China has just amended its Patent Law for the third time since its introduction in 1985. Compared to the 75-page long draft tabled for public consultation in July 2006, the revised law is rather limited in scope and many of the controversial topics such as statute of limitation as well as laches and acquiescence-type defenses have been left out. Nonetheless, the revisions have addressed various important issues central to the better protection, exploitation and enforcement of patent rights in China, including:

  • Absolute novelty standard introduced - Public use outside of China is now relevant in determining novelty;
  • Mandatory “China-first” filing requirement removed – Filing of foreign patent applications for inventions created in China will be subject to a new administrative “security examination” (details yet to be released);
  • Double patenting practice clarified - Applicants can apply for both invention patent and utility model patent for the same invention, but must give up the utility model patent to obtain the invention patent if granted;
  • Standard for design patents raised - Product labels for mere visual recognition will no longer be patentable;
  • Restriction on choice of agents lifted - Foreign applicants can now appoint any patent agent in China of their choosing and not limited to those specifically designated by the government for handling cases involving foreign parties;
  • Rights of co-owners defined - Absence any agreement, all co-owners must consent to the exploitation of patents except that a co-owner can use, and subject to sharing any license fees, grant non-exclusive license without the consent of other co-owners;
  • Civil and administrative remedies improved – Penalties for patent counterfeiting have increased and statutory damages for infringement is raised to US$150,000;
  • Prior art defense now available – This will allow Chinese courts to rule on non-infringement in patent infringement suits based on defendants’ evidence of use of existing technology / design without having to challenge the validity of the subject patent through parallel proceedings before the Chinese Patent Reexamination Board;
  • Bolar type exemption codified - Using, producing and importing patented pharmaceuticals or medical devices solely for the purpose of obtaining market approval are now exempted from patent infringement;
  • Disclosure of genetic sources required – When filing for inventions relating to genetic resources, applicants must disclose the sources of such materials;
  • Compulsory license regime refined - Process for granting compulsory license to make and export pharmaceuticals to least-developed countries and other qualifying destinations have been liberalized.

The revised Patent Law in China will become effective on October 1, 2009.

This last round of amendment to China’s Patent Law has attracted much international attention since work started in April 2005, especially in view of recent high profile patent disputes in China involving multinationals, such as the invalidation of Pfizer’s “Viagra” patent and Schneider’s potential payout of US$45 million in damages for patent infringement. While most should welcome the various revisions on patent filings and the improved patent protection through increased administrative penalties and civil liabilities, patent owners are advised to re-evaluate their filing and enforcement strategies in China in view of the more stringent patent standards and newly introduced exemptions and defenses to infringement under the revised Patent Law.