Administrative enforcement

A Season of CNIPA Rulemaking

During the past several months, CNIPA has issued new measures involving IP quality and enforcement that will present new opportunities and challenges for patent practitioners in the years ahead.

On February 10, 2021, CNIPA issued its Notice on the “Measures for Standardizing Patent Application Conduct (Draft for Comments)” 《关于规范申请专利行为的办法(征求意见稿)》 (the “Measures”). Rouse has written a brief explanation of these Measures.  Comments were due on February 26, 2021 at the email address of the Law and Treaty Directorate (tiaofasi) of CNIPA.  The Measures are another legislative step to address concerns over patent quality following CNIPA’s 2021 “Notice No. 1” on “Further Strictly Regulating Patent Application Behavior)” 《国家知识产权局关于进一步严格规范专利申请行为的通知》 (the “Notice”), about which I previously blogged. USPTO has also made its unofficial translation available.

Both the Measures and the Notice have now been distributed to local governments and institutions in China for further implementation.  The Measures and Notice also build upon an earlier SIPO notice, “Several Provisions Regarding the Regulation of Patent Application Conduct (Administrative Order No. 75)” 《关于规范专利申请行为的若干规定(2017)(第75号)》, which has been translated by USPTO. These legislative acts suggest a concerted effort to address low-quality patenting in China.  Chinese media has suggested that as much as 60% of the patent applications are now being cancelled at the instance of the applicant.

Another CNIPA measure, with significant trade implications, is the “Administrative Adjudication Measures for Drug Patent Dispute Early Resolution Mechanism (Draft for Publication Opinions)” 《药品专利纠纷早期解决机制行政裁决办法(征求意见稿)》 (the “Linkage Measures”), released on February 9, 2021.  Comments are due at the email address of CNIPA “zhifa” (enforcement) office on March 27, 2021. USPTO has made its translation of the Linkage Measures available here.

As with the previously discussed Measures and Notice, the Linkage Measures chart a complicated legislative course.   I previously blogged about NMPA and CNIPA’s draft “Implementation Measures for the Early Resolution Mechanism for Drug Patent Disputes (Trial) (Draft for Comment)” (the “Draft Measures”) (国家药监局综合司 国家知识产权局办公室公开征求《药品专利纠纷早期解决机制实施办法(试行) (征求意见稿)》意见 (Sept. 2020).  In addition, the SPC has released its Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Drug Marketing Review and Approval of Patent” (Draft for Solicitation of Comments)” 《关于审理涉药品上市审评审批专利民事案件适用法律若干问题的规定》(征求意见稿) (the “JI”).  The Linkage Rule, the NMPA and CNIPA rule, the JI, the Patent Law, the Phase 1 Trade Agreement,  “Notice 55” of the China Food and Drug Administration, and other policy statements present a complicated legislative sequencing, which also provides an opportunity to jockey for a position in a new legal landscape.  As I discussed in an earlier blog, the NMPA and CNIPA rule, in particular, was drafted, atypically, in advance of the Patent Law itself. 

It is, of course, not surprising that CNIPA would want to play an active role in patent linkage disputes now that China is committed in the patent law and the Phase 1 Trade Agreement to a linkage regime.  CNIPA has long had authority over infringement of patents.  Its sister agency NMPA have also previously experimented with patent linkage.  In a sense, CNIPA’s authority has always been broader than the courts.  It can issue both validity and infringement decisions, whereas the courts hear appeals of validity cases and adjudicate infringement decisions.  CNIPA’s infringement docket has also grown over the years.  According to CNIPA data, in 2020 there were 16,106 administrative patent infringement cases in China administered by CNIPA and its local offices.

Establishing a modern and accountable adjudication system for patent disputes is not an easy task.  China’s administrative patent disputes are supplementary to the TRIPS–mandated civil system for adjudication of patent disputes in China.  Such parallel administrative systems raise important questions of coordination and TRIPS Agreement compatibility.  As the global SEP controversies have recently shown, when multiple courts are seeking to handle similar issues, conflicts can arise over the primacy of an individual tribunal.  Regarding TRIPS Agreement compatibility, TRIPS Art. 49  requires that administrative procedures established by CNIPA be equivalent “in substance” with civil procedures in the courts  – including use of evidence, right to independent counsel, written decisions, transparency, etc.  

