Legal Alert on the Third Revision of Chinese Patent Law and its Implementing Regulations
Legal Alert on New Revision of Chinese Patent Law and its Implementing Regulations
China has revised Patent Law at the third time and this Third Amendment was adopted on 27 December 2008 and effective on 1 October 2009. Its new Implementing Regulations was adopted on 9 January 2010 and effective on 1 February 2010. Additionally new Examination Guidelines was effective on 1 February 2010. Certain consideration must be given in your patent filing and prosecution with regard to such new changes in the new revision of Patent Law ("the Law") and its new Implementing Regulations ("the Regulations").
You could not use the conflicting application strategy any more (Article 22)
Prizes and Remunerations for service inventors or designees (Article 16, Rules 76, 77 & 78)
No maintenance fee for application since 1 February 9, 2010 (Rule 93)
Designs on ichnographic prints mainly for identifying are not patentable (Article 25)
Brief specification is required for a design application (Article 27)
Two or more similar designs are allowed in one application (Article 31, Rules 28 & 35)
Parallel Import is allowed (Article 69)
Bolar Exception is adopted (Article 69)
A prior art Defense is included (Article 62)
Evidence Preservation before instituting a lawsuit is available (Article 67)
Damages and fines are increased (Articles 65 & 63)
More detailed provisions on compulsory license are added (Articles 48, 50 & 52-53)
Pledged patent should be recorded (Rule 14)
The Board may not terminate the examination after the invalidation request is withdrawn (Rule 72)
Filing a patent application before you release any information related to your invention (Articles 22 &23)
Since 1 October 2009, pursuant to the absolute novelty standard in the third revision of Patent Law, an invention/utility model or design shall not be an existing technology or design, publicly known in China or any other country in the world, before the date of filing. Therefore, it is important to file the patent application before releasing any information related to your invention or design which may possibly cause it to be publicly known.
Before 1 October 2009 pursuant to the previous law, however, public use or knowledge outside China was not considered when determining novelty and inventiveness, so an invention that was publicly known or used outside China might be patented in China. The third revision enhances this novelty standard.
An earlier application may bar the novelty of a later application filed by the same applicant (Article 22 of the Law)
An earlier application that is filed before but published later than the filing date of a subject application is called a conflicting application.
Before 1 October 2009, pursuant to the previous law, an identical earlier conflicting application did not destroy the novelty of the later subject application if both applications were filed by the same applicant. Therefore the applicant could use the conflicting application strategy to file a later application to back up the earlier application in some circumstances.
Since 1 October 2009, the Third Amendment provides that an identical earlier conflicting application filed by any one including the same applicant can definitely destroy the novelty of the later subject application. The previous strategy does not work.
Invention plus utility model strategy for protecting product invention (Article 9 of the Law, Rule 41 of the Regulations)
After 1 October 2009, you are able to effectively use the invention plus utility model strategy to obtain both a quick protection and a long-term protection for your invention by applying for both invention and utility model patents at the same day.
Before 1 October 2009, under the previous law, there was a strategy for an applicant to apply for both invention and utility model patents for the identical invention-creation, which brought a quick protection through the utility model application due to its quick grant and registration-like policy, avoiding the long examination term of invention application, and a long term protection through the invention application due to its long protection term, avoiding the short protection term of utility model patent. In order to avoid double patenting the applicant would be required to abandon the utility model patent when receiving the allowance of the invention patent. Pursuant to the previous law such abandonment of utility model patent would be deemed effective from the filing date, which caused the strategy to be not complete effective.
Now the third revision recognizes such a strategy and requires that applications for patent of utility model and patent of invention for the identical invention-creation be filed on the same day and that the applicant declare to abandon the patent right of utility model that has been granted earlier and not terminated at that time. The new law provides that such abandonment of utility model patent would be deemed effective from the issue date of the invention patent, which makes the strategy complete effective.
If you are interested in such a strategy, please be reminded that the new law requires that the applicant file two applications on the same day and the new regulations require that each of the two applications shall be claimed in the other application at the filing date.
A utility model patent could be generally granted in 10 months from the filing date and an invention patent in about three years. Therefore, this strategy brings a quick protection in about 10 months from the filing date through the utility model, and a long-term protection in about 3 years through the invention patent. Please also keep in mind that the strategy only applies for certain product inventions. Any method and products that has no certain configuration, such as compound and material, are not patentable subject matters of utility model patent, and could not be covered by such a strategy.
Additional attention should be given to inventions made relying on Genetic Resources (Articles 5 & 26 of the Law and Rule 26 of the Regulations)
If your invention is made relying on genetic resources, please pay attention to the following:
first, your acquisition or use of the genetic resources shall not breach any relevant Chinese laws and regulations;
secondly, you must describe the direct source and the original source of the genetic resources in a form when filing the application under Paris convention or entering the Chinese national phase of a PCT application; if you could not describe the original source you must explain the reason.
