More mechanism will be implemented for the compulsory licensing in China in accordance with the new Measures for Compulsory Licensing of Patent.

The newly revised Measures for Compulsory Licensing of Patent Implementation released by the State Intellectual Property Office (SIPO) came into force as of May 1, 2012.

The previous Measures for Compulsory Licensing of Patent Implementation were promulgated in 2003. SIPO combined the 2003 version with special Measures for Compulsory License on Patent Implementation concerning Public Health promulgated in 2005 and published a draft, open for comments, in October 2011.

In the 2003 measures, the circumstances where a person could apply for a compulsory licence (1) were it had been unable to obtain a license after a reasonable period of negotiation based on fair and reasonable terms, if the implementation of an invention or utility model which constitutes a significant progress had to rely on the implementation of a patent previously granted, (2) in situation where public health is concerned, and (3) in a states of emergency.

The 2012 Measures create two more grounds : (1) the patent has not been used for three years from the time of grant, or 4 years from the time of application and (2) the act of claiming the patent right is considered as a violation of anti-monopoly law.

Regarding the public health, the field is significantly widened. In the 2005 Measures, it was limited to contagious diseases. Under the new Measures, the contagious-disease restriction is gone.

Concerning the “non-use” condition, no indication is given as to what may constitute sufficient or insufficient use. The decision will be made, on a case-by-case basis, by SIPO.

It may also be noted that the scope of compulsory licence, which was limited to the domestic market, is now open to exports.

Comments

There has been no case of patent compulsory licensing in China since China’s patent legislation system was founded. Will any changes happen after the 2012 Measures come into force?

Several trends might happen: (a) applicants for compulsory licensing might start to dig unused patents as a ground for compulsory licensing; (b) applicants might be more willing to file antitrust cases in courts or the Anti-Monopoly Investigation Bureau for decisions or rulings that will be used as evidence for compulsory licensing proceedings.

These new measures do not mean, however, that SIPO will grant compulsory license lightly. Due to the fact that under the preceding Measures, there is no precedents, and due to the sensitivity of the compulsory license, SIPO might still be quite prudent for granting compulsory license, especially in the field of the patents concerning public interests.