Suggestions of Quality Brand Protection Committee about the Draft Amendment to the Patent Law of the People’s Republic of China (for Review)

The Amending Version by

SCLAOSuggestions Reasons

Article 2

For the purposes of this Law, invention-creations mean inventions, utility models and designs.

Inventions mean new technical solutions proposed for a product, a process or the improvement thereof.

Utility models mean new technical solutions proposed for the shape and structure of a product, or the combination thereof, which are fit for practical use.

Designs mean, with respect to a product, new designs of the whole

Inventions referred to in this Law shall mean inventions, utility models and designs.

An invention shall mean a new technological scheme suggested for a product, a process, use or the improvement thereof.

A utility model shall mean an applicable and practical new technological scheme suggested for the shape or structure of a product or a combination thereof.

A design shall mean a new design suggested for the shape or pattern of a product or a combination thereof and a combination of colors and shape or pattern which is full of aesthetic sense and is suitable for industrial application.

In current practice, claims are classified into two basic categories, namely product claims and process claims, and a use claim belongs to the category of process claims. According to the Examination Guideline, a process claim shall be defined in terms of such technical features as technological process, operational conditions, steps, and procedures, which are not necessarily suitable for defining a use claim. As a result, we observe many valuable use inventions cannot be well protected by patent. Therefore, we suggest to separate use inventions from process inventions, and let use claim to be defined by suitable features, so as to ensure its efficient protection.

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or partial shape, pattern, or the combination thereof, or the combination of the color with shape and pattern, which are rich in an aesthetic appeal and are fit for industrial application.

Article 3

The Patent Administration Department under the State Council shall be responsible for managing patent-related work nationwide. It shall accept and examine patent applications in a uniform way and grant patent rights in accordance with law, be responsible for performing patent-related market supervision and administration, investigating and handling acts of patent infringement and counterfeiting that have significant impact, setting up public patent information service systems, promoting patent information propagation and utilization.

It is suggested to amend Paragraphs 2 and 3 as follows:

The patent administration departments under local people's governments shall be responsible for patent-related work within their respective administrative regions and provide public patent services.

The aforementioned patent administration departments under local people’s government mean those patent administration departments at the provincial level and city level (whereby the city has one or more districts) authorized by laws and regulations.

Although we appreciate that the government intends to strengthen the patent protection system, we are concerned about delegation of more power to the administrative departments at different levels to settle various patent issues, in particular, patent infringement cases, since judgment of patent infringement may require quite complex technical and legal analysis. It is very hard for the patent administration department at the county level to judge a complex case about patent infringement.

Administrative departments have no necessary technical and legal skills and experience for settling patent issues. The fact that may not be ignored is that the administrative departments at different levels and in different areas may have obvious difference and unbalanced characteristic in abilities to settle patent issues. Delegation of more authorization to administrative departments will definitely result in difference in legal interpretation and implementation among different administrative departments and different opinions between administrative departments

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The patent administration departments under local people's governments shall be responsible for patent-related work within their respective administrative areas, implement patent administrative enforcement in accordance with the law, and provide public patent services.

The aforementioned patent administration departments under local people’s government mean those patent administration departments at the provisional level, city level (whereby the city has one or more districts), and county level (whereby the county is authorized by law or regulation).

and courts to a large extent. Delegation of the power to the administrative departments at the county level will not be good for ensuring the quality of examination and settlement of patent infringement cases and for maintaining the uniform standards for patent protection in the national market. Moreover, such expansion may result in severe regional protectionism.

As for the cases involving disputes about patent infringement and identification of patent compensations, judicial organs will generally be more effective and appropriate authorities. In addition, establishment of intellectual property courts and relative concentration of patent case judgment have been widely accepted as active measures for unifying judicial standards and establishing effective intellectual property judicial system. However, it seems that further delegation of the power to the administrative departments at different levels to handle various patent issues which is suggested in the Draft is antithetical to the aforesaid establishment of judicial system. As might be imagined, court judgments in administrative suits may reject relevant administrative decisions made during administrative infringement implementation (such as confiscation and destruction of relevant production equipment). The continually increased power of the administrative departments to handle patent issues and repeated participation by the courts in the same

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issues may most likely result in adverse effects on the independence of the courts and further break down the balance of the whole system.

With respect to the implementation power of administrative departments in other countries or regions upon patent infringement: U.S. International Trade Commission (“ITC”) is an administrative authority having the power to investigate patent infringement charges; however, ITC has limited jurisdiction only upon imported products and has no power to grant money relief, excluding exclusion orders, and the patentee must prove its satisfaction with the requirements of domestic industry.

Article 6

An invention-creation that is accomplished in the course of performing the duties assigned by employers shall be deemed an employment invention-creation. For an employment invention-creation, the employer has the right to apply for a patent. After such application is granted, the employer shall be the patentee.

For a non-employment invention-

Suggestion 1:

An invention-creation that is accomplished in the course of performing the duties assigned by employers or mainly by using the material and technical conditions of an employer shall be deemed an employment invention-creation. For an employment invention-creation, the employer has the right to apply for a patent. After such application is granted, the employer shall be the patentee.

For an invention-creation that is accomplished by using the material and technical conditions of an employer, if

It is suggested to retain the original provision, namely, an invention-creation includes all inventions that are accomplished in the course of “performing the duties assigned by employers” and “mainly by using the material and technical conditions of an employer”.

It is broader for the definitions of “invention-creation” in the original provision and it is easier to define during actual performance. However, reduction of the scope of “invention-creation” in the new law must require employers to refine employees’ scope of duties, which increases the compliance cost and will not always encourage inventions.

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creation, the inventor or designer has the right to apply for a patent. After such application is granted, the said inventor or designer shall be the patentee.

For an invention-creation that is accomplished by using the material and technical conditions of an employer, if the employer has concluded a contract with the inventor or designer providing the ownership of the right to apply for the patent or the ownership of the patent right, such provision shall prevail; otherwise, the right to apply for the patent is granted to the inventor or designer.

the employer has concluded a contract with the inventor or designer providing the right to apply for the patent and the ownership of the patent right, such provision shall prevail; otherwise, the right to apply for the patent is granted to the employer.

Reasons for the suggestion about Paragraph 3:

1. It is hard to clearly distinguish the invention-creation accomplished by using the employer’s material and technical conditions from that accomplished during performance of duties assigned by the employer, and the definition of “duties assigned by the employer” is not clear, which increase the possibility of the ownership conflicts between the employer and the inventor, which will not be good for protecting the R&D investment made by the employer and promoting the transformation of technical results. It is suggested to amend the provision as follows: the right shall vest in the employer, unless otherwise agreed by the inventor and the employer.

2. This article has little less power to protect an employer’s investment in its employees and will not be good for encouraging an employer to invest in its employees. Generally, a company will support various training programs for its employees and provide necessary information for performing duties, including the company’s know-how and internal research materials. Invention-creation accomplished on the basis of such training and information shall also be of the company’s properties, even if it is not resulted from the duties expressly assigned by the company; otherwise, it will damage the company’s legitimate rights and interests, except for contrary agreements between the company and its

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employees.

Generally, employees may use the company’s material and technical conditions before the company is aware, and it is hard for the company to enter into a contract with its employees even if it knows thereafter. Therefore, this article is not good for protecting the company’s benefits. It is suggested to amend as follows: the right shall vest in the employer, unless otherwise agreed by the inventor and the employer.

Moreover, there is a contradiction between the modifications contained in the Draft for Review and relevant terms of Article 7 in the Intention-Creation Regulations Draft concerning employment intention-creation. If the right to apply for patents vests in the inventor or the designer acquiescently, other legal issues will arise, such as publicity of the employer’s trade secrets.

Suggestion 2:

An invention-creation that is accomplished in the course of performing the duties assigned by employers shall be deemed an employment invention-creation. For an employment invention-creation, the employer has the right to apply for a patent. After such application is granted, the employer shall be the patentee.

For a non-employment invention-creation, the

Regarding paragraph #3:

For an invention-creation that is accomplished by using the material and technical conditions of an employer, the employer should also be allowed to legally establish a company policy indicating the ownership of IP rights relating thereto.

In addition, we think the current article does not consider the

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inventor or designer has the right to apply for a patent. After such application is granted, the said inventor or designer shall be the patentee.

For an invention-creation that is accomplished by using the material and technical conditions of an employer, if the employer has concluded a contract with the inventor or designer or legally establishes a company policy providing the ownership of the right to apply for the patent or the ownership of the patent right, such provision shall prevail; otherwise, the right to apply for the patent is granted to the inventor or designer, so long as the use of the material and technical conditions of an employer by the inventor or designer is not misappropriation from the employer.

scenario in which a creation invention is accomplished by unlawfully using the material and technical conditions of an employer. According to the current article, in such a scenario, if there is no contract, the right to file a patent application for that invention and the ownership of that patent shall belong to the inventor or designer, which in our opinion, is not only unfair to the employer but also raises up integrity concerns. To address this issue, we suggest adding “so long as the use of the material and technical conditions of an employer by the inventor or designer is not misappropriation from the employer”, as shown in the right column.

Article 11

After the patent right is granted for an invention or a utility model, unless otherwise provided for in this Law, no unit or individual may exploit the patent without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, use, offer to sell, sell, or import the

After the patent right is granted for an invention or a utility model, unless otherwise provided for in this Law, no unit or

individual may exploit the patented invention or utility model without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, use, offer to sell, sell, or import the patented products, use the patented method, or use, offer to sell, sell or import the products that are developed directly through the use of the patented

For clarity purpose, we suggest some revisions to the wordings in the Article as shown in the right column.

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patented products, use the patented method, or use, offer to sell, sell or import the products that are developed directly through the use of the patented method.

After a design patent right is granted, no unit or individual may exploit the patent without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, offer to sell, sell or import the design patent products.

method.

After a design patent right is granted, no unit or individual may exploit the patented design without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, offer to sell, sell or import the design patent products.

Article 12

Any unit or individual that intends to exploit the patent of another unit or individual shall conclude a contract with the patentee for permitted exploitation and pay the royalties. The licensee has no right to allow any unit or individual not specified in the contract to exploit the said patent.

Suggestion 1:

Any employer or individual that intends to exploit the patent of another employer or individual shall conclude a contract with the patentee for permitted exploitation. The licensee has no right to allow any employer or individual not specified in the contract to exploit the said patent.

In practice, not all patent licenses will be granted on the basis of royalties. For example, neither party may pay royalty to the other in case of cross-licensing. Therefore, it is suggested to delete such words in this clause, “and pay the royalties”.

Suggestion 2: Also for clarity purpose, we suggest similar revisions to the

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Any unit or individual that intends to exploit the patented invention, utility model or design of another unit or individual shall may conclude a contract with the patentee for permitted exploitation and pay the any royalties stated in the contract. The licensee has no right to allow any unit or individual not specified in the contract to exploit the said patented invention, utility model or design.

wordings in this Article as in Article 11, as shown in the right column.

Additionally, we understand the main purpose of this Article is to state that licensing is one way to gain the right to exploit a patented invention, utility model or design of others, and paying royalties is also one way to compensate the licensor for exploiting a patented invention, utility model or design. However, we think the word “shall” here could easily mislead people to deem that a royalty-bearing license from the patentee is the only way to gain such right. To avoid such confusion, we suggest to revise “shall” into “may” and also add “any royalties stated in the contract”.

Article 14 (It is the 1st article added. The original Article 14 is renamed Article 80.)

