Translation of Draft Patent Law Available

Thanks to He Jing of the Anjie Law Firm, attached please find an unofficial line-by-line translation of the recently released Patent Law Amendments 2nd reading.   Comments are due August 16, 2020.

Some highlights of this draft:

Partial Design Protection

Article 2 adds language back in to allow partial design protection.  This is a welcome development.  Article 42 also maintains the earlier draft’s extension of the duration of the design patent to 15 years.

Patent Abuse

Article 20 clarifies that the abuse of patent rights to exclude or restrict competition constituting a monopoly shall be dealt with under the anti-monopoly law.  The AML is itself under revision.

Good Faith/Public Interest

Article 20 continues to require “good faith” in patent filings and the exercise of patent rights, an important concept borrowed from the Trademark Law revisions which is having an increasing substantive impact.  The limitation that patents shall not be “allowed to harm public interests” raises similar concerns to me to the recently proposed amendments to the Copyright Law, about the definition of “public interest.”

Pharma Issues – Patent Term Restoration and Linkage

The notices of the NPC regarding the draft law, state that pharma-related IP issues were drafted to implement ‘”trade agreement(s).”   These are reflected in proposed Article 42 which provides for patent term restoration.  This draft removes the requirement of the “synchronous” launching of marketing approval outside of China with approval in China in order for patent term restoration to be granted.

Article 75 also sets forth an outline for a patent linkage regime, and calls for the drafting of more detailed measures to further implement the provisions.  Under this proposal, the innovator challenges a generic applicant for marketing approval within 30 days of the announcement of the application.  If the patentee does not file a lawsuit, a generic company may also request a determination from the courts or patent office of non-infringement based upon the China Patent Information Registration Platform for Listed Drugs.  A court or administrative procedure on patent infringement should render its decision within 9 months.  This draft lacks an incentive provision for a generic to successfully challenge an innovator through granting of a first generic marketing exclusivity due to a successful challenge to the patents. This skeletal section is also drafted as an addendum to the statutory exemptions to infringement, which appears to be an awkward placement.

Damages and Liability

Joint liability of Internet service providers for patent infringement has been removed.

Minimum statutory damages of RMB 100,000 has also been removed.  Statutory damages are capped at 5 million RMB.  Quintuple punitive damages up to 5 times remain from the prior draft.   The statutory damage maximum increases to RMB 5 million (Art. 71). In addition to the continuing focus on increases in damages, this draft also continues the momentum for a larger role for patent administrative enforcement.

The extension of the statute of limitations to three years has been retained from the prior draft (Art. 74).

Several provisions address the proposed “open licensing” system (Chapter 6).

The draft also encourages a flexible remuneration system including “equity, options, and dividends” to enable inventors or designers to reasonably share the proceeds of innovation (Art. 16).

 

 

 

China Patent and Licensing Discussions – Week of June 14th

On Wednesday, June 17th at 4:30 PM PST,  former Chief Judge Paul Michel (ret.) will be moderating a star-studded panel hosted by Berkeley Law on one aspect of one of the great ironies of this current moment in US-China IP relations: the weakening of the US IP system with respect to patent eligibility and China’s concurrent strengthening in those areas.  Judge Michel will be joined by former PTO Director David Kappos, Berkeley Law Professor Robert Merges, Beijing East IP Partner Liaoteng Wang, and Tsinghua Professor Guobin Cui.  Liaoteng Wang has recently written an article in anticipation of this event.  Information and registration information is available here and here.

The United States-China Intellectual Property Exchange and Development Foundation, of which I am a board member, will be hosting two webinars on pharmaceutical-related IP.  The first session focuses on the Phase 1 Trade Agreement including post-filing supplementation of data and patent term extension (June 16, 7 AM PST).    The second session focuses on patent linkage (June 17, 7 AM PST).   Former Chief Judge Randall Rader and several notable practitioners will be joining the discussions.

