Patent Law (Mainland China)

Jolene Chen

On October 17, 2020, the Standing Committee of the National People’s Congress promulgated the Decision on Amending the Patent Law of the People’s Republic of China (2020), and the newly amended Patent Law will come into force on June 1, 2021.  This article will highlight the important amendments made:

I. Punitive damages for patent infringement ranging from one to five times the damages, and increases the range of statutory compensation from the previous RMB 10,000 to RMB 1,000,000 to RMB 30,000 to RMB 5,000,000.

Article 71 of the Patent Law stipulates that the amount of compensation for patent infringement shall be determined based on the actual loss suffered by the rights holder or the benefit gained by the infringer; if the loss suffered by the rights holder or the benefit gained by the infringer is difficult to ascertain, it shall be reasonably determined based on a multiple of the royalty of the patent.  For intentional and serious infringement, the amount of compensation can be set from one to five times the amount determined by the above method.  If it is difficult to determine the loss of the rights holder, the benefit gained by the infringer or the royalty, the people’s court may award compensation ranging from RMB 30,000 to RMB 5,000,000, depending on the type of patent, the nature of the infringement and the circumstances of the infringement.

II. Amendment to the evidentiary rules regarding the amount of compensation by enabling the court to, under certain circumstances, require the infringer to submit relevant books, records or materials or suffer unfavorable consequences.

Article 71 of the Patent Law stipulates that to the extent that the rights holder has used its best efforts to produce evidence while the relevant books, records and materials relating to the infringing act are primarily in the infringer’s possession, the people’s court may, for the purpose of determining the amount of compensation, order the infringer to produce such books, records and materials relating to the infringing act.  If the infringer fails to do so, the people’s court may determine the amount of compensation based on the claim of the rights holder and the evidence provided by the rights holder regarding compensation.

III. Extending the term of protection for design patents from 10 years to 15 years.

Article 42, Paragraph 1 of the Patent Law stipulates that the term of an invention patent shall be 20 years, the term of a utility patent shall be 10 years, and the term of a design patent shall be 15 years, all commencing on the date of application.

IV. Establishment of a system of special licensing for practicing patents. If a patentee is willing to allow any entity or individual to practice the patent for a fee, the state will implement a preferential encouragement policy to waive the patent annual fee during the license period.

Articles 48-52 of the Patent Law stipulate that if the patentee voluntarily declares in writing to the administrative patent department under the State Council that s/he is willing to license any entity or individual to practice his/her patent and specifies the payment method and standard of the royalty, the patent administrative department under the State Council shall make a public announcement and implement open licensing.  In case of an open license declaration for utility model or design patent, a patent right evaluation report shall be provided.  A patentee seeking to withdraw the open license declaration shall do so in writing, and the withdrawal shall be announced by the patent administrative department of the State Council.  The announcement of a withdrawal of open licenses would not affect the validity of the open licenses already granted.  If an entity or individual intends to seek an open license, s/he shall notify the patentee in writing and pay the royalty according to the announced royalty payment method and standard before obtaining the license to practice the patent.  During the open license period, the patentee is entitled to a corresponding exemption of the annual patent fee.  The patentee conducting open licensing may negotiate with a licensee on the payment of royalties and grant a general license, but may not grant a proprietary or exclusive license for the patent.