According to the official central Chinese government website, on December 5, 2018, Premier Li Keqiang chaired a State Council meeting which cleared the long awaited proposed draft of the patent law amendments. The description of the draft is set forth below:
A rough translation is as follows:
In order to further strengthen the protection of the legitimate rights and interests of the patent rights holder, improve the mechanism system for stimulating creation of inventions, and raise those mature practices for effectively protecting patents into law, the meeting passed the “(Draft) Amendments of the Patent Law of the People’s Republic of China.” The Draft aims to increase the severity of penalties for intellectual property infringement, draws on international practices, significantly increase the amount of compensation and fines for willful infringement and counterfeiting of patents, and significantly increase the cost of infringement to deter illegal acts; it clarifies the burden of proof for the infringer to cooperate in providing relevant information, and sets forth that the network service provider should bear joint liability for not stopping infringement in a timely manner. The Draft also clarifies the incentive mechanism for inventors or designers to equitably share the proceeds from the creation of service inventions, and improves the patent authorization system. The meeting decided to bring the Draft to the NPC Standing Committee for its review.
In a possibly unrelated development, the National Development and Reform Commission released a Chinese interagency Cooperation Memorandum of Understanding on December 4, 2018 to deal with entities that have lost trust due to IP (patent) infringement. 关于对知识产权（专利）领域严重失信主体 开展联合惩戒的合作备忘录. Compared to the proposed patent law amendments, this lengthy document focuses even further on public law aspects of a patent law system, including recidivist infringers, “irregular” patent applications, providing false documents to the patent office, etc. and includes a range of 33 different punishments to be meted out from a wide number of agencies, including denial of subsidies, debarment for procurement purposes, denying access to range of government programs, prohibiting leisure travel, etc.
The two documents taken together may suggest a disheartening renewed emphasis on administrative measures to deal with patent infringement and innovation incentives. Such measures may be intended to address US trade concerns about IP infringement and “IP theft”. They may also represent a return to China’s increasingly administrative enforcement-oriented approach to patent issues. However, this renewed focus on administrative measures is also occurring the same time as China is moving to quickly establish a new national appellate IP court attached to the SPC by as early as the beginning of 2019. This new court will be a national appellate circuit court with jurisdiction over administrative appeals and technical IP matters and will likely include seasoned judges from Beijing and the SPC itself. Much work needs to be done to get this court off the group quickly.
What, however, is missing from both these documents is any reference to a patent linkage system for pharmaceutical products, which has been much talked about in this blog. As previously reported, former CFDA Commissioner BI had been dismissed from his post as party secretary to SAMR this past summer in response to China’s tainted vaccine scandal. A State Council notice (no. 83) of August 20, 2018 on deepening reform in China’s medical sector thereafter also ominously omitted any reference to patent linkage.
As the original deadline for passage of the patent law amendments was the end of this year, my guess is that this draft may be referred on to the NPC by the end of this year, and passage may occur as early as the first half of next year. I assume that a draft for public comment will be released by the NPC sometime early next year. Generic and innovative pharmaceutical companies that believe a linkage system would help accelerate innovation in the pharmaceutical sector and support early introduction of high quality generics, may consider commenting on these issues once a public comment draft is made available.
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