On June 16th at 9 AM  PST, I will also be speaking along with Jim Harlan of InterDigital on the US Department of Commerce’s Bureau of Industry and Security’s (BIS) ban on Huawei and its effect on global Standards Developing Organizations (SDOs). This program is sponsored by the American Intellectual Property Law Association’s Standards and Open Source Committee.  Non-AIPLA members may join this open event without charge.  Call: +1 (347) 991-7204, passcode 251151532, or join the Skype Meeting.

100 Priority IP Projects for 2020

wordcloudstrongipcountry

What does the recently released CNIPA document listing “100  Projects in 2020  to Deeply implement the National Intellectual Property Strategy to Accelerate the Construction of the Intellectual Property Powerful Country Promotion Plan” (2020年加快建设知识产权强国推进计划提出 100项具体措施) (the “100 Project List”) (May 28, 2020) add to the discussion around where China is headed on IP?

The projects reveal much more than its lengthy, bureaucratic-sounding title might indicate. There are several  themes worth noting:

  1. It is ambitious. It includes doing many things over a short period of time, including reducing patent examination time for “high value” patents to 16 months and trademark examinations to 4 months (Projects 55-56).
  2. China is paying attention to its IP quality vs quantity dilemma. This document calls for ending local subsidies for utility model and design patents, as well as trademark (task 59).  It also discusses problems with incentives that are intended to encourage high quality patenting in universities and research institutions, SOE’s, and major government projects (Projects 3, 4, 5, 12, 55, 60 -61, 66, 77-79, 93, 96-97).
  3. There is increased attention to defense patenting. The word “defense” appears 17 times.  Defense patenting also occupies a greater role than in prior plans of type (Projects 6-10, 25, 80).
  4. Trade secrets as well as improving the criminal IP process play important roles (Projects 24, 44, 49, 51-54).
  5. We can expect some important developments in plant variety protection (Projects 26, 47, 57, 92).
  6. There is no attention to innovative pharma IP challenges. There are tasks related to generic medicines and traditional Chinese medicine (Projects 38, 73).  Patent linkage does not appear in this list of tasks.  These omissions could suggest a lack of CNIPA commitment to Phase 1 pharmaceutical IP reforms.
  7. There is a big focus on improving IP-related services (Projects 1, 2, 62, 72, 74, 77, 86).
  8. China reiterates its commitment to plurilateral IP policy (Projects 82, 87).
  9. The drafters are committed to the  Phase 1 Agreement.  China is also doing a lot more on IP than what the Phase 1 Agreement requires (Projects 24, 49, 51, 83, 87, and others).

The word cloud above is drawn from a machine translation of the 100 Project List.

Further background: I have been blogging about China’s national IP plans for years now, including in  2014,  2015 , 2016 as well as in my discussions on the National IP Strategy.  Readers may wish to compare this document with some of the prior strategy documents.

 

Resources for the Week of May 18, 2020

On May 20, 2020 (4:30 PM PST), Berkeley will be hosting the next in our China series: Following the Data: What the Latest Research Says about China’s Legal and IP Environment. The webinar will cover data-driven research on Chinese legal developments and how these tools can provide strategic insights.  The speakers include: Benjamin Liebman, Columbia University; Tobias Smith, UC Berkeley; Melissa Schneider, Darts IP; Robert Merges, UC Berkeley; and Fei Deng, Charles River Associates.  I will be moderating.

On May 13, Berkeley hosted a book warming for Mara Hvistendahl’s The Scientist and the Spy: A True Story of China, the FBI and Industrial Espionage concerning a Chinese economic espionage case involving hybrid corn seed.  We had a lively discussion among the author, the former FBI agent in charge of the case (Mark Betten), the Dupont IP lawyer representing the victim (Jennifer Johnson), Jim Pooley, and myself involving IP and competition issues, racial profiling, criminalization of trade secrets issues and other issues. Here is the link to the recording.

Attendees are also invited to attend a series of webinars on IP-related issues in China which will include such topics as pharmaceutical IP matters, trade secret issues, licensing and antitrust, ‘101 issues in China, and abusive trademark registrations.  Please consult the website for fees for further information on the program, CLE credit, and the possibility of earning a certificate from Berkeley Law after completion.  We begin on May 25 with a discussion on the important pharma-related IP developments in China, many of which were agreed to in the Phase 1 Trade Agreement, and will include several speakers from the US and China who have been tirelessly working on these issues.