Genetic resources here means materials obtained from human, animal, plant or microorganism which contain genetic function units and possess actual or potential values. Inventions made relying on genetic resources mean inventions made by utilizing the genetic functions of the genetic resources.
Filing a secrecy review is a must-be step for filing invention or utility model applications abroad for inventions made in China (Article 20 of the Law and Rules 8-9 of the Regulations)
If you, as a foreign enterprise, have a company or research institute in China, you must pay attention to the following regulations.
If your invention is substantively made in China, before filing a patent application for such an invention in a foreign country, you must file a secrecy review before the State Intellectual Property Office of China. Without such a review, your corresponding Chinese application will not be granted patent rights. Without such a review the granted corresponding Chinese patent will be invalidated too. A secrecy review may be filed independently for a technical scheme without any Chinese filing, or filed when or after filing a Chinese patent application. No secrecy review request is required for a PCT international application filed before the State Intellectual Property Office of China as a receiving office since such review has been already a routine procedure in the Office.
After receiving the request, the Office will examine timely, and issue a Notification of Allowance for Foreign Filing if a request for foreign filing is allowed or a Notification of Secrecy Review if a further examination is necessary. Pursuant to Rule 9 of the Regulations, if the requester has not received the Notification of Secrecy Review within four months since the requesting date, he can file a patent application for such an invention in a foreign country. If the requester after receiving the Notification of Secrecy Review has not received the decision within six months since the requesting date, he can also file a patent application for such an invention in a foreign country. Recently it takes 10 or more days to receive the Office抯 decision for most cases, from which it can be seen that currently it takes less than a month to obtain the decision from the Office.
Furthermore, the rule does not apply to designs. A design made in China is allowed to be filed in a foreign country without any secrecy review.
Prizes and Remunerations for service inventors or designees (Article 16 of the Law, Rule 76，77，78 of the Regulations)
-- Alert on Employment contract and internal management regulations
If you, as a foreign enterprise, have a company or research institute in China, you have to review your employment contract and internal management regulations due to the following new Law or Regulations.
For a service invention or design, the previous Law and Regulations provide that the state-own enterprises or institutions should award prizes to the service inventors or designers after the patents are issued, and award remunerations after the patents are exploited.
A service invention or design is an invention or design made by a person in execution of the task of the entity which employs him or made by him mainly by using the material and technical means of the entity.
In the new Law and Regulations, the similar regulations apply to all patentees, not limited to state-own enterprises or institutions. For a service invention or design, any patentee is allowed to conclude an agreement on such prizes and remunerations with its inventor or designer or set rules on its management regulations.
If there is no such an agreement or no rules in the management regulations, the patentee shall, for the issuance of a patent, award RMB3000 or more to the inventor of a invention patent or RMB1000 or more to the inventor of a utility model patent or designer of a design patent as prize, and a percentage of not ness than 2% from the profits after taxation earned from exploitation of an invention or utility model patent or a percentage of not ness than 0.2% from the profits after taxation earned from exploitation of a design patent.
All enterprises shall pay attention to the above regulations, either setting rules in your management regulations or adding related articles in the employment contracts. Otherwise the employees may request for prizes and remunerations under the new Law and Regulations.
No maintenance fee for application since 1 February 9, 2010 (Rule 93 of the Regulations)
The new Regulations cancel the maintenance fee for application, among those fees. The maintenance fee was annual fee for an invention application since the third year from its filing date and before its issuance. Cancellation of this maintenance fee is good news to applicants.
Designs on ichnographic prints mainly for identifying are not patentable (Article 25 of the Law)
Pursuant to the new law, no patent right shall be granted for designs about patterns, colors or combination thereof on ichnographic prints, mainly for identifying, such as certain labels on bottles. However some designs on ichnographic prints, such as textiles and wall papers, are still patentable since they generally is not mainly for identifying. Additionally if you wants to protect certain labels that are used on bottles or packages, you may still file design applications for the bottles or packages with such labels, which are patentable pursuant to the new law.
Brief specification is required for a design application (Article 27 of the Law and Rule 28 of the Regulations)
The new law requires a brief specification for a design application to describe the essential(s) of the design. The brief specification can be used for interpreting the protection scope of a patented design. The applicant should describe name and use of the product with the design, key design points, whether to protect colors, and any views omitting in the brief specification.
Now a design patentee can take action if the alleged infringer offers to sell its patented design product (Article 11)
Pursuant to the new Law, the patentee has the right to prevent any other person from making, offering to sell, selling or importing the product incorporating his patented design. In previous Law, the patentee has no right to exclude others from offering to sell the product with his patented design. This amendment benefits the patentee's enforcement.
