E-News No.45

E-News No.45

Draft Fourth Amendment to the Chinese Patent Law for the State Council’s Review by Stephen Yang (Peksung Intellectual Property Ltd. – China) 

A new draft fourth amendment to the Chinese patent law was sent to the State Council to review and published on December 2, 2015. The period for soliciting comments ended on January 1, 2016. The proposed changes are mainly directed to design patent, patent enforcement and licensing.

Design Patent

The definition of “design” is proposed to change to allow partial design, i.e. design for a portion of a product, to be patented. Currently, a design patent is limited to a specific complete product and hence has relatively narrow scope. The term of design patents is proposed to extend to 15 years as China prepares to join the Hague Agreement.

Patent Enforcement

In the draft, repeated infringement or so called “group infringement”, i.e. infringement conducted by multiple parties, is defined as wilful infringement which disrupts market order. If wilful infringement is found, a court may award damages up to three times of the damages calculated using the loss of the patentee, the illegal gain of the infringer or by making reference to multiples of royalties. Furthermore, the upper limit of statutory damage is proposed to increase from RMB 1 million (USD155,000) to RMB 5 million (USD770,000). If calculation of damages using one of the above three methods is supported by the court, there is no limit to the amount.

For the purpose of calculating damages, the draft proposes that if infringement is found by the court but the relevant evidences are in the possession of the infringer, the court can request the infringer to produce the evidences. If the infringer does not cooperate, damages may be determined with reference to the plaintiff’s claim and evidence.

The draft introduces the concept of joint infringement and prescribes that if a party knows relevant products are raw materials, intermediate materials, parts or equipments specially used to exploit a patent but provides such products to another party who conducts patent infringing acts, or if it knows relevant products or methods are patented products or methods but induces another party to conduct patent infringing acts, it should be held jointly liable with the infringer. If an internet service provider (ISP) knows or should have known or is notified that its user infringes or passes off a patent using its internet service, but does not take necessary measures to curb it, it may be held jointly liable.

The draft also empowers local IP offices, in handling infringement cases, to carry out investigation and onsite inspection, review and reproduce evidences, and examine relevant products. Such power is currently limited to patent passing-off cases. Local IP offices, when dealing with wilful infringement, may confiscate the infringing products and the relevant parts, tools, moulds or equipments. For repeated infringement or patent passing-off cases, local IP offices may impose a fine up to five times the illegal amount of sales. However, the fine goes to the government instead of patentees.

License of Right

Patentees may write to SIPO to offer license of right, i.e. their willingness to license their patents to anyone, and specify relevant royalties. SIPO will announce the patentees’ statements. If a patentee withdraws its statement of license of right, the previously granted license of right is not affected.

Standard Essential Patents

The draft prescribes that if a patentee that is involved in the making of national standards fails to disclose its patents that are essential to the national standards in the course of making the national standards, it is deemed that the patentee permits the user of the national standards to use the relevant patented technology. The user may still have to pay the patentee, though.