AMENDMENTS TO IMPLEMENTATION REGULATIONS OF PRC PATENT LAW

05/01/2009

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The PRC Patent Law was last amended in 2008, and the amendments will take effect from 1 October 2009. The State Intellectual Property Office (SIPO) has started to draft amendments to the Implementation Regulations of the Patent Law and the Patent Examination Guidelines, which amendments are scheduled to take effect also from 1 October 2009.
As to the amendments to the Implementation Regulations, the Legislative Affairs Office under the State Council prepared and announced a draft for public comments. The major contents of the draft are summarized below:
Patent Filing Documents
The draft briefly sets forth the uniform and precise formality requirements of various filing documents and leaves the details to the SIPO (Article 2), and deletes the current requirement that a concerned party must submit two copies of each filing document.
The draft combines provisions governing the disclosure requirements for written applications filed for all three kinds of patents (Article 17). It sets forth details regarding the contents of description of design (Article 29), and clarifies that where a priority claim is made for a Chinese design patent application and the priority application does not contain a description of design, the applicant's priority claim will not be affected as long as the description of design submitted by the applicant does not go beyond the scope of the drawings or photos filed for the priority application (Article 32).
The draft also requires that a design patent application shall not cover more than 10 similar designs (Articles 29 and 36).
Patent Application and Examination
l	Reinstatement of Rights
	According to Article 7 of the current Implementation Regulations, where a concerned party fails to meet a deadline with good cause and thus loses his/her rights, he/she may apply for reinstatement of the lost rights within the statutory time period. The draft requires such party to proceed with the necessary proceedings for the purpose of reinstatement (Article 6).
	With respect to confidential patent applications, the draft authorizes the SIPO to decide whether a patent application involves national security (other than national defense) or other material issues; if the SIPO deems it necessary to keep the patent application confidential, it shall follow the procedure applicable to confidential patent applications and notify the applicant of the same (Article 8). The amendment also sets forth the formality and guidance for handling confidential patent applications (Articles 9, 10 and 11).
l	Applying for Patents Abroad
	According to the amended Patent Law, one may apply for patent abroad for his/her invention or creation completed in China; however, he/she must apply for a secrecy examination with the SIPO beforehand. An applicant can file for a secrecy examination in one of the following three ways: (1) filing a separate application for secrecy examination with the SIPO, providing details of the technology concerned; (2) filing an application for secrecy examination at the time when filing a national patent application with the SIPO, or filing an application for secrecy examination immediately after the national patent application is filed; and (3) filing an international patent application with the SIPO as a receiving office, which will be deemed as a simultaneous application for secrecy examination (Article 9).
	According to the draft, after receiving an application for secrecy examination, the SIPO must, within 3 months, serve the applicant a notice if it deems the patent application involves national security or other material issues; otherwise, the applicant may proceed with its foreign patent filing or international patent filing abroad assuming that the application has been approved. If the SIPO issues a notice within the said 3-month period, it must, within 5 months of the date of the application for secrecy examination, issue a decision on whether the patent application must be kept confidential; otherwise, the applicant may proceed with its foreign patent filing or international patent filing abroad assuming that the application has been approved (Article 10).
l	Prevention of Double Patenting
	Under the amended Patent Law, where an applicant files one invention patent application and one new utility model patent application on the same day for the same invention, both patent applications shall be granted if all the requirements are met. The draft prescribes, among others, details concerning making declarations at the time of patent filing and abandoning the new utility model patent granted at the time when the invention patent is granted (Article 43).
l	Inventions Utilizing Genetic Resources
	According to the amended Patent Law, for an invention utilizing genetic resources, no patent right shall be granted if the procurement or use of the genetic resources is against the law or contravenes any administrative regulations. For such application, the applicant must, in the patent filing documents, describe the direct source or original source of the genetic resources. If the applicant cannot explain the original source, he/she must give reasons. The draft defines the terms "genetic resources" and "invention utilizing genetic resources", and proposes the detailed requirements for disclosing the source of genetic resources in patent specifications (Articles 27 and 140).
	An applicant's failure to disclose the source can be a valid ground for rejecting has/her application during the preliminary or substantive examination (Articles 46 and 53), but can in no event be a valid ground for invalidating the patent, if granted (Article 67). Where the acquisition of genetic resources is against the law, it can be a ground for rejection during the preliminary or substantive examination and a ground for invalidating the patent.
l	Priority Claim
	The draft deletes the current requirement under Article 32 of the Implementation Regulations regarding priority claim declaration. In addition, where the SIPO receive copies of priority documents transmitted electronically, the applicants would be deemed to have submitted the required priority documents (Article 31).
	According to Article 32 of the Implementation Regulations, where a patent applicant fails to identify the filing date and the receiving country of the priority application, he/she may lose the priority claim. The draft allows the applicant to make a supplemental filing to provide such information within the specified time period, failing which priority claim is deemed not made (Article 32).
l	Preliminary Examination for New Utility Model Patent Applications and Design Patent Applications
	Since new utility model patent applications and design patent applications are not subject to substantive examination, patent rights so granted are more vulnerable to revocation or invalidation. The draft has added some factors to be considered during the preliminary examination of these applications, including whether new utility model patent applications obviously violate the novelty or practical use requirement, and whether design patent applications that involve conventional designs infringe on prior art or involve designs with respect to two-dimensional printing designs. (Articles 46(1))
Patent Evaluation Reports and Patent Invalidation
l	Patent Evaluation Reports for New Utility Model Patents and Design Patents
	According to the amended Patent Law, patent evaluation reports can cover new utility model patents and design patents, and requests for patent search reports can be filed by the patent applicants or interested party.
