Sweeping changes to the Chinese Patent Law (CPL) will come into effect on 1 October 2009. Accompanying the new CPL will be new implementing regulations and revised patent examination guidelines, although the final form of these accompanying regulations are as yet undecided. This article summarises some of the important changes.

Absolute novelty

The biggest change under the new CPL is the move to an absolute novelty regime. Under the current law, prior public uses outside China or other non-publication forms of prior disclosure outside China do not count against the novelty of a Chinese patent. Under the new CPL, public disclosure anywhere in the world prior to the filing (or priority) date will count against the novelty of a Chinese patent.

As absolute novelty is already the standard for patentability in most of the major patent filing countries, this is not likely to have an impact on applicants who are therefore used to such a practice. However, applicants from jurisdictions having relative novelty provisions or grace periods (e.g., the US) may need to reconsider their filing practice in China.

The change to an absolute novelty regime may also have a far-reaching effect on the decision whether to initiate invalidation proceedings against a Chinese patent. Chinese patents will in future be vulnerable to an attack based on a prior use outside China. As is always the case with a prior use, however, the person relying on it will need to provide convincing evidence that the relevant information was made available to the public.

First filing / secrecy examination

At present, Chinese entities are required to file first in China for inventions completed/made in China. The new CPL removes the first filing requirement and instead introduces a new requirement that all patent applications for inventions completed/made in China filed by both Chinese and foreign entities have to undergo a secrecy examination before a foreign filing can occur. This requirement applies to any invention that is “completed in China”, though at present it is unclear what exactly is meant by this term. It is thought that “completed in China” covers inventions made in China by joint Chinese and non-Chinese co-inventors.

The first draft of implementing regulations which was released on 9 March 2009 classifies the criteria and time requirements. The new secrecy examination may prove to be no more burdensome than the first filing requirements already in place in many jurisdictions, or it could lead to impractical delays. As the penalty for non-compliance is severe – refusal to grant a patent or the potential loss of a granted patent – this could force applicants to first-file in China by default for all inventions completed in China.

Increase in statutory damages award

The new CPL doubles the current maximum damages statutory award to RMB1m (approx £100,000) in patent infringement cases where damages or an account of profits cannot be accurately assessed. Patentees will also be able to recover reasonable expenses under the new CPL, although Chinese courts have in the past been reluctant to allow large claims for costs and this practice is unlikely to change. Introduction of a “Bolar” type exemption The introduction of “Bolar” type exemptions in the new CPL will allow parties to use patented inventions to generate data for the purpose of obtaining regulatory approval prior to expiry of a patent without the patentee’s licence. This change mirrors the general trend in developed nations, and the exempted acts include the making, use and importation of patented drugs or patented medical equipment and the specific making and importing of patented drugs or medical equipment solely for the purposes of obtaining and providing information required for regulatory approval. The new “Bolar” type exemption applies not only to regulatory approval for a generic drug, but also to regulatory approval for a new drug. Additionally, it is important to note that China does not have any form of patent term restoration, or supplementary protection certificate to extend the term of a patent due to delays in seeking regulatory approval, and this has not changed under the new CPL

Explicit allowance of parallel imports

Under the current law, there is specific provision for patent exhaustion for licensed products sold in China, but no explicit guidance on products imported into China. The new CPL confirms that parallel importation into China will not be considered an act of infringement provided the patented products, or products made from a patented method, have been sold by the patent rights holder or authorised for sale by the patent rights holder. However, the new CPL does not make clear how exhaustion will apply to imported products sold outside China under contractual restrictions that limit their importation into China.

Statutory availability of pre-action injunction and evidence preservation orders

Under the current law, both pre-action injunctions and evidence preservation orders are available as a result of Judgemade law. Under the new CPL, the existing practices will be codified in statute, although obtaining a pre-action injunction in China is likely to remain difficult.

Conclusion

The amendments to the CPL coming into effect on 1 October 2009 will require legal practitioners and applicants alike to adjust their approach to Chinese patents. The change to an absolute novelty regime means that the increase in available prior art may now make patents that were previously considered safe at risk of attack. Similarly, patentees may wish to reconsider asserting patents which were previously considered not worth asserting following the increase in the statutory damages award available.

Some other effects are harder to predict. The regulations concerning the new secrecy examination will affect everyone contemplating/conducting research and development activities in China and the full impact of this is as yet unknown. There is also hidden in this new requirement the prospect of conflict with other national laws on first filing requirements and clients are advised to tread carefully in this area.