up to three times the illegal gain or up to CNY 100,000 if no illegal gain can be found. In the Draft Revision 2008, however, the earlier proposed provision on willful infringement was removed and thus not shown in the recent draft. One of the arguments on this issue is that the key element of willfulness could not be reasonably defined.

For patent misuse and unfaithful accusation, the Draft Revision 2008 removed a provision proposed in the Draft Revision 2006, the provision stating that a patent owner shall be held liable if he, while knowing that his patented art belongs to prior art, brought a court or administrative action for infringement against another party and caused harm to the other party. On the other hand, the Draft Revision 2008 added a provision which was not presented in the Draft Revision 2006, the newly added provision stating that a patent owner shall be held liable if he brought a court or administrative action for infringement against another party without any factual basis or legitimate reasons, but rather solely in the purpose of harassing or causing harm to the other party, and actually caused harms to the other party.

To be continued.

Disclosure: none.