Exercise of the right to apply for patent and patent right shall comply with the good faith principle, and shall not damage public interests by misuse of patent right, or unreasonably exclude or restrict competition.

The fundamental theory on which modern patent laws are based, is that patent protection advances the progress of scientific knowledge and technological advancement through publication of the patent and encouraging innovation to develop alternatives. As a consideration for the patent holder’s contribution, he/she receive a right to exclude others from using the patented invention. This exclusive right is not considered a hindrance to technological advancement, and is designed to motivate innovators to invest time and resources to develop new inventions.

The concept of “unjustifiable” or “unreasonable” is very difficult to define in practice, and antithetical to the fundamental nature of the patent right. This might cause

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confusion in the fundamental understanding of the patent law, but also cause significant uncertainty to the patent holders and in turn dampen the incentive to invest in innovation in China. Indeed, with such uncertainty no prudent investor would agree to an arrangement whereby it sinks resources into costly R&D investment. An expansive view of “unreasonable” exclusion or restriction of competition will substantially undermine the patent right, which is important for encouraging indigenous innovation and dynamic competition to invent new technologies that will allow China to better compete internationally. Indeed, strong patent rights is itself an important aspect of competition that must be considered. The necessary incentives for innovation through strong patent rights will be undermined if subjective or even objective views of reasonable are applied as a matter of course in evaluating infringement disputes.

If the intention is to provide a competition component to the patent law, it is unnecessary as the AML already addresses the intersection of competition law and patent law in Articles 17 and 55.

We therefore recommend that Article 14 should be deleted as it is too vague and indefinite.

Article 15 If there are agreements regarding the exercise of rights by the co-owners of the right of a patent application or

The first sentence of this article mentions “the right of a patent application” and Article 13 of the Draft Amendment

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If there are agreements regarding the exercise of rights by the co-owners of the right of a patent application or of the patent right, the agreements shall prevail. In the absence of such agreements, the co-owners may separately exploit the patent or may, in an ordinary manner, permit others to exploit the said patent. Where others are permitted to exploit the patent, the royalties received shall be distributed among the co-owners.

Except under the circumstances specified in the preceding paragraph, exercise of the co-owned right of a patent application or of the co-owned patent right shall be subject to the consent of all the co-owners.

of the patent right, the agreements shall prevail. In the absence of such agreements, the co-owners may separately exploit the patent or may, in an ordinary manner, permit others to exploit or apply for the said patent. Where others are permitted to exploit or apply for the patent, the royalties received shall be distributed among the co-owners.

Except under the circumstances specified in the preceding paragraph, exercise of the co-owned right of a patent application or of the co-owned patent right shall be subject to the consent of all the co-owners.

also mentions that an applicant may require the employer or individual that exploits his/its invention to pay appropriate royalty after an application for invention patent is announced. It is suggested to make relevant amendment thereto in order to maintain the consistency with Article 13 and the first sentence of Article 15 of the Draft Amendment.

Article 16

After an employment invention-creation is granted a patent right, the unit shall reward the inventor or designer of the employment

After an employment invention-creation is granted a patent right, the employer shall reward the inventor or designer of the employment invention-creation. After such patent is exploited, the inventor or designer shall be given a reasonable amount of remuneration by the

The employer and the inventor should have the freedom of contract in deciding remuneration, either through an agreement or the employing organization’s internal policy.

We recommend that this article be revised to allow for

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invention-creation. After such patent is exploited, the inventor or designer shall be given a reasonable amount of remuneration by the unit according to the scope of application and the economic results.

Where the unit makes an agreement with the inventor or designer pursuant to Paragraph 4 in Article 6 of this Law to grant the unit the right to apply for a patent for the invention-creation, the unit shall give a reward and remuneration to the inventor or designer as stipulated in the preceding paragraph.

employer according to the contract or the policies formulated by the employer.

In case of absence of similar contract or policy, the inventor or designer may be given a reasonable amount of remuneration according to the scope of exploitation and the economic benefits obtained.

contractual freedom.

Suggested Amendments：Add to Sections 16.1 & 16.2 the

following：“If there is a contract between the entity and the inventor or designer regarding the right to apply for patent and the ownership of the patent, the contractual stipulations shall prevail.”

Article 19

If a foreigner, foreign enterprise, or other foreign organization without a regular residence or business site in China intends to apply for a patent or handle other patent-related matters in China, he or it shall abide by regulations to entrust a

Where a foreigner, foreign enterprise or any other foreign organization that has no habitual abode or business office in China intends to apply for a patent or handle other patent-related matters in China, it shall authorize a legitimately formed patent agency in accordance with the regulations or a qualified patent agent employed by the Chinese affiliates of the foreign enterprise or foreign organization to act on his or its

For historical reasons, it had been a long time since the establishment of patent system in China that only a few special patent agencies designated by the State Council or later the Patent Administration Department under the State Council could practice on behalf of a foreigner, foreign enterprise or any other foreign organization that has no habitual abode or business office in China for patent-related matters in China. However, along with the practicing

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legally established patent agency with the application and such matters.

If a Chinese unit or individual intends to apply for a patent or handle other patent-related matters in China, it or he may entrust a legally established patent agency with the application and such matters.

A patent agency or patent agent shall abide by laws and administrative regulations and handle patent applications or other patent-related matters as entrusted by its principals. It shall also be obligated to keep confidential the contents of the inventions of its principals, unless the patent applications have been published or announced. The specific measures for administration of the patent agencies and patent agents shall be formulated by the State Council.

behalf.

To apply for a patent or handle other patent-related matters in China, a Chinese entity or individual may authorize a legitimately formed patent agency to act on its or his behalf.

Patent agencies and patent agents shall abide by the laws and administrative regulations when filing applications for patents or handling other patent affairs as entrusted by the principal. It shall also be obligated to keep confidential the contents of the principal's invention, unless the application for patent has been published or announced. The specific measures for the administration of patent agencies and patent agents shall be formulated by the State Council.

experience growth of Chinese patent agencies, any legitimately formed patent agency has been allowed to act on behalf of said foreigner, foreign enterprise or organization for patent-related matters in China, since 2009 (the Third amendment of Patent Law). Now, with further rapid development of Chinese economy and maturing of the Chinese patent system, many foreign enterprise and foreign organization not only establish affiliates in China, but also hire qualified Chinese patent agents to handle patent-related matters of the enterprise or organization. These in-house patent agents have passed the Chinese patent agents qualification examination and are very familiar with the strategies and portfolios of the patents owned by the enterprise or organization or its Chinese affiliates, thus shall be allowed to practice on behalf of their employer before SIPO and the courts on matters related with the patents owned by the enterprise, organization or its Chinese affiliates in China.

Article 21 The patent administration department of the State Before the first publication of a patent application, the 13

The patent administration department under the State Council and its Patent Review Board shall, according to the requirements of objectivity, fairness, accuracy and timeliness, handle patent applications and requests in accordance with law.

The patent administration department under the State Council shall release patent-related information in a complete, accurate and timely manner, publish patent gazettes on a regular basis, and provide basic patent data.

Before a patent application is published or announced, the staff members of the patent administration department under the State Council and the persons concerned shall be obligated to keep such application confidential.

Council and the Board of Patent Appeals shall, pursuant to the requirements of objectivity, impartiality, accuracy and timeliness, handle the relevant patent applications and appeals.

The patent administration department of the State Council shall completely, accurately and timely announce the patent information and regularly publish patent gazettes, provide the basic data of patent information.

Before an application for patent is published or announced, the functionaries and other relevant staff of the patent administration department of the State Council shall keep confidential the contents therein.

functionaries and other relevant staff of the patent administration department of the State Council shall keep the contents therein confidential. However, once the application is published, even before announced, the contents therein pass into public domain and no obligation exists for keeping the confidentiality

Article 22 Suggestion 1: According to Paragraph 3 of this clause, inventiveness

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Inventions and utility models for which patent rights are to be granted shall be ones which are novel, inventive and of practical use.Novelty means that the invention or utility model concerned is not an existing technology; no patent application is filed by any unit or individual for any identical invention or utility model with the patent administration department under the State Council before the date of application for patent right, and no identical invention or utility model is recorded in the patent application documents or the patent documentations which are published or announced after the date of application.Inventiveness means that, compared with the existing technologies, the invention possesses prominent substantive features and indicates remarkable advancements, and the utility

Inventiveness means that, compared with the existing technologies, the invention or utility model possessing prominent substantive features and indicates remarkable advancements [or to amend “possessing prominent substantive features and indicating remarkable advancements” to “having the feature of non-obviousness”].

Practical use means that the said invention or utility model can be used for production or be utilized, and may produce positive results.

For the purposes of this Law, existing technologies mean the technologies known to the public both domestically and abroad before the date of application.

assessment standard for utility model is lower than that for invention. Compared with invention patents, utility model may be granted more easily because of lack of substantial examination and will be hard to be deemed as invalid due to lower level of inventiveness; however, in case of a claim and it is judged as infringement, the patentee of the utility model patent will have the same relief and compensation as the patentee of the invention patent, which is obviously unfair and just for the patentee of the invention patent and the public.

A legislation that sets up utility model system aims to help gizmos to obtain patent protection as soon as possible, which may be realized by virtue of rapid procedure for examination and approval of an application for utility model patent without material examination. However, it does not mean the quality of utility model patent may be accordingly reduced. Low threshold and low cost result in low inventiveness or approval of patent applications for utility model with no inventiveness contained, which impairs the image of patents in the public to a large extent.

We are very pleased to see that the Draft Amendment amends relevant issues existing in the current utility model system. For example, Article 64 of the Draft Amendment provides that, in case of a dispute about patent infringement involving utility model patent, the parties may actively

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model possesses substantive features and indicates advancements. Practical use means that the said invention or utility model can be used for production or be utilized, and may produce positive results.For the purposes of this Law, existing technologies mean the technologies known to the public both domestically and abroad before the date of application.

present a patent right assessment report, which can prevent some patentee of utility model patents from claiming rights with respect to uncertain patents and can further avoid unnecessary waste of litigation resources due to relevant acts without careful consideration and also avoid irretrievable losses and effects to the charged infringer. However, such amendment can still not settle the aforesaid problems in essence.

Under the current framework of utility model system, one of the methods to effectively settle the aforesaid problems is increase of the inventiveness standard for utility model patent up to the same level as that for invention patent. This method can not only maintain the advantage from the rapid procedure for examination and approval of utility model but also settle the aforesaid problems such as easier approval but difficult invalidity of utility model and obvious unfairness and justness for right claiming.

If we wish to distinguish utility model from invention patent from the point of inventiveness in order to protect gizmos, material examination of utility model may be adopted in order to improve the approval quality of utility model, specific reasons for which are described in the suggestions made about Articles 39 and 40 below.

In addition, we suggest that “possessing prominent

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substantive features and indicating remarkable advancements” shall not be deemed as the standard for identifying patent inventiveness. For the purpose of replacement, it is suggested to use “having the feature of non-obviousness”, which is consistent with the assessment standard for inventiveness in other main leading countries of intellectual property rights.

Article 25

Patent rights shall not be granted for any of the following:

(1) scientific discoveries;

(2) rules and methods for intellectual activities;

(3) methods for the diagnosis or treatment of diseases;

(4) animal or plant varieties;

(5) the method of nuclear transformation and substances obtained by means of nuclear transformation;

(6) Designs that are mainly used for marking the pattern, color or the combination of the two of prints.

It is suggested to present some exceptions with respect to protection of the patents of “(3) methods for the diagnosis or treatment of diseases”.

