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

publication date: Jan 19, 2009
 | 
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 and Canada Practices, 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. 

We have published Dr. Liu’s articles on the Draft Proposals for China Patent Law revision. Here, we present his review of the now accepted law, which will become effective on October 1, 2009. The material will appear in three installments, published weekly. In this section, Dr. Liu covers the subjects of “Novelty and Inventiveness,” Secrecy Check and Foreign Filing License, and “Crossover of Invention and Utility Model.” Forthcoming topics include “Design Patents,” “Limited Exceptions from Infringement,” and “Injunctive Relief,” among others.


On December 27, 2008, just a few days before the turn of the New Year, the Standing Committee of the Chinese National People’s Congress approved the third revision of the Chinese Patent Law. The newly revised law is expected to become effective on October 1, 2009. As a final update, this article presents an overview of the process and major changes approved by the top legislature in the third revision of the Chinese Patent Law.

INTRODUCTION

Before this third revision, the Chinese Patent Law has been revised in 1992 and 2000 following enactment of the law in 1984. The first revision of 1992 was driven by the government’s intention to further open up the country’s economy to the global market and also partially affected by the promises in the US-China Memorandum of Understanding (“MOU”) on protection of intellectual property rights signed in January 1992. The second revision in 2000 resulted from the nation’s effort to develop a market system and meet with the international norm after the country joined the WTO in November 1999.

The earlier two revisions may be regarded as aiming to establish the domestic environment for intellectual property protection and to attract more foreign technologies and investments. The third revision, on the other hand, is based more on the country’s own twenty-year experience with patent examination and protection. The revision reflects the government’s intention to enhance the quality of domestic innovations by raising the bar on patent requirements and provide adequate patent protection for both domestic and foreign industries (See: Charles C. Liu: A Balancing Act, CHINA DAILY, China Business Weekly—IP Special, page 9, September 9, 2008).

As mentioned in our earlier articles of this series, the process of the third revision began in April 2005. The preliminary investigation and preparation lasted about a year. After it was complete, a draft was released on July 31, 2006 by the State Intellectual Property Office (SIPO) for comments and a modified draft was submitted on December 27, 2006 by the SIPO to the State Council (Draft Revision 12/2006). Subsequently, a draft was released on February 28, 2008 by the legislative office of the State Council for comments (Draft Revision 2/2008) and a further draft was submitted on August 25, 2008 by the State Council (Draft Revision 8/2008) to the Standing Committee of the People’s Congress for the legislative approval. Now, the top legislature passed the final version of the revision (Finalized Revision 12/2008), with enforcement starting October 1, 2009.

In the following, we will discuss the major issues of the patent law as revised that are pertinent to innovative entrepreneurs and patent practitioners. To follow the format of our earlier published articles, we will also make comparison, whenever necessary, between the approved provisions in the finalized revision and the proposed changes in the drafts.

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

NOVELTY AND INVENTIVENESS

The draft revision proposed to tighten the novelty requirement. The current patent law adopts an absolute novelty test (novelty being defined with no territorial boundary) for prior publication and a relative novelty test (novelty being defined with a territorial boundary of China) for prior use or knowledge. Whereas, the Finalized Revision 12/2008 adopts the proposed changes in various drafts, such 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 arts is removed.

Prior to this revision, 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. As the newly revised novelty test becomes effective, 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 Finalized Revision 12/2008 does not adopt a proposal presented in Draft Revision 12/2006 that inserts the legal fictional figure of “a person of ordinary skills in the art” into the legal definition of inventiveness. 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 in the earlier draft intended to give some guidance on the somewhat confusing issue of inventiveness. Apparently, as reflected in the Finalized Revision 12/2008, the legislature does not revise the law regarding inventiveness for invention patents and utility model patents; this may be left as an issue to be further established in the practice of the courts and the SIPO. It is worth noting, however, that a thin inventiveness requirement, as being discussed below, is added in the revision to raise the hurdle for the applications of a design patent.

