China Passes Fourth Amendment to Patent Law

By Han-Mei Tso and Jude Yi

 简体中文   繁體中文

Despite a “regular pattern” of amending the Patent Law every eight years since it was enacted in 1984, China has now passed the Fourth Amendment to the Patent Law (hereinafter the “Fourth Amendment”) after 12 years since the Third Amendment. The Standing Committee of the National People's Congress, China’s legislature, passed the Fourth Amendment on October 17, 2020. The Fourth Amendment will take effect on June 1, 2021. Considering certain significant changes and its profound implications, the long wait may prove worthwhile. Here are the highlights of the most important revisions.

Most notably, the law on design patent has undergone a fundamental change—the introduction of partial design. Design, as defined by the Fourth Amendment, now means “any new design of the shape, the pattern, or their combination, or the combination of the color with shape or pattern, of the whole or part of a product, which creates an aesthetic feeling and is fit for industrial application.” China’s system with respect to design patent, from prosecution to litigation, was built on the inextricable tie between the scope of a design patent and the whole product to which the design is attached. The new law may require patent examiners, practitioners, applicants/patentees, and judges in China to change their mindset for the new design patent practices, and this could be a challenge in the near future. The China National Intellectual Property Administration (CNIPA) may also have to face the question whether to revise the Patent Examination Guidelines in order to accommodate the Fourth Amendment. For example, will the requirement that a design application involving a graphical user interface (GUI) should have the product name in its title still be appropriate?[1]

Equally important is the extension of the patent term of design patent from the current ten years to fifteen years from the date of filing.  This is believed to be paving the way for China to join the Hague system, another step toward IP law harmonization. Introduction of protection for partial designs is similarly a step toward IP law harmonization.

Two other revisions relating to patent term will affect invention patents in general and invention patents directed toward new drugs. If an invention patent is granted after four years from the filing date and three years from the date of requesting substantive examination, the patentee may file a request for compensation of the patent term for the unreasonable delay during prosecution of the patent application if the delay was not caused by the applicant. As to patents on new drugs, the CNIPA may, upon the request of the patentee, grant a term extension to compensate for the time of delay caused by the administrative approval of the new drug, provided that the term extension does not exceed five years and the total effective duration of the patent right after the approval of the new drug is no more than fourteen years. These two revisions are a direct reflection of the China-U.S. first stage Economic and Trade Agreement signed in early 2020.[2]

Last but not least, the Fourth Amendment includes certain significant changes with respect to enforcement of patent rights, particularly in the area that concerns both domestic and foreign patentees the most, that is, damages awards. As promised by President Xi to the world in his speech at the opening ceremony of the first China International Import Expo in November 2018, China has now enacted punitive damages in order to deter bad actors through patent infringement litigation. A damages award for willful infringement may be quintupled in the most serious circumstances. On the other hand, statutory damages have also been raised from the range of 10,000 to 1,000,000 RMB to the range of 30,000 to 5,000,000 RMB.[3] 

A unique addition of a new paragraph to the same Article that provides for the above damages award makes a subtle shift of burden of proof from the patentee to the infringer in relation to the calculation of damages. According to the new paragraph, the court is vested with the authority to order the infringer to hand over account books and materials related to the infringement after the patentee has made “exhaustive efforts” but yet unsuccessfully proved the amount of the damages due to the infringer’s control over such financial evidence. In the situation where the infringer refuses to provide or provides false account books and materials related to the infringement, the court may determine the damages award based on the claims and evidence provided by the patentee. 

Osha Bergman Watanabe & Burton LLP will continue to monitor the patent practices in China and report major developments of how the new law is implemented by the CNIPA and the courts.