As Premier Li Keqiang said at the executive meetings of the State Council held on December 9, 2015, accelerated construction of intellectual property powerhouse by virtue of reform is the important support for implementing the innovation driven development strategy and encouraging people to start their own businesses and to make innovations, in which protection of intellectual property rights in new fields and new formats such as online retailers and big data shall be strengthened. Along with rapid development of big data, analysis and other technologies, new methods for disease diagnosis and treatment may be obtained by means of big data and analysis technology. Patent protection by virtue of such method may well encourage and promote innovation in such field. Accordingly, we suggest making certain exceptions in protection of the patents of “methods for disease diagnosis and treatment” in order to strengthen the protection of big data, analysis and other new fields.

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The patent right may, in accordance with the provisions of this Law, be granted for the production methods of the products specified in Subparagraph (4) of the preceding paragraph.

Article 36

When an applicant for an invention patent requests substantive examination, he shall submit the reference materials relating to the invention existing prior to the date of application.

If an application has been filed for an invention patent in a foreign country, the patent administration department under the State Council may require the applicant to submit, within a specified time limit, materials concerning any search made for the purpose of examining the application in that country, or materials concerning the results of any examination made in the country. In the event of the

It is suggested to be deleted. As for the “reference materials” to be submitted according to Paragraph 1 of this clause, an applicant cannot make clear which material is the reference material concerning invention. No applicant will actively submit the materials which may affect invention approval; and, other kinds of materials will not help examiner to make decision even if an applicant submits. Moreover, if an applicant intends not to submit relevant reference materials to his/its invention, the patent office will not know and, even if it knows, it is hard to prove it. In practice, no applicant abides by this requirement and no patent office has taken compulsory measures or set up relevant punishments against such non-compliance. Therefore, the circumstance comes into being that “there are laws but little observation of them”.

As for Paragraph 2 of this clause, it is the reason for establishment of such a provision when the patent law was enacted that there were not enough patent documentation collected in patent offices, retrieval methods adopted by patent offices were rather backward and examiners lacked of

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applicant's failure to comply at the expiration of the specified time limit without legitimate reasons, the application shall be deemed to be withdrawn.

retrieval experience. However, presently information is exchanged frequently and the cooperation among patent offices in different countries becomes closer and closer, examiners can easily obtain retrieval or examination materials from other countries. Therefore, the retrieval capability and examination skills of Chinese examiners improve greatly. Accordingly, it is unnecessary for existence of this requirement. Moreover, it seems quite severe to deem an application withdrawn only because the applicant fails to submit such materials in time.

Therefore, it is suggested to delete Article 36.

Article 39

If no reason for rejection is discerned after an invention patent application is substantively examined, the patent administration department under the State Council shall make a decision on granting of the invention patent right, issue an invention patent certificate, and meanwhile register and announce the same. The invention patent right shall become effective as of the date of announcement.

Suggestion 1:

If no reason for rejection is discerned after a patent application for invention or utility model is substantively examined, the patent administration department under the State Council shall make a decision on granting of the patent right of invention or utility model, issue an patent certificate for invention or utility model, and meanwhile register and announce the same. The patent right of invention or utility model shall become effective as of the date of announcement.

Article 40

If no reason for rejection is discerned after preliminary

As what mentioned above, compared with invention patents, utility model may be granted more easily because of lack of material examination and will be hard to be deemed as invalid due to lower level of inventiveness, which results in series of problems.

As the alternative scheme of mentioned suggestion about Article 22, two proposals about Article 39 and 40 are put forward:

Suggestion 1: if we wish to distinguish utility model from invention patent from the point of inventiveness in order to protect gizmos, material examination of utility model may be adopted to improve the approval quality of utility model.

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examination of a design patent application, the patent administration department under the State Council shall make a decision on granting of the design patent right, issue a design patent certificate, and meanwhile register and announce the same. The design patent right shall become effective as of the date of announcement.

Article 40

If no reason for rejection is discerned after preliminary examination of a utility model or design patent application, the patent administration department under the State Council shall make a decision on granting of the utility model or design patent right, issue a corresponding patent certificate, and meanwhile register and announce the same. The utility model patent right and the design patent right shall become effective as of the date of announcement.

Suggestion 2:

Article 39

If no reason for rejection is discerned after a patent application for invention or utility model is substantively examined, the patent administration department under the State Council shall make a decision on granting of the patent right of invention or utility model, issue an patent certificate for invention or review certificate for utility model, and meanwhile register and announce the same. The patent right of invention or utility model shall become effective as of the date of announcement.

Article 40

If no reason for rejection is discerned after preliminary examination of a patent application for utility model and design, the patent administration department under the State Council shall make a decision on granting of the patent right of utility model and design, issue

The utility model patents which are granted through material examination have higher stability in rights, which on one hand reduces the risks in invalid patent that a patentee may face when he/it applies for patent and on the other hand avoids losses to charged infringers and meaningless waste of litigation resources in patent suits which are made on the basis of certain patents which should have not been granted.

Suggestion 2: as another alternative scheme, it may provides that an application for utility model patent shall be subject to material examination or preliminary examination only, and applicants may choose preliminary examination or material examination at their own discretion. This amendment grants more flexibility to applicants. If an applicant desires to be granted the patent quickly, he/it may choose preliminary examination procedure; if an application desires to obtain a more stable right, he/it may choose material examination procedures.

Different patent certificates may distinguish a utility model

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relevant patent certificate, and meanwhile register and announce the same. The patent right of utility model and design shall become effective as of the date of announcement.

which is licensed through material examination from that licensed only through preliminary examination.

Certainly, with a respect to a utility model which is licensed through material examination, no patent right assessment report is to be submitted to a court when an infringement litigation is brought with the court. The court will take different measures against such two kinds of utility models, such as suspension and preservation.

Article 41

The patent administration department under the State Council shall establish a patent review board. If a patent applicant is dissatisfied with the decision made by the Patent Administration Department under the State Council on rejecting of the application, he may, within three months from the date of receipt of the notification, file a request with the patent review board for review.

The patent review board shall perform the review. When necessary, it can check whether the

It is suggested to hold existing provisions and delete modifications thereto.

The Patent Reexamination Board shall be neutral during implementation of the review procedure and may not actively introduce any new fact or reason. The review procedure is of one kind of administrative relief against potential errors made by the examination departments. If a decision is made by the Patent Reexamination Board directly other than the examination department, the applicant concerned will lose the chance to receive such relief, which may further impair the applicant’s procedure rights.

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patent application conforms to the other circumstances specified by the relevant provisions of this Law, make a decision, and notify the patent applicant of its decision.

If the patent applicant is dissatisfied with the review decision made by the patent review board, he may take legal action before the people's court within three months from the date of receipt of the notification.

Article 42　The duration of the invention patent right shall be 20 years, that of the utility model patent right shall be 10 years, and that of the design patent right shall be 15 years respectively, all commencing from the date of application.

The duration of invention patent shall be twenty years, the duration of utility model patent shall be ten years, and the duration of design patent shall be fifteen years, as of the date of application.

With respect to a patent covering a pharmaceutical product approved for marketing by the CFDA, an adjustment of the patent term shall be available to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process.

Bolar exemption has been introduced into the Chinese Patent Law since 2009, in harmony with the practices in other major Patent Offices. However, with respect to a pharmaceutical product approved for marketing by the CFDA that is subject to a patent, no adjustment of the patent term, as a counter-element to the Bolar exemption, is available. In addition to this globally recognized policy on balancing Bolar (for the benefit of generic drug companies) with patent term extensions (for the benefit of originator drug companies), it is perhaps also relevant to note that, where there are signs of delays in the originator drug approval process, patent term extensions are additionally needed to ensure an ecosystem that promotes the introduction of new drugs for the benefit of society.

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Another very important point that we need always keep in mind is that since the purpose of patent term extension is to compensate for curtailment of effective patent term as a result of marketing approval process, it shall be granted only to the patent covering a marketed pharmaceutical product and owned or controlled by the market authorization holder of such product or its affiliates. We believe this is particularly

important for avoiding abuse of patent right by the patent owner who has nothing to do with the marketing of such product, so that shall be clearly stated out in the Rule of Implement of patent law.

Article 46

The patent review board shall examine the request for declaring a patent right invalid. When necessary, it can check whether the patent right conforms to the other circumstances specified by the relevant provisions of this Law, make a decision in a timely manner, and notify the requesting person and the patentee of its decision. The decision declaring a patent right invalid or valid shall be announced

Suggestion 1:

It is suggested to clarify the words “When necessary” in Paragraph 1.

It is suggested that the Law should clarify “When necessary” in order to prevent the Patent Reexamination Board from abusing “according to functions and powers” to examine a request for declaring a patent invalid.

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by the patent administration department under the State Council.

A person that is dissatisfied with the patent review board's decision on declaring a patent right invalid or its decision on affirming the patent right may take legal action before a people's court, within three months from the date of receipt of the notification. The people's court shall notify the opposite party in the invalidation procedure to participate in the litigation as a third party.

Suggestion 2:

The Patent Reexamination Board shall examine the request for declaring a patent right invalid, make a decision in time and notify the requesting person and the patentee of its decision.

We insist that this amendment should not be introduced in the new patent law. While SIPO explained that this amendment is meant to increase the patent right stability (decide the validity of a patent in one single judgment, also intending to stop ill-will requester to file separate invalidation requests on different grounds in different time), it could likely cause a negative consequence that the validity of a patent heavily rely on the individual knowledge, expertise and legal judgment of one PRB Examiner. Specifically, the PRB decision may be inventor-biased or requester-biased in different scenarios (see the following

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explanation), while not reflecting the just treatment to the granted patent.(1) Possible inventor-biased situationArt 66 in Implementing Regulation makes it clear that once an invalidation/validation decision of a patent is made, another invalidation request based on the same reasons and evidence will no more be accepted.

Thus, supposing an invalidation request is made on one single ground (e.g. support matter), had the PRB examiner “conducted examination of other matters” (e.g. non-obviousness) with limited references at hand and made a decision (e.g. regarding non-obviousness) based on first read of these references, another requester cannot raise another invalidation request based on the same ground (e.g. non-obviousness). In this scenario, because the PRB Examiner has made the decision of “other [patentability] matters” by his/her own judgment without hearing opinions from a challenging third party, including those skilled in the art, this invalidation decision could easily be inventor biased.

This situation will likely happen when the Examiner’s knowledge about the invention’s field is less than those skilled in the art.

(2) Possible requester-biased situation

In normal or most invalidation request cases, the requester is

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an interested third party who has ample time and no specific deadline (even in an infringement lawsuit) to prepare the request. In fact, it is the patent holder who has a tight deadline (2 or 3 months for foreign patentee) to respond to such request. Procedurally, had the Examiner decided to also “conduct examination of other matters” not mentioned in the original request, and issue an invalidation on the new grounds, the patentee has no chance to respond and comment on these new grounds, except to appeal in the Beijing IP Court and then High Court. In reality, with the low overturn rate of a PRB invalidation decision and the high legal cost, this will hugely discourage the patentee while greatly encourage any interested third party to file poor-prepared invalidation request, counting on the PRB Examiner to assert his/her opinion.

In global practice, an invalidation procedure is essentially designed as one that is initiated by a third party request. For the current practice, if the poor preparation of a third party requester causes failure of an invalidation request, he or she -- or other third parties -- could simply raise another one with different reasons and/or evidence, to challenge this patent. If an unfair/unjust PRB decision is issued based on a poor subjective judgment of a PRB examiner, the patentee has only but a small chance to remedy.