Two or more similar designs can be filed in one application (Article 31 of the Law and Rules 28 & 35 of the Regulations)
Pursuant to the new Law, one design application can contain two or more, but no more than 10, similar designs for the same product, or two or more designs incorporated in products belonging to the same class and sold or used in sets. The previous Law only allowed the latter. This amendment significantly reduces the applicants' cost for filing similar designs for the same product.
The new Regulations also require one basic design must be designated in the brief specification from the two or more designs within this application.
A joint owner may exploit the patent itself or to grant a general license without approval from other owners (Article 15 of the Law)
In the previous law there is no provision about joint ownership. Now in the third revision, it provides that an agreement concluded by the joint owners governs the exploitation of patent rights; if no such an agreement, each joint owner will be able to exploit itself or to grant to a third party a general license of the patent, and the royalties therefrom should be distributed between the joint owners. However without obtaining approval of all other joint owners, one owner could not exercise any other rights, such as assigning, abandoning, or exclusive licensing.
Parallel Import is allowed (Article 69 of the Law)
The new Law allows parallel import. Once a patented product is sold by the patentee or an entity or individual authorized by the patentee, any other person using, offering to sell, selling or importing that product should not be deemed an infringement of the patent right.
Bolar Exception is adopted (Article 69 of the Law)
Now Bolar Exception is adopted too in the third revision. Therefore, no infringement should be found where the making, using and importing of a patented medicine or medical device is for regulatory approval purposes by a party intending to market the product after expiration of the patent.
An interested party may request for Evaluation Report of a Utility Model or Design patent and anyone may copy this report (Article 61 of the Law, Rules 56 & 57 of the Regulations)
Pursuant to the new Law, in an infringement dispute relates to a utility model patent or design patent, the people's court ("Court") or the administrative authority for patent affairs ("AAPA") may ask the patentee or interested party to furnish an evaluation report on the patent rights made by the SIPO as evidence during trying such infringement disputes.
In the previous Law only patentees could request the SIPO to make a search report on novelty and inventiveness, and the SIPO did not accept the request from any interested party. Therefore the new Law offers a possibility for the alleged infringer to request the SIPO to examine on the patent at issue for the novelty, inventiveness and other substantive requirements. Such a policy may prevent the utility model or design patentee from abusing the patent rights since both the utility model and design patent can be granted after registration-like procedures without any substantive examination on their novelty and inventiveness.
A prior art defense is included (Article 62 of the Law)
The new Law also provides that where an alleged infringer in a patent infringement suit can provide evidences to prove that the technology or design it exploits was "existing technology" or "existing design" at the filing date of a patent at issue, no infringement should be decided, in which existing technology or design is defined as publicly known technology or design in China or abroad, which is introduced to the Patent Law for the first time.
Evidence Preservation before instituting a lawsuit is available (Article 67 of the Law)
The new law adds provisions on evidence preservation. Other than the preliminary injunction measure, the patentee or interested party can also, before instituting a lawsuit, request evidence preservation before the People's Court.
Damages and fines are increased (Articles 65 & 63 of the Law)
Now the statutory damages are increased. In the third revision, if none of actual losses, a licensing fee and earned profits can be determined, the statutory damages are awarded between 10,000 to 1,000,000 RMB. And damages can include reasonable cost for seeking protection.
In the new law, for passing off, the administrative authority for patent affairs may impose a fine of not more than four times the illegal earnings, or if there is no illegal earning, a fine of no more than RMB 200,000. In the previous law the top limits of such statutory fines are three times and RMB 50,000 respectively.
More detailed provisions on compulsory license are added (Articles 48, 50 & 52-53 of the Law)
The compulsory license policy is changed in this third revision. First the general reasons for granting a compulsory license are clarified as that the patentee, without any justified reason, has not exploited or sufficiently exploited the patent within three years from the grant date or four years from the date of filing; and that the patentee's exploitation of the patent is considered to be monopolizing behavior, and the granting is for eliminating or restricting the bad effect of such behavior on competition. In the previous law, the reason is simply listed as that the request for authorization from the patentee have been made on reasonable terms and conditions and such efforts have not been successful within a reasonable period of time.
The new law also provides that a compulsory license may be granted for making and exporting a patented medicine to certain countries and regions for the benefit of public health in accordance with relevant international treaties concerned to which China is party. For the patents related to semiconductor technology, the granting of compulsory licensing can only limited for public interest purpose or against monopolization.
Pledged patent should be recorded (Rule 14 of the Regulations)
The new Regulations provide that if a patent is pledged, the pledger and pledgee should record the pledge together before the Office.
The Board may not terminate the examination after the invalidation request is withdrawn (Rule 72 of the Regulations)
According to the previous Regulations, if the invalidation requester withdrew the request before the Patent Reexamination Board made the decision, the invalidation examination should be terminated. Now pursuant to the new Regulations, the Board may not terminate the invalidation examination if the Board thinks an entire or partial invalidation decision can be made on the basis of the examination done.