Revised Patent Law Passed by NPC

According to Chinese press reports, the National People’s Congress Standing Committee decided to approve the revised patent law on October 17, 2020.

The Legal Daily notes that among the key provisions that are incorporated into the new law are an increase in statutory damages, patent term restoration and early resolution of patent disputes (patent linkage) for pharmaceutical patents, and a newly added “grace period” type provision to address the Covid19 pandemic which permits initial disclosure of inventions for public benefit to address national emergencies without compromising the novelty of an invention in a patent application.

2nd Round of Patent Law Amendments Released for Comment

According to the NPC Observer and other sources, the NPC Standing Committee is now seeking comments to the second review draft of the  Patent Law amendments专利法修正案草案二次审议稿.  The official NPC comments released with the draft are here.  A longer report on the status of the revisions of the Patent Law dated June 28, 2020 is found here.  Comments are due by July 31, 2020.

In reviewing this draft, it may be worth referring to the prior draft including a translation provided by the Anjie law firm.

Please send in any translations that you have as well as any comments that you would like to share (chinaipr@yahoo.com).

Along with the recently proposed revisions to the Copyright Law, as well as drafts of recent judicial interpretations and further implementation of the Phase 1 Trade Agreement, this has been a busy season for law and policymaking in IP in China

The Patent Law will be discussed at the concluding webinar that Berkeley will be hosting July 15, 2020.  Prior to that, on July 8, 2020 there will also be a webinar on the Copyright Law including the proposed amendments.  Information on this successful series is available here.

Public Interest and Private Rights in the Copyright Law Amendments

June 13 is the last day for submitting comments to China’s National People’s Congress on proposed revisions to China’s Copyright Law.   In this blog,  I discuss draft provisions in the Copyright Law that reflect vague concepts of “public interest” and could thereby grant excessive discretion to China’s copyright enforcers, which are worthy of comments to the NPC.

There are two newly introduced provisions that are of significant concern: Art. 4 and a newly introduced Art. 50.  A long-standing restraint on administrative enforcement that is not in the public interest is also discussed, below:

4. 著作权人和与著作权 有关的权利人行使著作权或者与著 作权有关的权利,不得违反宪法和法 律,不得损害公共利益,不得滥用权 利影响作品的正常传播。国家对作 品的出版、传播依法进行监督管理。

Copyright owners and owners of rights related to copyright shall not violate the Constitution or laws, or jeopardize public interests, or affect normal communications of works by abusing their rights when exercising their copyright and rights related to copyright. The State shall supervise and administrate the publication and dissemination of works in accordance with the law. [emphasis supplied]

50. 滥用著作权或者与著作权有关的权利.,扰乱传播秩序的,由著作权主管部门责令改正,予以警告,没收违法所得,非法经营额五万元以上的,可以并处非法经营额一倍以上五倍以下的罚款,没有非法经营额、非法经营额难以计算或者不足五万元的,可以并处二十五万以下的罚款.

Where anyone abuses copyright or rights related to copyright and disrupts the order of communication, the copyright administration may order  correction, issue a warning, confiscate unlawful gains, and, in the cases of an unlawful turnover exceeding 50,000 yuan, impose a fine of one to five times of the unlawful turnover; or, in the cases of no unlawful turnover or an unlawful turnover that is difficult to calculate or less than 50,000 yuan, impose a fine of up to 250,000 yuan. [emphasis supplied]

Article 4 has had a controversial history.  It was previously the subject of a WTO dispute (DS362).  It originally provided that “Works the publication or distribution of which is prohibited by law shall not be protected by this Law”, thereby denying copyright protection to works that had not yet  been approved by censors.    As I recall, the original inclusion of that language in the Copyright Law had been opposed by many Chinese academics.  After China’s loss in that case, this language was removed, and additional language was added that “The State implements supervision and management over publishing and dissemination according to the law.” The amendment was discussed in a blog of Danny Friedmann of March 10, 2010 (citing Rogier Creemers). 

Article 4 is now proposed to be expanded again.  The new changes require that rightsholders not exercise their copyrights in a manner that affects “normal communication of works.”  What constitutes “normal” communication is unclear from the text.  In addition, Article 50 provides an administrative remedy against anyone who disrupts “the normal order of communication.”  “Normal communication” is also not otherwise defined and may not be the same concept as set forth in Article 4.   One concern may be that this is a “back door” mechanism for copyright authorities to regain the exemption from copyright protection for works that have not obtained censorship approval.  Such governmental “mission creep”  may also be reinforced by the relocation of China’s National Copyright Administration to the CPC Central Propaganda Bureau in the governmental reorganization of March 2018.  This standard of “normal order” of communication or “normal communication of works” is also not found in other IPR or quasi-IPR laws, such as China’s recently enacted E-Commerce Law (2018), which also contains an antitrust provision that  addresses conduct constituting an “abuse of dominance” that “excludes or restricts competition” (See Art. 23).

Xiong Wencong 熊文聪 discusses these two provisions in an exhaustive article 对新增“著作权滥用”条款的几点思考(“Some thoughts on the newly added ‘abuse of copyright’ provisions”) (Chinese language only).  Xiong points to a number of issues of concern, including that  “abuse of rights” should be based on motivations to harm another through exercise of rights, but also need to be constrained by other rules.  As set forth in the draft law, these concepts of abuse of rights are also not be easy for enforcement officials to enforce.  The “public interests” that may be implicated in an “abuse of rights” are difficult to understand except through other established mechanisms, such as antitrust law, and should be not be based on simply harming one individuals’ profitability.