Thus, with the current invalidation procedure, this

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requester-biased situation could happen easily by the suggested Art 46 amendment.

Suggestion 3:

The Patent Re-examination Board shall timely examine the request for invalidating a patent, any interested party shall be allowed to participate as a third party in the invalidation process, when necessary, may examine whether the patent application is in compliance with other provisions set forth under this Law, make a decision and notify the petitioner and the patentee.

The decision on invalidating or upholding the patent right shall be registered and announced by the patent administration department of the State Council, where judicial remedies are exhausted.

Where any party is dissatisfied with the decision of the Patent Re-examination Board on declaring a patent invalid or maintaining a patent, such party may, within three months as of receipt of the notification, bring a lawsuit to the people's court. The people's court shall notify the opposite party in the invalidation procedures to participate in the litigation as a third party.

We believe any interested party shall be eligible to participate as a third party in both invalidation and appealing processes, which is also consistent with the right of action where patent infringement disputes arise. In reality, the right of the interested party, for instance, an exclusive licensee, may be severely injured if it is not eligible to participate in invalidation or appealing process when the patentee, i.e. the licensor is reluctant or refuses to participate in those processes, which is absolutely unfair for the interested party.

Additionally, we welcome increased transparency and timely publication of PRB’s decisions. However, when reading this paragraph, it seems that once the validity of a patent is decided and announced by PRB, irrespective whether or not any party appeals the PRB decision, the PRB’s decision comes into effect. This could be very problematic since the PRB’s decision has not come into effect at this time point if it is appealed and it is possible that the PRB’s decision is revoked by courts in a later proceeding. Our understanding about the current principle is that the PRB’s decision is published, but not registered or announced until judicial remedies are exhausted. We support this principle and suggest to add “where judicial remedies are exhausted” to make this paragraph more clear.

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Article 47

Any patent right that has been declared invalid shall be deemed to be non-existent from the beginning.

The decision on declaring a patent right invalid shall have no retroactive effect on any written judgment or written mediation on patent infringement that has been made and enforced by the people's court, or on any decision concerning the handling of or punishment for a dispute over the patent infringement that has been performed or compulsively executed, or on any contract for permitted exploitation of the patent or for transfer of patent rights that has been performed--prior to the invalidation declaration of the patent right. However, compensation shall be made for the losses caused to another person mala fides by the patentee.

Suggestion 1:

Any patent right that has been declared invalid after exercise all available judicial reliefs shall be deemed to be non-existent from the beginning.

The decision on declaring a patent right invalid shall have no retroactive effect on any written judgment or written mediation on patent infringement that has been made and enforced by the people's court, or on any decision concerning the handling of a dispute over the patent infringement that has been performed or compulsively executed, or on any contract for permitted exploitation of the patent or for transfer of patent rights that has been performed--prior to the invalidation declaration of the patent right. However, compensation shall be made for the losses caused to another person mala fides by the patentee.

Reasons for amendment to Paragraph 1:

It is suggested to make amendment according to the left column with the same reason as Paragraph 2 of Article 46 above in order to avoid any confusion.

Reasons for amendment to Paragraph 2:

Since the organ that imposes punishments according to the amendments may be an administrative organ, the provision contained in this article “the decisions on punishment have no retroactive effect” conflicts with Chinese administrative laws, and the provision deprives the persons concerned of the right to receive relief with respect to the results of specific administrative acts. It is suggested to cancel relevant amendments thereto. As to the opinions as mentioned in Article 3, considering the complexity of patent cases, if the investigation and handling of a patent infringement case made by an administrative organ are not on the basis of effective judgment, the administrative organ may impose certain punishment which conflicts with the conclusive judgment issued by the competent judicial organ. If the decisions on wrong administrative punishment have no retroactive effect, it is impossible for the persons concerned to obtain any relief.

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Where the patent infringement compensation, royalties, and patent right transfer fees are not refunded pursuant to the provisions of the preceding paragraph, which constitutes a blatant violation of the principle of fairness, refund shall be made fully or partly.

Suggestion 2:

It is suggested to confirm the quasi judicial status of the Patent Reexamination Board and permit the courts to directly hear the validity of patents, which at least can partially settle relevant problems occurring in practice.

On one hand, the procedure for right confirmation may be simplified and the trial grades may be reduced; on the other hand, as for a patent infringement litigation, patent invalidity may become a new reason for plea, which may avoid damage to the charged infringer as mentioned above, and the judgment issued by a court for patent validity may avoid using the patent which should have been invalid to bring any patent infringement litigation in future.

Amendments to claims during present invalidity procedure contain much stricter limitations. Present

Special suggestion about the invalidation procedure

Presently, the sole organ that has the right to decide whether a patent is valid in China is the Patent Reexamination Board, and no judicial organ at any level has the right to directly decide or change the validity of any patent right, which results in lots of problems for the patent invalidation procedure and suits on patent infringement.

According to existing invalidation procedure, either party that disagrees on the invalidation decision made by the Patent Reexamination Board may bring an administrative litigation with the court against the Patent Reexamination Board. The court may hear whether such invalidation decision is correct only and has no right to change such decision made by the Patent Reexamination Board. If the court cancels the invalidation decision and remands for retrial, a new invalidation decision made by the Patent

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invalidity procedure cannot satisfy a patentee’s demands to further perfect its own patent rights. Therefore, it is suggested to broaden the limitations in amendment to claims during invalidity procedure or introduce reissuing procedure after a patent is granted, which permits a patentee to have a chance to further perfect his/its patent rights. This method is good for the patentee and improves the capability of third party and the public of anticipating the scope of patent right protection, and then the credibility of the patent rights can be strengthened.

Reexamination Board may be subject to the procedure for patent administrative litigation, which will make the whole patent invalidation procedure longer. Moreover, from the point of view of the Patent Reexamination Board, it becomes a defendant to the administrative litigation from a judge at the stage of patent invalidation procedure and, while it is defending for itself, it becomes an agent of the other party, thus the status thereof is not suitable.

In addition, as for a patent infringement litigation, patent invalidation is not a reason for infringement plea. Even though there is certain convictive evidence proving invalidation of the patent right, the charged infringer may put forward an invalidation request to the patent office and apply to the court for suspension in the action, which will make the trail period of the patent infringement litigation longer. Where the charged infringer fails to submit the invalidation request or if the court does not judge suspension, a decision on patent infringement may be made and the patent concerned may become invalid after a compensation judgment is issued, then the charged infringer will suffer from uncorrectable losses. Existing technical plea and other non-infringement pleas are applicable only to the specific infringement litigation, and the patent that should have been invalid may be used as a cause for other infringement litigation.

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Article 49

Where a national emergency or any extraordinary state of affairs occurs, or public interests so require, the patent administration department under the State Council may grant a compulsory license for exploitation of an invention patent or utility model patent.

Where a national emergency or any extraordinary state of affairs occurs, or noncommercial purposes such as public interests so require, the patent administration department under the State Council may grant a compulsory license for exploitation of an invention patent or utility model patent.

According to Article 31 of TRIPs, “Other Use without Authorization of the Right Holder”, the expressions used are “in the case of a national emergency or other circumstances of extreme urgency, or in the case of public noncommercial use”. Therefore, it is suggested to make amendment as mentioned in order to keep consistent with TRIPs.

Article 60

If a dispute arises as a result of exploitation of a patent without permission of the patentee, that is, the patent right of the patentee is infringed, the dispute shall be settled through consultation between the parties. If the parties are not willing to consult or if consultation fails, the patentee or interested party may take legal action before a people's court, and may also request the patent administration department to handle the dispute. Where the

Suggestion 1:

If a dispute arises as a result of exploitation of a patent without permission of the patentee, that is, the patent right of the patentee is infringed, the dispute shall be settled through consultation between the parties. If the parties are not willing to consult or if consultation fails, the patentee or interested party may take legal action before a people's court, and may also request the patent administration department to handle the dispute. Where the patent administration department deems, when handling a dispute, that an infringement is constituted, it can order the infringer to immediately stop the infringement. If the party is dissatisfied with the order, he may, within 3 months from the date of receipt of the notification of the order, take legal action before a

1. We would like administrative organs to intensify the power to suppress infringement acts and we also think that relevant administrative rights shall be limited. It is suggested that investigation and handling of patent infringement cases shall be on the basis of existing effective judgment or that administrative procedures shall be terminated or suspended once the case is submitted to a judicial organ. As patent right is a civil right, the patentee may exercise or waive his/its patent right and decide on the subject, time and method of exercise at his/its own discretion. Administrative organs shall promote exercise of the patent rights rather than destroying patentee’s right of decision.

2. Definitions of “group infringement” and “willful patent infringements that disrupt the market order” are not clear, and it is suggested to make clarification.

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patent administration department deems, when handling a dispute, that an infringement is constituted, it can order the infringer to immediately stop the infringement. If the party is dissatisfied with the order, he may, within 15 days from the date of receipt of the notification of the order, take legal action before a people's court in accordance with the Administrative Procedure Law of the People's Republic of China. If the infringer neither takes legal action at the expiration of the time limit nor ceases the infringement, the patent administration department may file an application with the people's court for compulsory enforcement.

For willful patent infringements that disrupt the market order, such as group infringements and repeated infringements, the patent administration department may

people's court in accordance with the Administrative Procedure Law of the People's Republic of China. If the infringer neither takes legal action at the expiration of the time limit nor ceases the infringement, the patent administration department may file an application with the people's court for compulsory enforcement.

For willful patent infringements that disrupt the market order, such as group infringements and repeated infringements, the patent administration department may investigate and handle it. Where the illegal turnover reaches or exceeds RMB 50,000, a fine equal to one to five folds of the illegal turnover may be imposed. Where no illegal turnover has been generated or the illegal turnover is less than RMB 50,000, a fine less than RMB 250,000 may be imposed.

3. It is suggested that specific identification standard of “illegal turnover” should be specified clearly. It is unclear that “illegal turnover” as mentioned in this article refers to all sales volume of the patent-infringing products or the part of sales volume involving the patent right concerned in the whole product. A patent-infringing product may be made by using lots of patents, know-how and other intellectual property rights, and the sales volume thereof may be attributable to marketing, advertising, brand influence and other factors. Therefore, it will be unfair if all sales volume of a product is identified as illegal turnover arising from infringement of certain patent right.

4. It is suggested to further specify the relationship between fine and indemnity against infringement (including payment order). In particular, in case of investigation and handling of a case initiated by a patent administration department, and if the patentee brings a patent infringement suit, how to coordinate the relationship between administrative enforcement and judicial remedy? If the court determines on the amount of indemnity against infringement in the suit, in particular, according to Article 65 of the Draft Patent Law, such amount may be increased to two or three times in case of intentional tort, then the infringer is required to pay one to five times illegal turnover as the fines and two to three times indemnity against infringement as the damages. How to deal

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investigate and handle it, order the infringer to immediately stop the infringement, and may confiscate the patent-infringing products as well as the components, tools, molds, devices, and other means specially used to produce patent-infringing products or apply infringement methods. For repeated infringement, the patent administration department can impose a fine. Where the illegal turnover reaches or exceeds RMB 50,000, a fine equal to one to five folds of the illegal turnover may be imposed. Where no illegal turnover has been generated or the illegal turnover is less than RMB 50,000, a fine less than RMB 250,000 may be imposed.

with the relationship between fine and indemnity against infringement? If the fine is paid first, is the infringer capable of paying indemnity against infringement? If not, will the patentee’s benefits be damaged due to investigation and handling initiated by the administrative department?

