On August 10, 2012, China's State Intellectual Property Office (SIPO) released a notice to seek public comments on the draft Patent Law (the 4th amendment) (the “Draft”), aiming to address patent enforcement challenges, particularly those revealed in administrative enforcement issues related to patent infringement.

The Draft amends the current Patent Law in seven provisions, which grant more authority to the departments of patent administration (DPA), e.g., the SIPO and local intellectual property offices, for investigating and collecting evidence related to patent infringement as well as determining penalty amounts for compensation to victims of infringement after a finding of infringement.  

The key amendments to articles 46, 47, 60, 61, 63, 64, and 65 are as follows:

  • The Draft eases the plaintiff’s burden of proof in bringing intellectual property infringement actions by allowing the court to initiate evidence collection and investigation based on the petitioner’s application. The Draft grants the People’s Court the authority to help with seeking and collecting allegedly infringing products possessed by the defendant(s). Furthermore, where the party under investigation refuses to provide evidence or disrupts the investigation process, the People’s Court and the DPA will take compulsory measures or issue a warning to such party.

To supplement and in conjunction with Article 61, the Draft further grants patent administration authorities the power to freeze or seize counterfeit products or infringing products with evidentiary support. Warnings and penalties may be given to those refusing to cooperate with authorities during their investigation (Article 64).  

  • The Draft addresses the issue of “low damages” awarded to plaintiffs often seen in patent infringement actions. The Draft introduces punitive compensation for intentional infringement, where the highest amount of compensation could triple the figure determined under the current law (Article 65). In addition, the Draft stipulates penalties of under RMB 200,000 or criminal liabilities in patent counterfeiting matters where no illegal revenue exists or difficult to estimate (Article 63).
  • The Draft grants the DPA the discretion to determine the amount of damages in patent infringement cases, compared to the current Patent Law where only the People’s Court has the right to determine the amount of damages for patent infringement. Allowing the DPA to determine the damage amount thus helps save public resources, otherwise the infringed party would have to file a separate action regarding the damages with the People’s Court (Article 60).
  • The Draft addresses the issue of “overly long duration” in the patent administrative review process. The Draft requires that the DPA under the State Council should timely register and announce the decision of patent right invalid or upholding the patent right, and the decision should come into effect on the date of the announcement (Article 46). 
  • The Draft grants the DPA the authority to investigate and punish bad faith patent infringement, which will effectively inspect and stop bad faith patent infringement alleged of disrupting market order (Article 60).  

China’s Patent Law, first promulgated in 1985 and subsequently amended in 1992, 2000, and 2008, has yet to provide the enforcement authorities with “real-teeth” procedural and substantive rules to have meaningful patent right enforcement. The Draft, however, is one step towards that direction. It is one of the first initiatives under China’s intellectual property rights protection regime announced during the State Council Standing Committee Meeting on November 9, 2011. The Draft aims to address specific enforcement issues such as “tendency for low damages awarded to plaintiffs” and “discretion by the court to punish bad faith patent infringement.” In addition, the Draft also tackles long-standing issues in patent infringement litigation and administrative process by providing clarification on “plaintiff’s burden of proof” and “overly long administrative review time.”

Comments on the Draft were due by September 10, 2012 and the final version has yet to be released. For more information please visit http://www.sipo.gov.cn/tz/gz/201208/t20120810_736864.html. Please note this link is to a Chinese language website.