IPR Update: Patent Law¡¯s Implementing Regulations Ammended

Sam Engutsamy, February 5 2010

Adopted by the by the sixth session of the Standing Committee of the 11th National People¡¯s Congress, the Decisions of the State Council to Amend the Implementing Regulations of the Patent Law of the People¡¯s Republic of China (¡°the Amended Regulations¡±) came into effect on February 1, 2010. The Amended Regulations are to be read in conjunction with the country¡¯s third amendment to its patent legislation, the Patent Law of the People¡¯s Republic of China (¡°the Act¡±), which came into effect on October 1, 2009.

Background: Patent Law

The Act was China¡¯s third amendment to its patent regime. Previous amendments had been brought about through international pressure for China to develop its IPR regime to international standards. The first amendment to China¡¯s Patent Law (¡°1992 Act¡±) came around through the 1992 Memorandum of Understanding between the United States and China, and China becoming a party to the Patent Cooperation Treaty. The second amendment (¡°2000 Act¡±) came around through entry requirements to the WTO and obligation to protect IPR under the TRIPS Agreement. China¡¯s most recently amendment, the Act, was not created through international pressures, or obligations. Positively, it was through China¡¯s own domestic realisation that changes and updates to their IPR regime were required. The Act was adopted at the 6th Session of Standing Committee of the 11th National People¡¯s Congress of the People¡¯s Republic of China on December 27, 2008, in accordance with the State Council¡¯s National Intellectual Property Strategy.

The Amended Regulations

The Amended Regulations make a number of modifications to the Patent Law¡¯s previous implementing regime; in total adding nine new rules, removing five previous rules, and amending forty-seven remaining rules. Outlined below are some of the amendments the Amended Regulations address:

(A) Compulsory Licenses:
Article 50 of the Act states that ¡°for the purpose of public health, the patent administrative department of the State Council may grant a compulsory license for a patented pharmaceutical so as to produce and export it to the country or region which conforms to the provisions of the relevant international treaty to which the People¡¯s Republic of China has acceded.¡± This in effect allows the State to effectively bypass the country¡¯s Patent Laws, and grant a compulsory licence should public health issues aris. What the Act failed to do is provide a definition as to the meaning of ¡°patented pharmaceuticals¡±.

The Amended Regulations clarifies the Article 50 proviso, by defining patented pharmaceuticals as ¡°any patented product or product directly obtained according to patented processes in the medical and pharmaceutical field to address public health issues, including patented active ingredients needed in the production of the product and diagnostic supplies necessary for the application of the product.¡±

The Amended Regulations also go onto stipulate that the granting of compulsory licenses should be in line with international agreements China is a binding signatory to.

(B) Security Review:
Article 20 of the Act states that ¡°where an entity or individual intends to file an application in a foreign country for patenting an invention or utility model accomplished in China, he shall report in advance to the patent administrative department of the State Council for confidentiality review.¡± Failure to submit such a report, would result in the patent being non registerable in China. Article 20 remained silent on the procedures surrounding the confidential examination, and would it would entail. The Amended Regulations, define the meaning of ¡°invention or utility model accomplished in China¡± as ¡°substantive content of the technical solutions made in China.¡± Pleasingly, it also provides details regarding the filing of the confidential examination.

(C) Protection of Genetic Resources:
Article 5 of the Act states that ¡°no patent will be granted for an invention based on genetic resources if the access or utilization of the said genetic resources is in violation of any law or administrative regulation.¡± The Amended Regulations defines ¡°genetic resources¡± as hereditary material with practical or potential values obtained from human, animals, plants or microbes. The Amended Regulations work in coordination with the Convention on Biodiversity; an international treaty that China signed in June 1992, and ratified in January 1993.

(D) Invention Incentives:
Article 16 of the Act states that ¡°the entity to whom a patent is granted shall give to the inventor or designer of the service invention a reward and shall, after exploitation of the patented invention, pay the inventor or designer a reasonable remuneration on the basis of the scope of popularization and application as well as the economic benefits yielded.¡± The Act sheds little light on how such ¡°reasonable remuneration¡± is expected to be calculated. The Amended Regulations outline the use of negotiations between the parties, or using the business entities internal rules in order to ascertain the levels of remuneration to be awarded.

The Amended Regulations highlight two main pointers. Firstly, it allows certainty to prevail, by clarifying aspects left opened or undefined by the Act. Secondly, it highlights China¡¯s commitment in strengthen its IPR regime, and working hand in hand with international obligations she is a signatory to.

With China¡¯s Trademark laws currently being amended, we can only anticipate China¡¯s IPR regime strengthening in subsequent years, and the fulfilment of the country¡¯s National IP Strategy.

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