5. It is not enough for one party within a “15-day” time limit for action to decide whether to bring a suit with a court and appoint an appropriate lawyer according to the notice from a patent administration department, especially when there is certain public holiday. Therefore, it is suggested to extend the period to “3 months”.

6. As to the provisions “confiscate the patent-infringing products as well as the components, tools, molds, devices, and other means specially used to produce patent-infringing products or apply infringement methods”, confiscation is a serious remedy and may take material adverse effect. Other similar enforcement powers and measures may be appropriate to those fake commodities or piracy cases involving a large number of products if the scope of right protection is clear; however, it is a question how to implement this article in case of other industries than traditional manufacturing industry, in particular, technical industry. As to patent cases, it may be improper to take more radical enforcement measures such as confiscation due to

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uncertain scope and meaning of the claims.

Suggestion 2:

Where a dispute arises as a result of the exploitation of a patent without the authorization of the patentee, that is, the infringement of the patent right of the patentee, it shall be settled through consultation by the parties. Where the parties are not willing to consult with each other or where the consultation fails, the patentee or any interested party may institute legal proceedings in the people's court, or request the patent administration department for patent affairs to handle the matter.

When the patent administration department for patent affairs handling the matter considers that the infringement is established, it may order the infringer to stop the infringing act immediately.

If the party is not satisfied with the order, he may, within 15 days from the date of receipt of the notification of the order, institutes legal proceedings in the people's court in accordance with the Administrative Procedure

Law of the People's Republic of China. If, within the said time limit, such proceedings are not instituted and the order is not complied with, the patent administration department may approach the people's court for

Regarding paragraph #2:

Since patent infringement acts infringe the private right of patentees, it seems inadequate for administrative authorities to investigate and punish an alleged infringement ex officio, i.e. they act just on their own initiative. We suggest that such investigations of infringement disrupting the market order are only initiated upon request of the patentee.

If it is considered necessary to empower administrative authorities to investigate an infringement act proactively, we suggest a restriction to “alleged patent infringement act disrupting the market order” to mass infringement and repetitive infringement only.

As a minimum requirement, the patentee should be informed before an administrative authority ex officio initiates an investigation.

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compulsory execution. The said authority handling the matter may, upon the request of the parties, mediate on the amount of compensation for the damage caused by the infringement of the patent right. If the mediation fails, the parties may institute legal proceedings in the people's court in accordance with the Administrative Procedure Law of the People's Republic of China.

The administrative authority for patent affairs has the power to investigate and punish the willful mass or repetitive patent infringement act disrupting the market

order or repeated infringement, as well as stop the infringement act, confiscate the infringing products, the parts, tools, modules or equipment that are used to manufacture the infringing products or implement the infringing methods. The patent administration department shall inform the patentee of an intended ex officio investigation before the investigation is initiated. For the repeated infringement activities, [the patent administration department] shall impose a fine of more than one time and less than five times of the amount of illegal business income; for zero illegal business income or illegal business income of 50,000 yuan or less, [the patent administration department] shall impose a fine of 250,000 yuan or less.

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Like suggested Article 3, the draft revision to Article 60 would substantially expand the patent administration departments’ enforcement authority. While we greatly appreciate the changes made by the State Council Legal Affairs Office (“SCLAO”) to SIPO’s April 2015 draft, the suggested Article would allow the patent administrative department to investigate, punish, and stop willful or repeated patent infringement activities. While Microsoft applauds ongoing efforts to improve patent administration and enforcement across China, we are uncomfortable with the breadth of this expansion of the responsibilities of the patent administrative departments and believe that China’s courts are typically best suited to adjudicate patent infringement disputes and award appropriate remedies.

suggested Article 60 would also allow the patent administration departments to “confiscate the infringing products, the parts, tools, modules or equipment that are used to manufacture the infringing products or implement the infringing methods.” Confiscation is a severe remedy and has the potential to have tremendous negative effects. Additionally, outside the traditional manufacturing industries, it is unclear how this authority would be applied. This type of aggressive enforcement activity is perhaps appropriate in combatting high-volume, commercial-level piracy and counterfeiting, where the scope of the protected

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rights is clear. However, due to the uncertainty regarding the scope and meaning of patent claims, it would be inappropriate in the patent context. Accordingly, we recommend deleting this revision in its entirety, or – at a minimum – removing the authority to confiscate infringing products or the parts, tools, modules, and equipment used in their manufacture.

Suggestion 4:

Article 60

For willful patent infringements that disrupt the market order, such as group infringements and repeated infringements, the patent administration department under the State Council may investigate and handle it, order the infringer to immediately stop the infringement, and may confiscate the patent-infringing products as well as the components, tools, molds, devices, and other means specially used to produce patent-infringing products or apply infringement methods with the permission of the people’s court. For repeated infringement, the patent administration department can impose a fine. Where the illegal turnover reaches or exceeds RMB 50,000, a fine equal to one to five folds of the illegal turnover may be

1. Patent administration departments are aware that stricter protection of patent rights shall be subject to the condition that administrative enforcement upon willful patent infringement shall be subject to judicial procedures; otherwise, someone may abuse his powers to maliciously beat competitors. One extreme example is that one party may beat its competitors and complain about infringement by using its utility model patent (which may be granted without material examination). The reasonable royalties paid by the charged infringer may be much lower than the value of the product line concerned. Therefore, if a patent administration department confiscates the product line concerned, it will break the competition and market order to a large extent.

2. The meaning of “willful infringement” is not clear even if it is followed by group infringements and repeated infringements. Moreover, it is unclear whether willful infringement contains other acts than group infringements

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imposed. Where no illegal turnover has been generated or the illegal turnover is less than RMB 50,000, a fine less than RMB 250,000 may be imposed.

and repeated infringements; if yes, such infringement acts may be included in the scope of “willful infringement”. In addition, the meanings of “group infringements and repeated infringements” are not clear and may be expanded, which may result in the aforesaid malicious behavior easily.

Therefore, we strongly suggest that such kind of enforcement power may be exercised only by the patent administration department under the State Council other than local patent departments and that such enforcement must be confirmed by the court within a reasonable period.

Article 61 (new)

The patent administration department that handles the patent infringement dispute, upon request of the parties, may carry out mediation concerning the amount of compensation for the patent right infringement. If mediation fails, the parties may take legal action before the people's court in accordance with the Civil Procedure Law of the People's Republic of China. Where the mediation agreement is reached but either party refuses to perform

It is suggested to delete this article.

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it or fails to completely perform it, the opposite party may file an application with the people's court for compulsory enforcement.

Article 62 (new)

Where a party that knows that its products are raw materials, intermediary items, parts, devices dedicated to practice a patent, without the authorization of the patentee, provides, for production or business purposes, such products to another party and the another party has practiced the act of infringing the patent right, the party shall bear the joint and several liability with the infringer.

Where a party that knows that its products or methods are patented products or methods, without the authorization of the patentee and for production or business purposes, induces, another party

Suggestion 1:

A person that falls in any of the following circumstances shall be deemed infringing a patent right and shall assume joint and several liability together with the direct infringer or solely assume the liability:

1) as to the patent rights of a product, for the purpose of production and operation, offering for sale, selling or importing relevant commodities to others for exploiting the patent therein without the patentee’s license even if he/it knows that the commodities are used only for exploiting patents, without any material purposes but relating to material characteristics of patent invention and creation;

2) as to the patent rights of a method, for the purpose of production and operation, offering for sale, selling or importing relevant commodities to others for exploiting the patent therein without the patentee’s license even if he/it knows that the commodities are used only for exploiting patents, without any material purposes;

1) In this Article, it is required that only when “others have committed an infringement of patent rights”, can the provider be deemed as having infringed patent rights, and should assume joint and several liabilities together with the infringer. However, Article 11 of the Patent Law provides that only actions of patent committed for the purpose of “production and operation” will be deemed as infringement of rights. Moreover, Article 69 of the Patent Law also specifies some exceptions for infringements. For example, the use of related patent for scientific research and experiment will not be deemed as infringement of patent rights. In such a case, if the provider provides goods to consumers without any “production and operation purposes” or anyone who falls into exceptions of infringement acts, the provider will not be deemed to have infringed patent rights and thus does not have to assume any joint and several liabilities. This will exclude a great part of infringement obligations of the providers, which is not in accord with the original legislative intention of setting this indirect infringement clause. Therefore, we suggest that

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and the another party has practiced the act of infringing the patent right, the party shall bear the joint and several liability with the infringer.

3) Instigating others to exploit the patent for the purpose of production and operation, without the patentee’s license.

“infringement of patent rights by others” be restricted to “exploitation of patent” unilaterally by others. In such a case, if the act of the exploiter constitutes an infringement, the provider and the direct infringer shall together assume joint and several liabilities for infringement; however, if the act of the exploiter does not constitute an infringement on account of provisions in Article 11 or 69 of the Patent Law, the provider shall solely assume liabilities for infringement.

2) Regarding “raw materials, intermediary items, parts, devices” as used in this Article. On one hand, such enumeration is not exhaustive, and some goods which do not belong to the scope of “raw materials, intermediary items, parts, devices” might be excluded; on the other, all these can be substituted for the word “goods”. If revised, the clause will become more concise.

3) In this Article, the word “provide” in Item 1 fails to specify which acts belong to “provision” and it is inconsistent with the provisions on infringements in Article 11 of the Patent Law. We suggest further specifying it to include “offering for sale, sale, importation” and other acts.

4) In this Article, we cannot explicitly see that the act of providing goods dedicated to implementing method patent right also belongs to indirect infringement. Therefore, we suggest further specifying the same, as shown in Item 2 of

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the proposed revisions.

5) In practical operation, there is still ambiguity as to “dedicated to exploit a patent”. We suggest, in the case of products’ patent rights, to further specify it as “dedicated to exploiting the patents of the said product which does not have any other substantial uses and are related to the substantial features of the patent invention-creation”; in the case of method patent right, to further specify it as “dedicated to exploiting the patent of the said method which has no other substantial uses”.

6) It is still impossible to clearly tell whether “others” refer to “an individual” or “many persons”. It should be specified to highlight the principle of “an individual party”.

Suggestion 2:

Where a party that knows or should know that its products are raw materials, intermediary items, parts, devices dedicated to practice a patent, without the authorization of the patentee, provides, for production or business purposes, such products to another party and the another party has practiced the act of infringing the patent right, the party shall bear the joint and several liability with the infringer.

Where a party that knows or should know that its products or methods are patented products or methods,

1. Regarding Article 62, it is very difficult to directly prove “knows”. “Should have known” has reduced the difficulty. Besides, “should have known” is recognized in laws and regulations, for example, as stated in the following Article 63.

2. Besides, we suggest that this Article should cover the case in which the direct infringer does not assume liabilities so as to clear the uncertainty in law. Such a case may occur where there are special provisions in the law. For instance, where the direct infringer is an individual, and does not assume liabilities provided that the infringement

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without the authorization of the patentee and for production or business purposes, induces, another party and the another party has practiced the act of infringing the patent right, the party shall bear the joint and several liability with the infringer.

is committed not out of purposes of production and operation. One more concrete example is method right claim directly implemented via mobile phone. Wherein, in case the mobile phone subscriber is an individual, the patentee should be allowed to directly claim his/her rights from mobile phone equipment provider.

Article 63 (new)

Where an internet service provider who knows or should have known that an internet user uses the internet service provided by the provider to perform a patent infringement or counterfeiting of a patent, fails to take necessary measures to stop the infringement, such as deleting, hiding, or disconnecting the link of the patent-infringing product, the internet service provider shall assume joint responsibilities along with the internet user.