In a possibly related development to the above, Art. 52 of the proposed revision of the Copyright Law expands the requirement of current Art. 48, and thereby perpetuates – and possibly expands –  an existing ambiguity under the Chinese Copyright Law regarding what constitutes “public interest.”

Current Art. 48 provides:

有下列侵权行 为的,应当根据情况,承担停止侵 害、消除影响、赔礼道歉、赔偿损失 等民 事 责 任;同 时 损 害 公 共 利 益 的,可以由著作权行政管理部门责 令停止侵权行为,没收违法所得, 没收、销毁侵权复制品并可处以 罚款

Anyone who commits any of the following acts of infringement shall, depending on the circumstances, bear civil liabilities such as ceasing the infringement, eliminating the bad effects of the act, making an apology or paying compensation for damages; where public interests are impaired, the administrative department for copyright may order the person to discontinue the infringement, confiscate his unlawful gains, confiscate or destroy the copies produced through infringement, and may also impose a fine… [emphasis supplied]

Proposed Article 52 provides:

 有下列侵权行 为,损害公共利益的,除承担本法 第五十一条规定的民事责任外,由 著作权主管部门责令停止侵权行 为,予 以 警 告,没 收 违 法 所 得,没 收、销毁侵权复制品,没收主要用 于制作侵权复制品的材料、工具、 设备 等,

Anyone who commits any of the following acts of infringement and impairs public interests  shall bear civil liabilities in accordance with Article 51 of this Law; besides, the copyright administration shall  order the person to discontinue the infringement, issue a warning, confiscate his unlawful gains, confiscate or destroy the copies produced through infringement, and may also impose a fine; where the circumstances are serious, the said department may, in addition, confiscate the material, tools and instruments mainly used to produce copies through infringement, etc. [emphasis supplied]

Proposed Article 52 maintains the limitation in Art. 48 of the current Copyright Law on administrative enforcement to instances where there is an adverse impact on “public interests”.  In the past there was already a concern that this could undermine the commitments China made in the earlier WTO case (DS362) to provide copyright protection to works not otherwise approved by censors notwithstanding that administrative agencies as well as law enforcement generally should look to focus their resources primarily on areas that invoke strong public interests, notwithstanding previous amendments to Art. 4.   The “public interest” test has also long been viewed as a limitation on certain types of content-neutral copyright administrative enforcement, particularly in dealing with software end-user piracy.  In order to address these concerns China agreed in a 2005 JCCT outcome to announce that software copyright infringement was in fact against the public interest. 

The continued presence of this language should raise concerns about China’s willingness to address software end user piracy through administrative enforcement actions, including controlling government use of pirated software, as required by  Article 1.23 of the Phase 1 Agreement.  Moreover by placing the “public interest” test at the beginning of this article to govern both administrative and potentially civil cases, it might be read to require that civil cases also reflect “public interests”, or at best to authorize government agencies to intervene in private civil matters through ex-officio administrative enforcement.  The restriction might further limit the availability of copyright remedies to uncensored works, thereby violating the WTO decision in DS362.  Additionally, the language might be linked to efforts by NCAC or its parent agency, the Central Propaganda Bureau, to restrict enforcement options for works that might not be consistent with current public interests.  Although no examples are provided in this draft legislation, one wonders whether a popular video game that may be distracting students from other activities or civil cases brought against the government for copyright infringement, including (but not limited to) business software could be perceived as against public interests.

Vague notions of public interest/public harm/abuse of IP interests that are not tied to clear legal concepts such as abuse of dominance under the Antimonopoly Law have not generally brought welcome improvements to other aspects of China’s IP environment.   Thankfully, a long-standing provision in China’s contract law regarding invalidity of provisions that “impair technological progress” was recently removed from China’s civil code.  A similar problem has appeared with respect to enforcing “under-performing” concepts of “good faith” in China’s trademark law and other IP laws.

Vagueness in safe harbors have also not provided ample guidance in the proper exercise of rights, such as in Article 55 of China’s Antimonpoly Law.  The recently proposed revisions to the AML do not propose changes to Art. 55.   Article 55’s ambiguous concept of what conduct constitutes proper exercise of IP rights which might otherwise violate the AML is drawn from similarly vague language in TRIPS Art. 40.   As Prof. Hao Yuan has noted elsewhere in this blog “the IP immunity approach [of this article] has largely been ignored in practice. “   

It is not only the vague language of these provisions that is worrisome.  The expansion of administrative discretion embodied in these three provisions of China’s Copyright Law is also accompanied by an extensive expansion of administrative enforcement capacity contemplated by the draft Copyright Law (Art. 7), which would vest county-level governments with extensive authority over copyright matters.  Efforts to expand administrative authority are a “new normal” for Chinese IP agencies, which is being accomplished through draft IP legislation, expansive interagency cooperation, or even (I would argue) as a vehicle for “deliverables” in the Phase 1 Agreement.  One additional factor in this proposed legislation is the reorganization of the copyright administration under the umbrella of the powerful CPC propaganda bureau, now called in English the Publicity Department.  This agency may legitimately want to further expand its influence over content or practices deemed inappropriate for non-copyright related reasons. Expansion of authority of administrative agencies that are frequently used for enforcement can, of course, be a helpful development for rightsholders.  However, I believe that non-copyright concerns may be best addressed in non-copyright legislation.  If left unchecked, introduction of non-IP concerns that are enforced by administrative agencies could also transform IP from a private right to a regulatory tool and constrain the development of the judiciary as an expert and transparent enforcement vehicle independent from the administrative agencies to enforce these IP rights.

 
Update of July 8, 2020: Here is an article from the July 6, 2020 South China Morning Post expressing concerns about the “public interest” and administrative enforcement aspects of the proposed draft copyright law.