China's State Intellectual Property Office (SIPO) has released the Draft Amendment to the Patent Law of the People’s Republic of China (Draft). The stated goal of the proposed changes is to enhance patent enforcement and strengthen patent protection.

The Patent Law was last amended in 2008 - which is relatively recent, given its less than 30 years history. So why another amendment now? The reason provided by SIPO is that because of various practical problems, patent enforcement remains difficult in China, resulting in a weak protection of patent rights which harms China's technological development.

This Draft proposes to enhance patent protection by the following means:

  • Courts shall have enhanced duty and power to collect evidence from the defendants;
  • Patent administrative authorities shall have enhanced power to deal with patent infringements (e.g. being able to award damages); and
  • Punitive damages shall be awarded for deliberate patent infringement acts.

Article 62 of the Draft provides that the courts shall, at the request of the plaintiff, collect evidence from the accused infringer. If the alleged infringer refuses to provide or moves, forges or destroys evidence, this constitutes an illegal interference with the civil proceeding, and the court can take coercive measures (e.g. fines and detainment). If in such illegal interference a crime is committed, it shall be prosecuted accordingly. This proposal aims at easing the heavy burden on the plaintiff to collect evidence for proving infringement and is generally welcomed.

Article 60 of the Draft proposes to grant SIPO and its local offices the power to award damages in patent infringement actions - whereas the current law only allows to order injunctive reliefs. In addition, if the patent infringements "disrupt the market order" or "have significant impact on the country," the patent administrative authorities may (1) initiate an administrative action by themselves (instead of only upon the patentee's request) and (2) impose a fine of up to four times the illegal gains obtained, or up to RMB 200,000 (USD 3,120) if there are no illegal gains or if these cannot be determined (among other remedies). There are some concerns by IP practitioners and companies to grant such power to SIPO and its local offices in addition to the courts.

The Draft also establishes a system of punitive damages in order to prevent intentional infringements and to address the issue of low and inadequate damages. Article 65 of the Draft proposes that for a deliberate patent infringement, the administrative authority or the People’s Court may increase the damages up to three times of the regular amount. However, there is no guidance on what shall be considered "deliberate infringement."

Other notable changes in the Draft include a clarification regarding the time at which a decision about a patent invalidation request takes effect and the relevant procedures to follow (Article 46). These changes shall ensure that a stay of a patent infringement proceeding shall be lifted promptly if a decision on patent validity is made by the Patent Review and Adjudication Board, even if this decision is appealed.

Most of the proposed changes, especially regarding the court's power and duty to collect evidence from the defendants, are much appreciated by the Chinese patent community. However, there are some concerns by IP practitioners and companies over the proposal to enhance SIPO and its local offices' power to deal with patent infringement cases.

It remains to be seen whether the proposed changes will be enacted. Sources say a new Patent Law may be out in 2013. We will keep you updated with any developments.