	The draft defines the so-called "interested party" as a party who is entitled to file a lawsuit or seek remedy from the patent authority against patent infringement pursuant to Article 60 of the amended Patent Law, including an exclusive licensee or a non-exclusive licensee who has been authorized by the patentee to use the patent (Article 56). According to the draft, where the SIPO deems that a new utility model or design patent application meets the requirements for patent grant, it shall issue a patent evaluation report accordingly. If the SIPO deems that the application does not meet the requirements for patent grant, it shall ask the applicant to file a response within one month; the SIPO shall issue a report after reviewing the response filed by the applicant (Article 58).
	After a patent evaluation report is issued, any person may gain access to such report; where two or more parties file separate applications for patent evaluation reports for the same patent application, the SIPO may combine the two applications and issue only one patent assessment report (Article 59).
l	Formality of Invalidation Actions
	The draft has deleted the requirement under Article 65(3) of the Implementation Regulations that the petitioner must submit a decision or judgment to prove the conflict of rights in the context of an invalidation action. (Article 68)
	The draft also allows the Reexamination Board to declare a patent invalid even if the petitioner withdraws his/her invalidation application (Article 74(2)).
l	Simplified Requirements for Paying Fees
	Under the draft, four types of fees, i.e. fees for suspension, fees for petitioning for compulsory licensing, fees for petitioning for decision for compulsory licensing and maintenance fees have been deleted from the current 18 types of fees under Article 90 of the Implementation Regulations (Article 122).
	The draft changes the time limit for requesting refund of excess fees paid from one year from the date of payment to 3 years from the date of payment (Article 123).
Compulsory Patent Licensing
l	Definition of "Improper Use of a Patent"
	In the context of compulsory licensing, the draft defines the term "improper use of a patent" used under the amended Patent Law as where "the manner of using a patent by the patentee and his/her licensees, or the scale of such use, does not meet the local need for the patented product or the patented method" (Article 76(1)).
l	Compulsory Licensing for Public Health Reasons
	In the context of compulsory licensing of patents for drugs under the amended Patent Law, the draft defines the so-called "patents covering drugs" as patented products or products directly manufactured using patented methods in the pharmaceutical field, which can be used to deal with public health problems. Such patents include active ingredients and products used in diagnosis. Other relevant issues regarding compulsory licensing are also dealt with (Articles 76(2), 77 to 82).
Exploitation of Patents and Inventors' Remuneration and Compensation
l	Exploitation of Patent Rights
	The draft contains provisions that encourage exploitation of patent rights, including their practice, assignment, licensing, encumbrance, and capitalization.
l	Compensation for Employees' Inventions
	According to Article 16 of the amended Patent Law, an employer shall give an employee compensation for the patented/patentable that he/she has created in the course of inventions his/her duties. The Implementation Regulations set forth the minimum standards of such compensation, which apply to state-owned entities and serve as reference for private companies.
	The draft prescribes the following rules: (1) employees and employers may, by contract, determine the compensation required under the amended Patent Law; (2) the minimum statutory standards shall apply in if there is no relevant contract or if the contract is unfair to either party; (3) the compensation may be paid in the form of cash, stock, or stock options; (4) the minimum standards shall apply to all PRC entities, whether state-owned or private; and (5) the compensation given to the employee shall be considered a tax-deductible expense. (Articles 87 to 89).
	At least RMB3,000 shall be paid for each invention patent while at least RMB1,000 shall be paid for new utility model or new design patent. Besides these one-time payments, the employer must annually give the employee at least 2% of the after-tax profits generated from an invention or utility model, or at least 0.2% of the after-tax profits generated from a design patent as compensation. Alternatively, the employer may, by referring to the above payments, give a lump sum payment to the inventor as compensation. Where the employer assigns or licenses the patent to a third party, it shall pay at least 10% of the after-tax profits generated from such assignment or licensing to the employee as compensation.
	The right of an employee-inventor to receive compensation shall survive the termination of employment unless otherwise stipulated in the employment contract, and can be inherited by his/her heir.
Patent Protection
	The draft sets forth the basic principles that should be followed by patent authorities in handling among others, patent infringement matters and mediation of patent disputes (Article 94).
	According to the draft, local patent authorities may report and ask SIPO/patent authorities of a higher level to handle and investigate patent infringement cases that may result in a significant impact nationally. The draft has stipulated relevant rules regarding the coordination among different authorities (Article 79).
	The draft also defines the acts of patent counterfeiting acts in details (Article 109). In the case of improper patent markings made by a patentee, the draft authorizes the competent patent authority to order correction within a specified time period; if no correction is made within the specified time period, the party concerned shall be deemed to have committed a patent counterfeiting act (Article 110).
	The draft identifies the proceedings that may be suspended due to a patent ownership dispute or a protective court order.
National Phase of an International Patent Application
l	For an international patent application, the draft requires an applicant to pay a priority claim fee within 2 months of the date of the entry into the national phase in China (Article 141).
l	Currently an applicant of a national utility model patent application shall, within 2 months of the filing date, apply for voluntary amendment, whereas for an international utility model patent application, the applicant shall apply for voluntary amendment within 1 month of the date of the national entry. For consistency purpose, the draft stipulates that for an international utility model patent application, the applicant shall, within 2 months of the filing date, effect voluntary amendment. (Article 143)