The Peoples Republic of China published a second draft of proposed amendments to its patent law on December 27, 2006. The draft makes progress toward harmonizing the patent law of the PRC with patent laws of other nations and international treaties. Of particular interest to Western companies patenting technology in China are proposals that would: (1) grant a compulsory license if a patent has not been exploited within three years from the grant date; (2) grant a compulsory license where the patent holder exercises the patent right to eliminate or restrict competition; and (3) require a compulsory license to permit PRC pharmaceutical manufacturers to manufacture patent drugs for sale to third-world nations for treatment of epidemic disease.
The first two proposals are modifications from the harsher first draft of these amendments. Western enterprises which consider their patent rights to be a competitive advantage may have strong concerns about the compulsory license language. The third proposal is permitted under China's current WTO agreements; however, given China's history of poor intellectual property enforcement in the PRC, it is likely that this provision will allow pharmaceuticals nominally destined for third-world countries to become available through clandestine channels in the PRC. Thomas Ladd participated in the preparation of comments on these and other proposed amendments to PRC patent law for presentation to the PRC patent office through the American Bar Association Section of International Law and Section of International Property Law.