.

SAMR Releases Legislative Work Plan for 2020

On 26 March 2020, SAMR released its Legislative Work Plan for 2020 (“2020 Legislative Plan”) 国家市场监督管理总局2020 年立法工作计划. In 2020, 7 draft laws and administrative regulations行政法规, including the Amendment to the Detailed Rules for the Implementation of the Patent Law and the Amendment to the Anti-Monopoly Law, will be proposed for deliberation to the Ministry of Justice. Additionally, 48 administrative rules部门规章 will be formulated or amended.

SAMR’s practice is to designate one or two SAMR bureaus/departments with primary drafting responsibility for these projects. This is likely the second time that a yearly legislative work plan was publicly released since SMAR was organized in 2018. The prior legislative work plan is here.

The Class I Projects of administrative rules shall be submitted for legal review by June 30, 2020,  and completed by the end of the year. The 2020 Legislative Plan does not give a specific deadline for the 7 laws and administrative regulations, as well as the Class II Projects of administrative rules. It simply states that these categories shall be submitted for review on time, ensuring high-quality and efficiency (“部门规章第二类项目以及法律、行政法规,要确保高质高效推进,按期送审”).

IP-related projects, drafting departments, and some brief comments follow below:

Laws and Administrative Regulations:

1.Anti-Monopoly Law 中华人民共和国反垄断法. On January 2, 2020, SAMR issued the Draft Amendments to China’s AML (Draft for Public Comment) “反垄断法”修订草案 公开征求意见稿) (“Draft AML Amendments”). The ABA’s Antitrust Law and International Law Sections submitted comments to SAMR on the Draft AML Amendments. According to the NPC Observer, the Draft AML Amendments are on the State Council’s calendar for the 13th NPC Standing Committee Legislative Plan. It is a priority Class II Project. According to the recent government reorganization, it would otherwise be expected that the Ministry of Justice would prepare a draft of the AML revisions for consideration by the State Council which would then forward on to the NPC for three readings.  As mentioned in a previous blog, Article 55 of current AML (Article 62 of the Draft AML Amendments) stayed unchanged in the most recent draft and there are otherwise very little IP-related amendments contemplated at this time. 

Drafting Department: Anti-Monopoly Bureau

6.Regulations for the Implementation of the Drug Administration Law 中华人民共和国药品管理法实施条例  On August 26, 2019, China’s National People’s Congress adopted the new Drug Administration Law (“DAL”), which took effect on December 1, 2019. The legislative history is set forth in the NPC Observer. As noted in the previous blog, the new law addresses some important issues involving counterfeit and substandard medicines. However, it does little to improve the IP regime for innovative medicines.

In order to coordinate the implementation of the DAL, the revision of other supporting regulations and administrative rules will be further implemented this year.

The Regulations for the Implementation of the DAL had been amended and published on March 2, 2019. It has now been put into the Legislative Plan again. These revisions may be intended to implement changes in the newly revised DAL. On the other hand, it is also hoped that a linkage system would emerge as part of a package of legal reforms as contemplated by the US-China Phase 1 Agreement and to implement an earlier CFDA policy decision.

In addition, this 2020 Legislative Plan includes more than ten Drug/Medical Devices-related administrative rules, including: Measures for the Administration of Drug Registration药品注册管理办法, Measures for the Supervision and Administration of Drug Production药品生产监督管理办法, Measures for the Supervision and Administration of Drug Operations药品经营监督管理办法, Measures for the Supervision and Administration of Drug Online Sales药品网络销售监督管理办法, Measures for the Administration of Registration of Medical Devices医疗器械注册管理办法, Measures for the Supervision and Administration of Medical Devices医疗器械生产监督管理办法, and the Measures for the Supervision and Administration of Medical Devices医疗器械经营监督管理办法