Where a patentee or interested party can prove that an internet user uses the internet service to infringe on his or its patent right or

Suggestion 1:

Where an internet service provider who knows or should have known that an internet user uses the internet service provided by the provider to counterfeit a patent, fails to take necessary measures to stop the infringement, such as deleting, hiding, or disconnecting the link of the patent-infringing product, the internet service provider shall assume joint responsibilities along with the internet user.

Where a patentee or interested party can prove that an internet user uses the internet service to counterfeit a patent, he or it can notify the internet service provider to take the aforesaid necessary measures in the preceding paragraph to stop the infringement. Where the internet service provider fails to take necessary measures after receiving a valid notification, it shall assume responsibilities along with the internet user for the additional damage.

1. We suggest deleting “to perform a patent infringement” and only reserve “counterfeiting of a patent”.

How can we determine whether an internet service provider knows or should have known that an internet user commits a patent infringement? If the patentee issues a warning letter to the internet service provider claiming that any internet user is infringing upon its patent right and demands internet service provider to disconnect the link to the internet user, then can we thus conclude that “the internet service provider knows or should have known the same”? To judge a patent infringement requires complicated professional skills in terms of technology and law. Thus, it should be affirmed by a court by comparing technical characteristics of the alleged infringement technical solutions against those of the technical solutions protected by the right claim. Moreover, even if the court has convicted an infringement, it is also possible that the said patent right may be invalidated during the invalidation procedures. Then how reliable is it to let the internet service provider to determine the establishment of an

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counterfeit a patent, he or it can notify the internet service provider to take the aforesaid necessary measures in the preceding paragraph to stop the infringement. Where the internet service provider fails to take necessary measures after receiving a valid notification, it shall assume responsibilities along with the internet user for the additional damage.

When the patent administration department deems that an internet user uses the internet service to infringe on a patent right or counterfeit a patent, the department shall notify the internet service provider to take necessary measures to stop the infringement as described in the preceding paragraph. Where the internet service provider fails to take necessary measures, it shall assume joint and several responsibilities along with the internet user for the

When the patent administration department deems that an internet user uses the internet service to counterfeit a patent, the department shall notify the internet service provider to take necessary measures to stop the infringement as described in the preceding paragraph. Where the internet service provider fails to take necessary measures, it shall assume joint and several responsibilities along with the internet user for the expanded portion of damage.

patent infringement?

In addition, suppose the patentee has issued a warning letter requiring the internet service provider to disconnect the link, can we determine that “the internet service provider knows or should have known the same” on account of the above fact? If yes, then what information should be included in the warning letter? Despite the fact that Item 2 provides that such a notice should be “valid”, the word “valid” is in itself not that clear.

Based on the existing Article 63, if the internet service provider arbitrarily disconnects internet service to the internet user, then the public nature and universality of internet services cannot be guaranteed. On the contrary, if the internet service provider does not discontinue internet services to internet users without exception, then it might have to assume unreasonable joint and several liabilities.

2. However, based on the patent right certificates or by way of rapid internet searching, internet service provider can easily detect whether there are counterfeiting of any patent (according to the specific definition of counterfeiting of patents as stated in the detailed rules for the enforcement of the Patent Law). Therefore, we recommend that “to perform a patent infringement” be deleted and only “counterfeiting of a patent” be reserved.

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expanded portion of damage. 2. We suggest explicitly defining “a valid notification”, for example, to specify it as the certificates of rights of the patentee. Otherwise, the internet service provider may interpret its meanings at will, which is harmful to the enforcement of this Clause.

Suggestion 2:

It is suggested to delete or amend as follows:

Where a service provider who knows that a user uses the service provided by the provider to perform a patent infringement or counterfeiting of a patent and knows the infringement intention but still actively takes one or more measures to assist in such infringement act or provide relevant conveniences, without taking necessary measures to stop the infringement, the service provider shall assume joint responsibilities along with the user.

Where a patentee or interested party can prove that a user uses the service to infringe on his or its patent right or counterfeit a patent, he or it can notify the service provider to take the aforesaid necessary measures in the preceding paragraph to stop the infringement.

When the patent administration department deems that a

We have noted similar provisions in this exposure draft that have been drawn in part from the Trademark Law or Copyright Law wherein a third party facilitating an infringement knows or should have known that it has to assume joint and several liabilities. We hold that, rather than stipulating provisions simply with respect to internet service providers (ISP), all acts or services facilitating an infringement under the condition that the facilitator knows or should have known such an infringement should be treated as equals. Therefore we recommend deleting this clause or revise it so that all service providers (such as providing facilities or services in warehousing, transportation, etc.) facilitating an infringement under the condition that the facilitator knows or should have known such an infringement should assume joint and several liabilities.

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user uses certain service to infringe on a patent right or counterfeit a patent, the department shall notify the service provider to take necessary measures to stop the infringement as described in the preceding paragraph. Where the service provider fails to take necessary measures and is proved that it knows such actual or suggested infringement or actively takes measures to assist in such infringement or provide relevant convenience, it shall assume joint and several responsibilities along with the user for the expanded portion of damage.

Article 64

If a dispute over patent infringement involves an invention patent for the method of manufacturing a new product, the unit or individual manufacturing the same product shall provide evidence to show that the manufacturing method of their own product is different from the patented method.

If a dispute over patent infringement involves a utility

Suggestion 1:

It is suggested to further specify the meaning of “interested parties” as mentioned in Paragraph 2 hereof.

In Item 2 of Article 64, by providing that “both parties can take the initiative to provide such patent right assessment report”, unnecessary waste of litigation resources arising out of arbitrary claim of rights by the patentee based on an uncertain patent can be prevented. We appreciate such revisions made here.

However, for the sake of clarity, we suggest further specifying the “interested party” in Item 2 of this Article. The ambiguity here lies in whether it merely refers to those who have the same interests with the patentee, or any party involved in a patent infringement dispute, including the alleged infringer? In consideration of efficiency, both the plaintiff (including the patentee or licensee) and the

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model patent or a design patent, the people's court or the patent administration department may require the patentee or the interested parties to present a patent right assessment report prepared by the patent administration department under the State Council through searching, analyzing, and assessing the relevant utility model or design, which shall serve as evidence for trying or handling the patent infringement dispute. Both parties can take the initiative to provide such patent right assessment report.

defendant should be allowed to request patent right assessment report. The same problem also exists in Article 56 of the detailed rules for implementation, according to which only the patentee and interested party may request the patent right assessment report from SIPO.

Suggestion 2:

If a dispute over patent infringement involves a utility model patent or a design patent, both the parties shall actively produce the patent right assessment report; otherwise, the people's court or the patent administration department shall require the parties to present a patent right assessment report prepared by the patent administration department under the State Council through searching, analyzing, and assessing the

1. We recommend revising it to “both parties should take the initiative to provide such a patent right assessment report”.

2. We suggest revising it to “mandate both parties to submit the patent right assessment report in relation to new utility models or exterior designs”. Considering that new utility models or exterior designs are not subject to substantial examination and the defendant is required to defend within a short period upon filing of a lawsuit, thus the defendant is in an unfavorable position. Mandating the submission of the

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relevant utility model or design, which shall serve as evidence for trying or handling the patent infringement dispute.

patent right assessment report is conducive to balancing both parties’ positions in the prosecution and administrative procedures.

Article 67

When the patent administration department investigates and handles the suspected patent infringement or counterfeiting of a patent, it may, based on evidence obtained, inquire the parties concerned, and investigate the circumstances related to the suspected illegal act; conduct on-the-spot inspection of the places where the suspected illegal act is committed; consult and duplicate the relevant contracts, invoices, account books and other related materials associated with the suspected illegal act; and check the products related to the suspected illegal act and seal or detain the products that constitute an intentional patent infringement and disrupt the market order or are

Suggestion 1:

When the patent administration department investigates and handles the suspected patent infringement or counterfeiting of a patent, it may, in terms of actual circumstances, inquire the parties concerned, and investigate the circumstances related to the suspected illegal act; conduct on-the-spot inspection of the places where the suspected illegal act is committed; check the products related to the suspected illegal act and seal or detain the products that constitute an intentional patent infringement and disrupt the market order or are proved to be produced by the counterfeited patent; consult and duplicate relevant contracts, invoices, account books and other related materials associated with the suspected illegal act.

When the patent administration department performs its duties as prescribed in the preceding paragraph, the parties concerned shall provide assistance and cooperation. Where the parties refuse to provide assistance or cooperation or create obstacles when the patent administration department performs its duties, the patent administration department shall give them a

First, by revising Article 67 of the draft and simply juxtaposing “suspected patent infringement” with “suspected counterfeiting of a patent”, the reviewer fails to take into account the marked difference in the complexity involved in determining of both of them. Relatively speaking, “suspected counterfeiting of a patent” is easier to determine. While for “patent infringement”, in view of the complexity with the determination of a patent infringement, the administrative law enforcement authority will find it difficult to determine whether there is a “suspected patent infringement” through simple and preliminary judgments. If the administrative law enforcement authority directly exercise all its investigatory authorities as listed in Article 67 for any request of handling patent infringement cases on file, even if it involves continuously consulting and duplicating contracts, invoices, account books and other materials of the respondent without convicting an infringement, in practice, such acts will severely affect the normal production and operation activities of the respondent. Especially due to the absence of a definite and clear criteria and procedure as to the determination of “a suspected patent infringement”, provided that the administrative law enforcement authority cannot guarantee

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proved to be produced by the counterfeited patent. When the patent administration department performs its duties as prescribed in the preceding paragraph, the parties concerned shall provide assistance and cooperation. Where the parties refuse to provide assistance or cooperation or create obstacles when the patent administration department performs its duties, the patent administration department shall give them a warning; where the parties' actions constitute violation of public security administration regulations, the public security organization shall impose a punishment on them; where the parties' actions constitute a crime, criminal responsibility shall be pursued in accordance with law.

warning; where the parties' actions constitute violation of public security administration regulations, the public security organization shall impose a punishment on them; where the parties' actions constitute a crime, criminal responsibility shall be pursued in accordance with law.

The patent administration department shall be obligated to keep confidential the information which is obtained during on-the-spot inspection, consultation and copy of relevant contracts, invoices, account books and other related materials associated with the suspected illegal act, especially business secrets.

exercising its authorities in a just and fair manner, it is quite likely that the administrative law enforcement authority may exercise its investigatory authorities irrespective of whether acts of the respondent is reasonable and whether the acts of the respondent truly constitutes a patent infringement. In this way, it will be difficult to guarantee the respondent’s right to maintain normal business and the corresponding rights of the respondent are directly prejudiced by an excessive expansion of public powers. Therefore, to prevent the administrative authority from excessively or mechanically use its investigatory authorities, we suggest that clarifications be made with respect to the “suspected patent infringement” and “suspected counterfeiting of a patent”.

Second, we suggest that only for “willful patent infringements or counterfeiting of a patent that can be proved with evidence to be disrupting the market order”, will it be allowed to “consult and duplicate relevant contracts, invoices, account books and other related materials that are related to the suspected illegal acts”, since “contracts, invoices, account books and other related materials” are chiefly used to determine the amount of damages or the amount generated from illegal operation, and not to determine whether an infringement exists. Moreover, the department regulating the patent work does not have the authority to determine the amount of infringement

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compensation. Therefore, during the course of ordinary administrative law enforcement, it is not necessary to consult and duplicate “contracts, invoices, account books and other related materials”. Only when investigating and addressing “willful patent infringements or counterfeiting of a patent that can disrupt the market order”, will it be necessary to exercise the above-mentioned authority.

