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Waves of Changes in Chinese Patent Law and Regulations: A Further Update, Part I

publication date: Oct 20, 2008
 | 
author/source: Charles C. Liu, PhD, JD, and Jeanne J. Liu

Editor's note: This article was prepared by Charles C. Liu, PhD, JD, Partner, Director of US Practice, Unitalen Attorneys at Law and Jeanne J. Liu. Unitalen, the largest private IP law firm in China (see website), is a partner of ChinaBio® Accelerator. Dr. Liu and Ms. Liu have kept ChinaBio® Today readers current with the evolving changes in each Proposed Draft of the new Patent Law. Here they discuss the Draft of August 2008. Earlier, they reviewed the 2006 Draft (see article) and the February 2008 Draft (see article).

We will present the material in three installments, which will appear on a weekly basis. In this section, They cover the subjects of “Novelty and Inventiveness” and “Secrecy Check and Foreign Filing License.” Forthcoming topics include “Crossover of Invention and Utility Model,” “Design Patents,” and “Disclosure of Genetic Resources,” among others.


On August 25, 2008, the day after the Beijing Olympics came to a spectacular close, Chinese legislature calmly resumed its review on a draft revision of the patent law. This article, following our earlier published ones, is to provide further update on the ongoing revision process of the Chinese patent law.


Introduction


Since its enactment on March 12, 1984 (effective April 1, 1985), the Chinese patent law has been revised twice in the past: The first revision on September 4, 1992 (effective January 1, 1993) and the second revision on August 25, 2000 (effective July 1, 2001).

The effort for third revision began in April 2005. As mentioned in our earlier articles, a draft for the third revision was released by the State Intellectual Property Office (“SIPO”) for comments on July 31, 2006 and a modified draft was submitted by the SIPO to the State Council on December 27, 2006 (“Draft Revision 12/2006”), and a draft was released by the legislative office of the State Council for comments on February 28, 2008 (“Draft Revision 2/2008”).

Recently, the State Council submitted a new draft on August 25, 2008 (“Draft Revision 8/2008”) to the Standing Committee of the People’s Congress for the legislature’s approval. It is expected that the Congress will approve a final version by the end of this year, or, most likely, early in 2009.

Over the past two decades, the engine of the nation’s economy has been running at a high speed, and now, to maintain its momentum, the engine needs to be lubricated and injected with the fuel of innovation. The earlier two revisions of the patent law are focused on the establishment of a basic yet comprehensive system for patent procurement and protection. The third revision reflects the government’s intention to strive to encourage high quality innovations by raising the bar on patent requirements and provide adequate patent protection by tightening the measures on patent enforcement.

Here, we will go over the major issues of the revision that are pertinent to innovative entrepreneurs and patent practitioners as a further update on the process of the third revision as presented in our earlier published articles. The changes proposed in the draft revision, especially in the Draft Revision 8/2008, will be highlighted in comparison with the counterparts of the current patent law.

The major issues of the revision include: Novelty and inventiveness, inventions made in China and foreign filing license, crossover of invention and utility model, design patents, patent infringement and limited exceptions, damages and injunctive relieves, patent misuse and unfaithful proceeding, compulsory licenses, disclosure of genetic resources, designation of patent firms to handle foreign-related matters, and empowerment of patent administration.


Novelty and Inventiveness


The draft revision proposes to tighten the novelty requirement. The current patent law adopts an absolute novelty test (novelty being defined territorially as anywhere in the world) for prior publication and a relative novelty test (novelty being defined territorially in China only) for prior use or knowledge. Whereas, in the Draft Revision 8/2008, as in the prior drafts, it is proposed that the absolute novelty test will be applied not only for prior publication but also for prior use or knowledge. Thus, the boundary limitation attached to the publicly used or known prior art is expected to be removed.

Under the current law, an invention could be considered as novel even if it is publicly used or known in a foreign country. The argument was made that the patents granted under the relative novelty standard may prevent certain technologies of foreign origin from being freely used in China, and, on the other hand, that domestic industries may have less incentive in making their own innovations rather than simply copying or repeating technologies of foreign origin. If the proposed test is adopted, patent applicants, especially foreign ones, may have to keep their inventions from being publicly disclosed anywhere before filing patent applications in China.

For inventiveness, the name of the legal fictional figure of “a person of ordinary skills in the art” is inserted into the legal definition in the Draft Revision 12/2006. Based on that draft, the inventiveness of an invention is defined as being an invention having significant substantive characteristics to a person of ordinary skills in the art and constituting a substantial technological advance in the field. The draftsmen of the revision intended to give some guidance on the somewhat confusing issue of inventiveness.

In the Draft Revision 8/2008, however, the above insertion is not included. Apparently, the legislature is not going to revise the law regarding inventiveness for invention patents and utility model patents. It is worth of noting, however, that a thin inventiveness requirement is proposed to raise the hurdle for design patents.


Secrecy Check and Foreign Filing License

A hang-up in the process of the patent revision, which causes much concern to many domestic and foreign entities that have business in China, is the regulations on patent applications for inventions made in China.

The current patent law requires that if a “Chinese individual or organization” intends to file a patent application based on an invention made in China, he must file the application in China first. In practice, this rule raised much concern among inventors and entrepreneurs both domestically and overseas. To tackle this issue, the proposed draft revision tilts the scale towards the inventors or applicants.

Intending to encourage Chinese nationals to file patent applications overseas and to enhance the competitiveness of Chinese industries in the global market, the patent regime intends to remove the obligatory rule of first file in China. Draft Revision 8/2008 states that “any individual or organization” may file a patent application in a foreign country based on an invention made in China.

For national security reasons, on the other hand, the draft further states that the applicant should petition the state patent office to run a “secrecy check” before filing a patent application in a foreign country. This draft, however, is unclear about what happens if someone fails to petition for a secrecy check. One might expect more detailed rules, for example those regarding the mechanism and retroactivity of the secrecy check, to be proposed later in the revision of the rules implementing the patent law (“Patent Rules”).

It is worthy of notice that the Draft Revision 12/2006 proposes to change the obligatory “first file in China” rule to a foreign filing license rule, and, on the other hand, extends the regulation to both domestic Chinese and foreigners such that a foreign filing license is required for “any individual or organization” if the application is based on an invention made in China. To tighten the control, moreover, the prior drafts added a patent-denial penalty provision if any person failed to obtain the requisite foreign filing license. Such rather rigid penalty provision remains in the Draft Revision 2/2008 but is not stated in the Draft Revision 8/2008.

On the other hand, some detailed mechanisms to implement foreign filing license as originally proposed in the prior drafts are not shown in the most recent draft. For example, the Draft Revision 2/2008 included a paragraph that a foreign filing license should be granted unless a secrecy order is necessary for national security or for important public interests. The Draft Revision 2/2008 also states that a petition for foreign filing license shall be deemed as being included with the filing of a Chinese patent application, but that foreign filing license is not required if six months lapse after the state patent administration receives the patent application and has not issued any order to prevent the applicant from foreign filing. The Draft Revision 8/2008 does not include such detailed mechanisms. The implementation of these and other more detailed rules is expected as one of the tasks for the revision of the Patent Rules.


Disclosure: none.

 

 


 

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