Drafting Department: National Medical Products Administration (NMPA)

7.Rules for the Implementation of the Patent Law 中华人民共和国专利法实施细则. The Rules for the Implementation of the Patent Law, were last amended in 2010. It is likely that these amendments will also be in the form of amendment to the previous Rules,  and perhaps may anticipate some of the changes expected in a revised patent law

On January 4, 2019, the National People’s Congress released a public comment draft of the long-awaited revised patent law. The NPC Observer’s summary of the legislative history to date is here. As we noted previously, a major disappointment remains the absence of a patent linkage regime, including a notion of “artificial infringement.” If the new Patent Law fails to address patent linkage, then the Rules for the Implementation of the Patent Law are also very likely to omit a patent linkage regime.

Drafting Department: China National Intellectual Property Administration (CNIPA)

Administrative Rules:

 Class I Projects

10.Provisions on Prohibiting Infringements upon Trade Secrets禁止侵犯商业秘密若干规定.  SAIC, as a predecessor agency to CNIPA, promulgated the Provisions on Prohibiting Infringements upon Trade Secrets in 1995 and amended it in 1998. These Provisions were formulated in accordance with the relevant provisions of the Unfair Competition Law then in effect.  These early rules were especially important for administrative enforcement of trade secrets and do need to be amended in light of recent revisions to the Anti-Unfair Competition law.  One overdue change is to correct language that specifically enumerated rights in trade secrets to Chinese citizens, legal persons or other organizations, and not to all natural persons such as foreign natural persons, which is a legacy that unnecessarily violates national treatment obligations (Art. 2): “The term ‘rights holder’ in these regulations refers to citizens, legal persons or other organizations that have ownership or use rights over trade secrets according to law. ” 本规定所称权利人,是指依法对商业秘密享有所有权或者使用权的公 民、法人或者其他组织。

In addition, in the Phase 1 IP Agreement, the trade secret provisions generally memorialize amendments already made to China’s Anti-Unfair Competition Law, including an expanded scope in defining “operator” (Art. 1.3), acts that constitute trade secret infringement (Art. 1.4), as well as a shifting of the burden of proof in civil proceedings where there is a reasonable basis to conclude that a trade secret infringement has occurred (Art. 1.5). The Agreement also requires China to change its trade secret thresholds for “initiating criminal enforcement.” (Art. 1.7).  It is hoped that some of these provisions will be incorporated into China’s administrative trade secret enforcement mechanisms.

Drafting Department: Price Supervision and Inspection and Anti-Unfair Competition Bureau

36.Measures for the Administration of Trademark Agency 商标代理管理办法

Drafting Department: CNIPA

37. Provisions on Protecting Geographical Indication Products地理标志产品保护规定. Prior rules in this area had been adopted by one of the precursor agencies to SAMR, the State Administration for Quality Supervision, Inspection and Quarantine in furtherance of China’s sui generis GI system. On April 3, 2020, CNIPA promulgated the Administrative Measures for the Use of Geographical Indications (Trial) 地理标志专用标志使用管理办法(试行). These measures will hopefully also be harmonized with China’s trademark-based GI system, which is also undergoing reform (see item 55, below). 

Drafting Department: CNIPA

38. Official Logo Protection Measures官方标志保护办法. On March 24, CNIPA released Official Logo Protection Measures (Draft for Public Comment). Comments will be due on April 23, 2020.  

 Drafting Department: CNIPA

 Class II Projects

54. Provisions on the Determination and Protection of Well-Known Trademarks驰名商标认定和保护规定.

Drafting Department: CNIPA

55Administrative Measures Concerning the Registration of Collective Marks and Certification Marks集体商标、证明商标注册和管理办法.

Drafting Department: CNIPA

Class I Projects Administrative Rules Nos. 36 and 37 and Class II Projects Nos. 54 and 55 all have prior effective versions that were issued in 2014 or earlier.  It is likely that these projects will be in the form of amendments to the previous Administrative Rules.

Prepared by Dr. Xu Xiaofan and Mark Cohen