China’s Patent Law is undergoing revision for the third time since it was issued in 1985. It was previously amended in 1992 and 2000. In July 2006, the State Intellectual Property Office (SIPO) promulgated the Draft of Amendments to the Patent Law (the Draft), soliciting public comments and opinions. Early this year, SIPO revised the Draft by incorporating the public comments and its recent research and submitted it to the State Council for review. The Draft makes significant changes to the Patent Law. Below are some examples of how those changes may affect future patent practice in China.

Under the current Patent Law, a patent agent is required to obtain a special license from SIPO if the agent intends to provide services to foreign clients. This requirement is abolished in the Draft. Likewise, the current Patent Law requires that a domestic company hire a domestic patent agent to assist with its patent applications overseas. This requirement does not exist in the Draft. Under the terms of the Draft, a domestic company may file an application in the foreign country either through an agent in that country or on its own, if the law of that country permits it.

The current Patent Law requires Chinese entities and individuals to file applications first in China for inventions originating in China with Chinese inventors. It is common, therefore, for a Chinese affiliate to transfer an invention to its foreign parent company and allow the parent company to choose which country to file in first. The Draft extends the “China first” requirement to both Chinese and foreign entities. Thus, the transfer strategy will not work under the terms of the Draft.

Pre-suit evidence preservation is available under the Draft. Under the terms of the Draft, the court must make a decision within 48 hours when a motion for evidence preservation is filed. The Draft also includes statutory damages, which are now covered only in a judicial interpretation of the Supreme Court. The Draft is intended to increase the upper limit of the statutory damages to 1 million RMB (up from one half-million under the Supreme Court’s interpretation).

The current statute of limitations for patent infringement suits is two years after the patent owner becomes, or should have become, aware of the existence of the infringement. In the case of an ongoing patent infringement, the statute of limitations does not apply, and the patent owner still has the right to sue after the two-year term expires. However, under the Draft, if the patent owner sues five years after knowledge of the infringement, he or she may not have the right to request that the infringing party cease use of the patent as long as the infringing party is willing to pay royalties as agreed on by the parties or decided by the court. Although there have been significant revisions to the current Patent Law in this Draft, it has only been submitted for public comments and for the State Council’s review and has not yet been submitted to the People’s Congress. What the approved final version will be remains to be seen.