Next, we also suggest that the administrative law enforcement authority should exercise their authorities on the condition of “necessity”, or to provide that “according to the actual necessity, any party concerned may be inquired ……”. In doing so, the possibility can be prevented that taking the initiative to exercise the authority exceeds the requester’s necessity of making a request, and has thus caused excessive unnecessary impacts on the normal production and operation activities of the suspected infringer.

Finally, we recommend including provisions that the patent administrative authority shall assume confidential obligations for any information (trade secrets in particular) that it gets into contact with during the course of conducting field inspections at any concerned party’s site related to any suspected illegal acts, consulting or duplicating contracts, invoices, account books and other relevant materials.

Suggestion 2: For the same reasons as mentioned above in relation to Article 3 and 60, we suggest that the power given to patent

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When investigating and prosecuting the alleged acts of patent infringement and forge the patent, the patent administration department for patent affairs may, based on the evidence obtained, inquire the parties involved, and to investigate the facts relevant to the alleged illegal act; carry out an on-the-spot inspection of the site where the party’s alleged illegal act took place; inspect and duplicate the contracts, invoices, account books and other relevant materials related to the alleged illegal act; and examine the products related to the illegal act and seal up or seize the products that are proved by evidences to willfully massively or repeatedly infringe patent rights and that disturbs market order or pass off a patent.

The parties shall assist and cooperate with the patent administration department s in exercising the functions and authorities prescribed in the preceding paragraph in accordance with law. Where the parties refuse to be investigated or impede the administrative authority for patent affairs to perform their duty, the administrative authority for patent affairs shall give the warnings; if there is serious circumstance, the punishment in public order and security administration shall be imposed in accordance with the law.

Where the parties refuse or hamper the patent

administrative authorities should be restricted to a reasonable scope.

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administration department to carry out its duties, the patent administration department may issue warnings; where the conduct constituted a violation of the security administration, the public security will impose penalty in accordance with the law; where [the conduct] constituted crime, [the party] shall be responsible for criminal liabilities in accordance with the law.

Suggestion 3:

Delete entirely or amend as follows:

When investigating and prosecuting the alleged acts of willful or repeated patent infringement and forge the patent, the patent administration department for patent affairs may, based on the evidence obtained, inquire the parties involved, and to investigate the facts relevant to the alleged illegal act; carry out an on-the-spot inspection of the site where the party’s alleged illegal act took place; inspect and duplicate the contracts, invoices, account books and other relevant materials related to the alleged illegal act; and examine the products related to the illegal act and seal up or seize the products that are proved by evidences to willfully infringe patent rights and disturb market order or pass off a patent.

The parties shall assist and cooperate with the patent

The suggested revision to Article 67 would significantly expand the authority of the patent administrative department. We would respectfully question whether such an expansion is justified. Additionally, while inclusion of the concepts of “willful infringement” and “disturb market order” may provide useful restrictions, it is unclear as to how the infringement is to be determined as “willful” or the market order deemed “disturbed.” Accordingly, Microsoft would respectfully suggest that the suggested authority of the patent administrative department under Article 64 be removed or – at a minimum – narrowed and clarified

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administration department s in exercising the functions and authorities prescribed in the preceding paragraph in accordance with law, and may not refuse or impede them. Where the parties refuse to be investigated or impede the administrative authority for patent affairs to perform their duty, the administrative authority for patent affairs shall give the warnings; if there is serious circumstance, the punishment in public order and security administration shall be imposed in accordance with the law.

Where the parties refuse or hamper the patent administration department to carry out its duties, the patent administration department may issue warnings; where the conduct constituted a violation of the security administration, the public security will impose security administration penalty in accordance with the law; where [the conduct] constituted crime, [the party] shall be responsible for criminal liabilities in accordance with the law.

Article 68

The amount of compensation for patent right infringement shall be determined according to the patentee's actual losses caused by the infringement. If it is hard to

If the losses of the patentee, benefits of the infringer, or royalties of the patent are all hard to determine, the people's court may, on the basis of the factors such as the type of patent right, nature of the infringement, and seriousness of the case, determine the amount of compensation within the range from 10,000 yuan to

Reasons for revision of Item 2:

Given the complexity of a patent infringement case, in case the actual losses of the patentee cannot be determined, it seems inappropriate, from the perspective of fairness, to artificially increase the lower limit of statutory damages

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determine the actual losses, the amount of compensation may be determined according to the benefits acquired by the infringer through the infringement. If the losses of the patentee, benefits of the infringer are all hard to determine, the amount of compensation may be determined according to the reasonably multiplied amount of the royalties of that patent. With respect to an intentional patent infringement, the people's court may increase the aforesaid compensation amount by one to three folds according to the seriousness, level, and result of the infringement. The amount of compensation shall include the reasonable expenses paid by the patentee for putting an end to the infringement.

If the losses of the patentee, benefits of the infringer, or royalties of the patent are all hard

5,000,000 yuan.

The people's court shall order the accused infringer to provide the account books and materials related to the infringement for determining the amount of compensation where the patent right holder has tried the best to provide proofs and the account books and materials related to the infringement are mainly controlled by the accused infringer. Where the accused infringer fails to provide the account books and materials or provides fake account books and materials, the people's court shall determine the amount of compensation with referring to the claim of the patent right holder and the provided proofs. If a crime is constituted, the accused infringer shall be investigated for criminal responsibility according to Article 67 above.

from RMB 10,000 to RMB 100,000. The judge may, according to the case and various circumstances, grant the patentee a statutory damages equal to above RMB 10,000 to below RMB 5,000,000.

Reasons for revision of Item 3:

1. We suggest the following provisions: in case the patentee has provided preliminary proof evidencing an infringement and has endeavored to put to the proof, the People’s Court may start to order the infringer to provide documents relevant to the infringement or assist the patentee in obtaining other evidence from the infringer, rather than waiting till the People’s Court convicts an infringement. The patentee usually finds it difficult to obtain such relevant evidence from the infringer on his own. Additionally, in practice, in view of its workload, the People’s Court normally does not allow securing such relevant evidence before a lawsuit is filed.

2. A People’s Court should order an infringer to provide appropriate evidentiary documents, and give consideration to the compensation amount as claimed by the patentee.

3. To safeguard the judicial system, instead of merely ruling that the infringer lose the lawsuit, the court should exert greater deterrence to any infringer who gives false information or refuses to provide evidence required.

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to determine, the people's court may, on the basis of the factors such as the type of patent right, nature of the infringement, and seriousness of the case, determine the amount of compensation within the range from 100,000 yuan to 5,000,000 yuan.

After the people's court deems that a patent infringement is constituted, it may order the accused infringer to provide the account books and materials related to the infringement for determining the amount of compensation where the patent right holder has tried the best to provide proofs and the account books and materials related to the infringement are mainly controlled by the accused infringer. Where the accused infringer fails to provide the account books and materials or provides fake account books and materials, the people's

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court may determine the amount of compensation with referring to the claim of the patent right holder and the provided proofs.

Article 72

The following shall not be deemed to be patent right infringement:

(1) After a patented product or a product directly obtained by using the patented method is sold by the patentee or sold by any unit or individual with the permission of the patentee, any other person uses, offers to sell, sells or imports that product;

(2) Before the date of patent application, any other person has already manufactured identical products, used identical method or has made necessary preparations for the manufacture or use and continues to manufacture the products or use the method within

The following shall not be deemed to be patent right infringement:

(1) After a patented product or a product directly obtained by using the patented method is sold by the patentee or sold by any unit or individual with the permission of the patentee, any other person uses, offers to sell, sells or imports that product;

(2) Before the date of patent application, any other person has already manufactured identical products, used identical method or has made necessary preparations for the manufacture or use and continues to manufacture the products or use the method within the original scope;

(3) With respect to any foreign means of transportation that temporarily passes through the territory, territorial waters, or territorial airspace of China, the relevant patent is used in the devices and installations for its own needs, in accordance with the agreement concluded between the country it belong to and China, or in

Regarding condition (5):

There is a high possibility that a generic company could receive market approval before expiration of the patent. In such a situation, if the generic company actually begins to market a drug that infringes the innovator’s patents, the damage to the innovator may be irreparable, even if the innovator later wins its patent dispute. Therefore, we believe a mechanism should be established to allow drug market authorization holders to timely assert patent rights and request preliminary injunctions before generic drugs are launched into the market. We thus suggest that the Article may be amended to provide the patent right owner or any interested party standing to file an infringement suit with the court based on the generic drug application information timely received from CFDA to seek a judicial decision on whether the launch of the generic drug constitutes patent infringement and should be withheld till patent expiration. The corresponding part of the Drug Administration Law or Drug Registration Regulation shall also be amended to

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the original scope;

(3) With respect to any foreign means of transportation that temporarily passes through the territory, territorial waters, or territorial airspace of China, the relevant patent is used in the devices and installations for its own needs, in accordance with the agreement concluded between the country it belong to and China, or in accordance with any international treaty to which both countries have acceded, or on the principle of mutual benefit;

(4) Any person uses the relevant patent specially for the purpose of scientific research and experimentation; and

(5) Any person produces, uses, or imports patented drugs or patented medical apparatus and instruments, for the purpose of providing information required for administrative examination and

accordance with any international treaty to which both countries have acceded, or on the principle of mutual benefit;

(4) Any person uses the relevant patent specially for the purpose of scientific research and experimentation; and

(5) Any person produces, uses, or imports patented drugs or patented medical apparatus and instruments, for the purpose of providing information required for administrative examination and approval, or produces or any other person imports patented drugs or patented medical apparatus and instruments especially for that person. The patent right owner or any interested party may file an infringement suit at the court based on drug application information obtained from CFDA and seek a court decision on whether the launch of the third party’s drug constitutes patent infringement and should be withheld till patent expiration.

require CFDA to provide such information

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approval, or produces or any other person imports patented drugs or patented medical apparatus and instruments especially for that person.

Article 73

Where any person, for the purpose of production and business operation, uses, offers to sell or sells a patent-infringing product without knowing that such product is produced and sold without permission of the patentee, he shall not be liable for compensation provided that the legitimate source of the product can be proved.

Where any person, for the purpose of production and business operation, uses, offers to sell or sells a patent-infringing product without knowing or should not have known that such product is produced and sold without permission of the patentee, he shall not be liable for compensation provided that the legitimate source of the product can be proved.

Regarding “not knowing”, it should refer to the lack of actual knowledge and the lack of a reason to know.

Article 74 (new)

The patent administration department should establish patent rights protection credit information records, and include them into national credit information sharing exchange platform.

This article is EXPECTED to be further clarified or deleted.

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Article 75 (new)

Establishing patent agencies and obtaining qualification of patent agents need an approval of the patent administration department under the State Council.

No unit or individual can engage in patent agency services for business purposes without an approval of the patent administration department under the State Council. Where a unit or individual violates this provision, the patent administration department shall order the unit or individual to stop the violation and confiscate his unlawful gains, and may impose a fine.

It is suggested that “No unit or individual can engage in patent agency services for business purposes without an approval of the patent administration department under the State Council. Where a unit or individual violates this provision, the patent administration department shall order the unit or individual to stop the violation and confiscate his unlawful gains, and may impose a fine.” contained in Paragraph 2 is suggested to be deleted.

Regulation of the patent agency business ought to be more and more liberal rather than rigorous with the advance of society.