Given the competition that exists between the courts and administrative enforcement, and the TRIPS obligation to adopt procedures equivalent to the civil courts, CNIPA should maintain a similar level of transparency as the courts.  One such effort was initiated many years ago by the State Council in its “Opinion on Making Publicly Available According to Law Information on Administrative Penalties Concerning the Production and Sale of Fake, Counterfeit and Sub-standard Goods and Intellectual Property Rights Infringement” 《关于依法公开制售假冒伪劣商品和侵犯知识产权行政处罚案件信息的意见) (2013)》(the “Opinion”), which required publication of administrative cases , although ironically the Opinion it had not been published until 2014.  In the race to transparency, the courts, however, clearly vanquished the administrative agencies.  The courts launched China Judgments Online in 2014 and have additionally enacted extensive rules around the publication of cases and the use of case precedent.  Although administrative enforcement databases were contemplated by the 2013 rule, it was not until January 9, 2020 that an experimental centralized database of administrative punishment cases was established by SAMR.  This database has helped satisfy a clear need.  To judge by its public reception, this database has been welcomed by the Chinese public.  As of March 18, 2021, the database had 454,921,194 visitors, with many full text decisions.  By comparison, however, China Judgments Online had 58,127,883,615 visitors at about the same time that I visited the SAMR database, or well over 128 times the visitors of the SAMR database.  I did not locate a count of total documents in the SAMR database, only that 2981 documents were received in 2021. 

In the absence of an accurate count of decided and published cases, it will be extraordinarily difficult to determine the extent of the database’s reach.  China Judgments Online by comparison had 3,145,017 administrative judgments alone, not limited to IP, in its database.  Although there have been several studies on the level of missing cases in the judgments database, I am unaware of any studies on how much the new SAMR database fully reflects the universe of administrative IP enforcement decisions. 

Will CNIPA now commit to offer transparency in linkage and other important cases?  Article 6 of the Linkage Measures requires publication of CNIPA decisions.  As previously noted, CNIPA’s  “Opinions on Strengthening the Protection of intellectual property”  《关于强化知识产权保护的意见》, adopted in April 2020 to implement the Phase One Trade Agreement, lacked “any commitment to increasing administrative and judicial transparency.”  Moreover, while the judiciary has taken several impressive steps to improve transparency, China also had consistently declined to commit to making administrative decisions available to WTO members or to accept publication of administrative cases as a TRIPS obligation.  Back in 2005, the Chinese delegation to the WTO said that, “[r]egarding obligations of administrative agencies to provide written decisions with interpretations for their enforcement decisions, his delegation believed that this question was not relevant to the IPR system and that his delegation was not obliged to answer it here.” TRIPS Council Meeting of December 1-2, 2004, IP/C/M/46 (11 Jan. 2005). The statement was repeated in a similar fashion later in 2005 (TRM, IP/C/39, p. 4) (21 Nov. 2005).  I hope that CNIPA will continue to turn to its better angels to further increase administrative transparency, particularly with respect to infringement decisions involving patent linkage or major patent cases. 

Another recent legislative development is the new CNIPA Measure on Handling of Major Patent Infringement Decision Administrative Disputes (Draft for Public Comment)《重大专利侵权纠纷行政裁决办法 (征求意见稿)》(the “Major Dispute Measure”).  The enforcement (zhifa) division of CNIPA should receive comments by April 2, 2021. The Major Dispute Measure will be implemented on the same day as the revised Patent Law (June 1, 2021).  The Major Dispute Measure establishes procedures for major patent disputes which are defined to include cases that: involve important public interests; have significant impact on commercial development; cross the boundaries of provinces, autonomous regions and directly administered cities; and other major cases should be handled by CNIPA in accordance with Art. 70 of the Revised Patent Law.  The Major Dispute Measure may also address long-standing and surprising domestic concerns that patent litigation in China is too slow.  It also affords the opportunity to consolidate similar cases.  The Major Dispute Measures might also help CNIPA to leverage its administrative enforcement mechanisms to become more active in cases that challenge major Chinese industrial policies, such as global SEP litigation.  

The Major Dispute Measure requires a case be established within 15 days of the filing of an appropriate complaint.  The case should be resolved within 90­­ to 120 days of its establishment. The Major Dispute Measure also requires that a final decision should be in writing and made available to the public. The Major Dispute Measure, like the Linkage Measures, does not explicitly provide for the possibility of extension of time for foreign-related cases, unlike Article 270 of the Civil Procedure Law.  Currently foreign-related patent cases in the courts of China average about 12 months to complete.  If enacted in its current form, administrative enforcement timing inflexibilities could place a foreign litigant at a strategic disadvantage when it seeks to comply with Chinese litigation formalities under severe time constraints.   

In light of CNIPA’s interests in handling patent linkage and major disputes, this season of CNIPA rule making may augur a time when foreign patent lawyers will need to better understand the opportunities and challenges of China’s administrative enforcement regime. 

2 replies »

  1. Thank you very much for this interesting post. You mention regarding the Major Dispute Measure that “The case should be resolved within 90­­ to 120 days of its establishment.” Where did you get this time period from?

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    • The 90-120 days time limit is drawn from Art. 20: “第二十条 国家知识产权局处理专利侵权纠纷,应当自立案之日起90日内结案。因案件复杂或者其他原因,不能在规定期限内结案的,经批准,可以延长30日。案情特别复杂或者有其他特殊情况,经延期仍不能结案的,经批准决定继续延期的,应当同时确定延长的合理期限。”

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