The Revised Chinese Patent Law. By Philip Graff, Partner and Chinese Business Group Leader, MAQS Law Firm Copenhagen

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The Standing Committee of China’s National People’s Congress (NPC) approved the third Amendment to China’s Patent Law on 27 December, 2008. The revision will take effect on 1 October, 2009. The Patent Law of China was first implemented on 1 April 1985. Amendments were subsequently made in 1992, 2000 and 2008, respectively.

Before the revision was presented to the NPC for hearing, EU has supported some conferences hosted by the Legislative Affairs Office of China’s State Council and Patent Office to solicit opinions and experience from European experts on a number of questions of interest to the Chinese drafting team. Several foreign business associations, academics, practitioners and officials, especially from EU, have been closely monitoring the drafting process and have been actively lobbying for the changes. The significant changes are:

Filing in China First is Relaxed
The current patent law in China requires that Chinese citizens or companies must first apply for Chinese patents before they file for foreign patents. This requirement will be removed, and foreign companies in China can get an international patent under the Patent Cooperation Treaty (PCT) through other countries such as EU countries. This will give the liberty for the Company to better control where the suits or objections to any patent application will be dealt with. 

Absolute Novelty
The revision adopts the “absolute standard for novelty” principle to authorize patents rather than “relative novelty” in the current law texts. This change will harmonize China’s Patent Law with international standards.

Under “relative novelty,” as long as an invention or technology is new in China, it can be patented in China. But with the new “absolute” principle, a Chinese patent can only be given to an invention or technology that is totally new worldwide. It is good news to foreign companies which already have registered patents, e.g., for the biotechnological pharmacy industry.

Designer Has the Right to Stop “Offer to Sell”
The current law only prohibits making, selling or importing the product incorporating patented design for production or business purposes. The revision added “offer to sell” to the list of the prohibition. Therefore, the patent owner will soon have the right to stop any infringement in advertisements, displays or exhibitions.

Compulsory License
The revision states that China’s Patent Office may grant a compulsory license to exploit a patent for an invention or utility model if the patent owner has not adequately been used so for three years after issuance of the patent. Besides, the revision states that a compulsory license will also be issued with respect to China’s new anti-monopoly law. Furthermore, the revision specifies that a compulsory license will be issued during the public health emergencies, in order to maintain the government’s ability to respond to outbreaks of disease. This section of the compulsory license amendment may be prejudicial for the biotechnological pharmacy industry. We believe that the Chinese government will use the new stipulation to negotiate with international pharmaceutical companies on drug price and license.

The Enforcement
The revision raises the penalty for patent infringement from 300 percent to 400 percent of illegal profits and increases the damage payment from 50,000 RMB to 200,000 RMB, equivalent to 164,000 DKK, even if there is no profit from the infringement. With respect to cases where it is difficult to calculate the monetary loss, damages and illegal profit, the compensation to the patent owner has been increased with the maximum amount of 1 million RMB.

The revision has been made in order to change the perception that China is too lenient to the Patent infringers. The implementation regulations and guidelines for examination are still under review and the practical implementation will be developed in the coming years.

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