The year 2012 was another year of change. The State Intellectual Property Office (SIPO) published a few new regulations related to patent marking, prioritized examination, as well as a draft of the fourth amendment to the Chinese patent law.

Draft of the Fourth Amendment

On August 9, 2012, SIPO published a draft amendment to the Chinese patent Law, soliciting public comments. The draft amendment was not extensive and only related to seven articles, all of them directed to enforcement.

A unique aspect of the Chinese patent system has been the administrative route for enforcing patent rights. In other words, a patentee does not necessarily need to go to court to enforce its patent rights. Instead, the Chinese patent Law offers the option of going to local administrative bodies to file a complaint against the alleged infringers. Currently the local administrative bodies are called local IP offices, spread across China in many cities. However, until now, apart from issuing an order to stop infringement and mediating possible damages among relevant parties, local IP offices have not been given the power to take action against infringement. The draft amendment aims at strengthening the power of the local IP offices.

First, the draft amendment empowers local IP offices to award damages. Currently, if the relevant parties are not satisfied with mediation at the local IP office in terms of damages, they have to go to court. This amendment aims at considerably reducing the time needed to obtain damages.

The draft amendment also allows local IP offices to query the parties concerned, investigate the relevant circumstances of the suspected infringing act, carry out an onsite inspection of the site where the infringement takes place, review and reproduce the contracts, invoices, account books and other relevant materials, examine the products relevant to the infringing act and confiscate them. Under the current Chinese patent Law, local IP offices have this power for patent passing-off cases but not for infringement cases. This amendment draws on the relevant provisions in the Chinese trademark Law which empower the local Administration for Industry and Commerce (AIC), the administrative authority for enforcing trademark rights, to take similar actions against trademark infringement.

The draft amendment clarifies courts’ rights to investigate, confiscate infringing products and evidence such as invoices, account books and other relevant materials. In addition, the draft amendment provides that the alleged infringer may be subject to criminal charges, if it refuses to provide the evidence requested by the court or moves, forges or destroys the evidence. This amendment aims at coping with the difficulty in collecting evidence, which is considered the trickiest part of infringement litigation in China.

The draft amendment also includes provisions related to tripling the damages for wilful infringement. This is to create greater deterrence to potential infringers as the cost of infringement will increase, and to compensate the patentee for the time and energy spent on protecting its patent rights.

In order to curb the act of wilful infringement, repeated infringement and infringement by multiple parties, which usually requires the patentee to incur huge costs in terms of time and money, without the promise of meaningful compensation at the end, the draft amendment prescribes that if an infringing act is found to be one that disrupts the market order, the local IP office, or even the IP office at the state level, can order the infringement to cease, confiscate the illegal earnings, and confiscate or destroy the infringing products or any equipment specially designed for conducting the infringing act. In addition to these measures, the local IP office or the IP office at the state level can further impose a fine of up to four times the illegal earnings.

The draft amendment further includes important provisions that help to increase the efficiency of infringement litigation. Specifically, it prescribes that a decision on validity of the patent made by the Patent Re-examination Board (PRB) becomes effective when it is published and that the court and local IP offices should promptly deal with an infringement case when such a decision becomes effective. Currently, an alleged infringer may delay the infringement suit by fighting against the decision of the PRB in court—usually not the same court that deals with the infringement suit. These new provisions allow the patentee to speed up the infringement suit, when its patent is found to be valid by the PRB.

Patent Marking Regulations

On March 12, 2012, SIPO published new Patent Marking Regulations which became effective on May 1, 2012. The new regulations replaced the previous ones which were published on May 30, 2003.

The regulations require that the patent marking must be made in Chinese language (simplified Chinese for mainland China). The patent marking can be made on the product, packing of the product or manual of the product.

Specifically, for granted patents, one should make marking in Chinese language corresponding to Chinese invention patent / Chinese utility model patent / Chinese design patent, AND the patent number. The new regulations also prescribe that in addition to the above content, additional texts, graphics identifications can be added, but the additional texts, graphics identifications and marking shall not mislead the public. For pending patent applications, markings should be made in Chinese language indicating the type of patent applications (invention, utility model or design) and patent application number (not publication number) and must include characters indicating “patent applied; not granted yet”. The regulations further prescribe that for products directly obtained from patented method, markings should be made so that this is clearly indicated.

The regulations do not include any provisions regarding updating the patent marking but do include a rule that says improper marking constitutes patent passing-off. Rule 84 of the Implementing Regulations of the Chinese patent law prescribes that any of the following is an act of passing off a patent:

  1. affixing patent indication on a product or on the package of a product which has not been granted a patent, continuing to affix patent indication on a product or on the package of a product, after the related patent right has been declared invalid or is terminated, or affixing the patent number of another person on a product or on the package of a product without authorization ;
  2. sale of the product as prescribed in subparagraph (1) ;
  3. indicating a technology or design to which no patent right has been granted as patented technology or patented design, indicating a patent application as patent or using the patent number of another person without authorization, in such materials as specification of product etc. , which could mislead the public to regard the related technology or design as patented technology or patented design;
  4. counterfeiting or transforming any patent certificate, patent document or patent application document;
  5. any other act which might cause confusion on the part of the public, misleading them to regard a technology or design to which no patent right has been granted as patented technology or patented design. Affixing patent indication legally on a patented product, or on a product directly obtained by a patented process, or on the package of such products before the termination of the patent right, offering for sale or sale of such products after the termination of the patent right is not an act of passing off a patent.

Where any person sells a product passing off a patent without knowing it , and can prove that it or he obtains the product from a legitimate channel, it or he shall be ordered to stop selling the product by the administrative authority for patent affairs, but be exempted from being imposed a fine.”

If passing-off is established, in addition civil liability, relevant enforcing bodies will require the relevant party to correct marking and confiscate the illegal earnings and may impose a fine up to four times of the illegal earning. Where there is no illegal earning, the fine may be up to RMB 200,000 (USD32,000).

Patent applicants and patentees should not this rule when they make patent markings.

Regulations on Prioritized Examination for Invention Applications

On June 19, 2012, SIPO published regulations on prioritized examination for invention applications which became effective on August 1, 2012. The regulations do NOT apply to those applications that enjoy prioritized examination through bilateral or multi-lateral agreements, e.g. patent prosecution highway (PPH) between SIPO and examination authorities of other countries or regions.

Applications that may enjoy prioritized examination under these regulations include important applications in technical areas such as energy saving technology, environmental friendly technology, new generation of information technology, biotech, high-end equipment manufacturing, new energy, new materials, new energy vehicles, low carbon technology and resource saving technology that is beneficial for green growth. Alternatively, a first filing in China for which foreign applications are filed later on may also enjoy prioritized examination. An application must be filed electronically to be eligible for prioritized application. The regulations further provide for the document requirements for applying for prioritized examination.