SECRECY CHECK AND FOREIGN FILING LICENSE

The regulations on patent applications for inventions made in China have caused much concern to many domestic and foreign entities that have business in China. In the revision drafts, different proposals have been released. Nevertheless, in the Finalized Revision 12/2008, the regulations are generally depicted as a rule of foreign filing license somewhat like that provided in the US patent system.

Prior to this finalized revision, the 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. On the other hand, the law does not provide any measure to deal with the cases where a person fails to follow the rule. In practice, this rule raised much concern and caused great uncertainty among inventors and entrepreneurs both domestically and overseas.

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 replace the obligatory rule of “first file in China” to the rule of foreign filing license and to extend the regulation to both domestic Chinese and foreigners.

The Finalized Revision 12/2008 provides that “any organization or individual” shall petition the state patent office to run a “secrecy check” on an invention made in China “prior to” the filing of a patent application based on such invention for either invention patent or utility model patent in a foreign country. The adopted provision makes the government’s position more straightforward than the proposal stated in the Draft Revision 8/2008, the draft proposing that any person “may” file a patent application directly in a foreign country based on an invention made in China.

The Finalized Revision 12/2008 adopts the patent-denial penalty provision proposed in the earlier drafts, i.e., the Draft Revision 6/2006 and Draft Revision 12/2006, but somehow was not included in the Draft Revision 8/2008. The patent as revised states that no patent shall be granted for patent application filed in China if the applicant failed to follow the rule of foreign filing license.

It is noted that, some detailed rules, as proposed originally in earlier drafts, to implement the foreign filing license are not included in the revised law. Such detailed rules, for example those for petition and secrecy check, will be more reasonably included in the Rules Implementing the Patent Law (“Patent Rules”) and the Patent Examination Guidelines (“Examination Guidelines”).

On November 5, 2008, the SIPO released its proposal as the first draft revision of the Patent Rules (Draft Revision of Rules 11/2008), the proposed rules stating that a petition for foreign filing license is implied whenever an applicant files a regular national application or PCT application at the SIPO.

The proposed rules also state that, within two months from the office’s receipt of the petition, the SIPO shall give a notice to the petitioner if upon the office’s review the related invention is regarded as to be “possibly related” to state security or interests, and further that, if no such notice is received by the petitioner, a foreign filing license is deemed to be granted and thus the petitioner is permitted to file applications for foreign patent.

Based on the proposed rules, moreover, after the above notice was given and within four months from the office’s receipt of the petition, the SIPO shall give another notice to the petitioner whether a secrecy order is necessary, and further that, if no such notice is received by the petitioner, a foreign filing license is deemed to be granted and thus the petitioner is free to file applications for foreign patent. It shall be noted that the detailed rules mentioned here are subject to change during the process of the revision of the Patent Rules.

CROSSOVER OF INVENTION AND UTILITY MODEL

Under certain circumstances for an invention related to physical items, a person may file patent applications for both invention and utility model, even though only one patent, for either invention or utility model, can ultimately be obtained. If a person has both an issued patent and a pending patent application, both based on the same invention, and the patent application is allowable for issuance, the applicant has two options: To abandon the patent right of the issued patent, a utility model patent for example, or to withdraw the pending patent application, an application for invention patent, for example.

The Finalized Revision 12/2008 inserts a clause to address the above issue, such that if both an application for utility model patent and an application for invention patent that are based on the same invention” were “filed on the same date by the same applicant,” and if the earlier granted utility model patent is still in force, the invention patent may be granted provided that the applicant claims to abandon the earlier granted utility model patent.

It is worth noting the changes in the definition of the effective date of the abandonment of the earlier granted utility patent. When the Examination Guidelines were revised in June 2006, the effective date of such abandonment was changed from the date of issuance of the invention patent to the date of filing of the application for the utility model patent. As a result, the options of the crossover became much less attractive. It seems that the legislature may reinstate the old rule on the timing of the abandonment, which is reflected in the Draft Revision of Rules 11/2008.

It should be pointed out that, based on the Examination Guidelines, although an applicant may take advantage of the crossover of the two types of applications when filing the applications in China through the Paris Convention, the applicant is obligated to select either invention or utility model, but not both, at the national entry into China for a PCT application.

To be continued...


Disclosure: none.


 

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