Article 81 (New)

Where an R&D institute or college established by the state fails to, within a reasonable period after an employment invention-creation is granted a patent, exploit or make

Where a R&D institute or college established by the state obtains a patent right on the basis of the employment invention-creation, in case of absence of contracts or policies issued by the unit, the inventor or designer may negotiate with the unit on allowing the inventor or designer to exploit the patent, or licensing

Regarding Article 81, it should be consistent with the provisions in the Law of the People’s Republic of China on Promoting the Transformation of Scientific and Technological Achievements which has taken effect since October 1, 2015. With reference to Article 40 (Ownership of Intellectual Property Rights) and Article 44 (Remuneration

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necessary preparation for exploiting the employment invention-creation, transfer the patent to others, or license others to exploit the patent, the inventor or designer may negotiate with the unit on allowing the inventor or designer to exploit the patent, or licensing others to exploit the patent without changing the ownership of the patent, and may enjoy the corresponding rights and interests as specified in the agreement.

others to exploit the patent without changing the ownership of the patent, and may enjoy the corresponding rights and interests as specified in the agreement.

for Inventors), these two articles provide that in most cases the contract/internal policies should be first be taken into account. Therefore, Article 81 may also include corresponding provisions. Additionally, the contract or policies will provide everyone with predictability and transparency.

Article 82 (New)

Where a patentee declares to the patent administration department under the State Council in writing that he or it is willing to license any person to exploit his or its patent and clarifies the royalty, the department shall publicize the declaration to implement declaratory license.

Where a patentee makes a

Article 82 (New)

Where a patentee declares to the patent administration department under the State Council in writing that he or it is willing to license any person to exploit his or its patent and clarifies the royalty and other license conditions, the department shall publicize the declaration to implement declaratory license. The patent administration department under the State Council shall grant relevant benefits in annual fee or others to the patentee.

This represents an overly simplistic and unrealistic view of patent licensing, mistaking the intention to license with the complicated contract terms in actual license agreements including but definitely not limited to the royalty conditions.

This article assumes that only one patent is licensed to anyone for the same royalty and does not take into account that each licensing contract may have very different terms and not necessarily the same royalty, often referred to as ex ante licensing terms. This article is inappropriate for patentees who license multiple patents.

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declaratory license statement for a utility model patent or design patent, the patentee shall provide a patent right assessment report.

To withdraw a declaratory license statement, a patentee shall submit a written document to the patent administration department under the State Council and the department shall publicize the withdrawal. Withdrawal of the declaration does not affect the efficacy of previously granted declaratory license.

Article 83 (New)

Anyone who is willing to implement a patent practicing declaratory license shall notify the patentee in writing and pay the royalty, to obtain a declaratory license.

Licensees of declaratory licenses may register before the patent administration department under

Suggestion 1:

During the term of a declaratory license, the patentee shall not grant an exclusive or sole license for the patent.

Admittedly, infringement of patent rights may also occur during the licensing period, the patentee should be allowed to seek for preliminary pre-suit injunction.

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State Council for record, as proof of obtaining declaratory licensees.

During the term of a declaratory license, the patentee shall not grant an exclusive or sole license or request a pre-litigation injunction for the patent.

Article 84 (New)

Where disputes arise on declaratory licenses between the parties, the parties may request the patent administration department under the State Council to adjudicate. Where the concerned party is dissatisfied with the decision, he or it may take file for litigation before a people's court within 15 days upon receiving the notification of the decision.

This article has the same problems with that of the above article.

Further, paragraph 2 of this article might discourage any patentee from using the process defined by Article 79 and 80 because in so doing they would lose the right to grant an exclusive license and not seek pre-suit injunctions. In practice, multiple exclusive patent licenses may be available under different field of uses.

We therefore recommend that this article be deleted. The contract law and other rules related to licensing might be a better place than the patent law to handle this issue.

Article 85 (New)

Where a patentee participating in the formulation of a national standard fails to disclose his or its

Suggestion 1:

Where disputes arise on declaratory licenses between the parties, the parties may request the patent administration department under the State Council to

The “fifteen days” time limit for prosecution is far from adequate for any party concerned to decide whether to file a lawsuit with the court and engage a competent lawyer, especially when any public holiday is involved. We hereby recommend that such time limit be extended to “three

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standard-essential patents during the formulation process, he or it is deemed to have licensed the implementers of the standard to use his or its patented technology. The royalty to be paid shall be decided through negotiations between the two parties. Where the two parties fail to reach an agreement, the patent administration department under the State Council may adjudicate. Where a party concerned is dissatisfied with the decision, he or it may file for litigation before a people's court within 15 days upon receiving the notification of the decision.

adjudicate. Where the concerned party is dissatisfied with the decision, he or it may take file for litigation before a people's court within 3 months upon receiving the notification of the decision.

months”.

Suggestion 2:

It is suggested to delete this article.

Contract disputes should be handled by the courts. Administrative authorities should not get involved in contractual issues between private parties.

We therefore recommend that this article be deleted.

Article 85 (New)

Where a patentee participating in the formulation of a national

Suggestion 1:

It is suggested to delete this article.

This “failure to disclose in standard setting” article is in conflict with the SIPO/SAC Regulatory Measures on National Standards involving Patents and the GBT 20003.1

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standard fails to disclose his or its standard-essential patents during the formulation process, he or it is deemed to have licensed the implementers of the standard to use his or its patented technology. The royalty to be paid shall be decided through negotiations between the two parties. Where the two parties fail to reach an agreement, the patent administration department under the State Council may adjudicate. Where a party concerned is dissatisfied with the decision, he or it may file for litigation before a people's court within 15 days upon receiving the notification of the decision.

standard on the obligation to disclose for the participants of the standard setting process. In the latter two set of rules, the patentees (participants of standard setting process) are required to disclose their potentially essential patents during all the phases of standard setting, at their best capability. Only when the failure to disclose constitutes violation of the good will principles, may it be deemed as breaches of disclosing obligations.

Furthermore, the penalty for non-disclosure is too severe and does not recognize the existence of general declarations where patents are not required to be disclosed. The language is arbitrary in requiring a compulsory license to any user (apparently automatically and before all the terms such as defensive suspension and reciprocity are negotiated), even for inadvertent non-disclosure, and even if the SEP holder is still willing to correct the inadvertent omission and to grant a (F)RAND license.

Such a rigid rule would also make it difficult for Chinese SDO’s to incorporate international standards into their specifications due to inconsistent rules in their IP policies that would be subject to this Article 82 of the Patent Law.

Finally, requiring SIPO and its local subsidiaries to adjudicate on private matters such as licensing terms will be counterproductive for facilitating trade and dissemination of

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technologies.

We humbly submit that the Patent Law is not the correct place to discuss SDO IP Policies. The IP Policy itself and its interpretation by a court in the event of a dispute is the best approach. We therefore recommend that this article be deleted.

1. We recommend revising it to “deemed that it allows the practitioner of such standard to use its necessary standard patents” and it should also be limited to such claims as are necessary for the execution of the standard.

2. This Article should include the following:

a. Patents implicitly licensed by the patentee participating in the standard should only be limited to necessary standard patents, but not including unnecessary patents, nor including irrelevant or unnecessary patented technologies.

b. Where a patent concerns multiple technical solutions, only those technical solutions necessary for the standard should be authorized;

c. Where one party owns necessary standard patents but does not authorize the other party who owns necessary standard patents, the other party should have the right to license its own necessary standard patents to such a party.

Suggestion 3: Article 28 of TRIPs Agreement expressly specifies that a 64

Where a patentee participating in the formulation of a national standard intentionally fails to perform the disclosure obligation designated by the standard formulation organization and to disclose his or its standard-essential patents and violates the state policies on intellectual property rights or relevant regulations formulated by the standard formulation organization during the formulation process, he or it is deemed to have licensed the implementers of the standard to use his or its patented technology on the fair, reasonable and non-discriminatory principles. The royalty to be paid and other relevant issues shall be decided through negotiations between the two parties. Where the two parties fail to reach an agreement, either party may submit the dispute to the competent people’s court or the agreed arbitral tribunal for judgment or ruling. Where a party concerned is dissatisfied with the decision, he or it may file for litigation before a people's court or a higher people’s court within 3 months upon receiving the notification of the decision.

patent right is an exclusive right. Therefore, the patentee should decide at its discretion whether a patent will be licensed, to whom the patent will be licensed, and which patent will be licensed. Extra care and caution should be taken when restrictions are to be imposed on the fundamental rights of the patentee.

Most standard setting institutions, especially those related to information, communication and other technical standards, have laid down patent-related policies or requirements so as to regulate the obligations of any patentee participating in the standard to disclose and license its standard patents. Therefore, provisions in Article 85 intended to regulate the disclosing obligations of any patentee participating in the standard in relation to its standard patents should be limited to the circumstance in which the patentee intentionally breaches its corresponding disclosing obligations as required by relevant standard setting institutions. This is also in accord with the provisions in Article 13 of the above-mentioned regulations by the State Administration of Industry and Commerce, which provides the act of “intentionally not disclose information on its rights to the appropriate standard setting organization while participating in the setting of standard”.

FRAND compulsory license should only be limited to the circumstance in which the patentee intentionally conceals

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standard patented technology, such as patent ambush. Otherwise, FRAND commitments should only be on a voluntary basis. This will also encourage contributors to get actively involved in setting standards and prevent abuse of rights by those who use the standard.

We recommend that failure of a patentee participating in the standard setting process to observe its disclosing obligations should not be “deemed to have licensed the implementers of the standard to use its patented technology”. The consequence should be that the patentee, in accordance with principles of FRAND, licenses the implementers of the standard to use its undisclosed standard patent that are related to the standard.

Meanwhile, such patentee should be required to license its standard patent rather than “patented technology”. The expression of “patented technology” is too broad and usually covers much more than the patent claims as specified by the patentee. Normally, technologies necessary for the implementation of the standard are merely limited to those specified in the claims.

Additionally, the “fifteen days” time limit for prosecution is far from adequate for any party concerned to decide whether to file a lawsuit with the court and engage a competent lawyer, especially when any public holiday is involved. We

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hereby recommend that such time limit be extended to “three months”.

Other proposals and suggestions:

1. There is no specific meaning in the new law of unfair limited competition. Therefore, it is suggested to express the detailed scope thereof.

2. The new law reduces the scope of “employment invention” and increases the compliance cost of an enterprise. However, it has rather limited positive effect on encouraging employees to make non-employment invention. Therefore, it is suggested to retain the original provisions.

3. It lacks relevant basis for the new law increasing the statutory minimum compensations. Therefore, it is suggested to retain the original minimum amount.

4. It is suggested that the new law may grant appropriate encouragement to the patentee of declaratory license in order to develop the patentee’s positivity.

5. Have the patent administration departments under local people's governments enough ability to settle complex patent issues? According to the Draft, the power to implement the patent administrative enforcement is delegated to the patent administration departments under local people's governments at the levels of province, city (whereby the city has one or more districts) and county authorized by laws and regulations. However, only the people’s courts at the level of city authorized by laws and regulations have relevant authority through actual practices of the people’s courts. Therefore, such provision may expand the power of administrative enforcement to a quite extent.

3. “专利代理人(patent agent)” is a name generally accepted and used. Therefore, it seems inadvisable that it is changed into “专利代理师(patent master)”.

4. Existing provision “If a foreigner, foreign enterprise, or other foreign organization without a regular residence or business site in China intends to apply for a patent or handle other patent-related matters in China” was made on the basis of absence of general use of electronic application. Such provision is to be modified along with development and generalization of electronic application.

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