On October 17, 2020, the Standing Committee of the National People's Congress in China promulgated the fourth amended Patent Law of the People's Republic of China, which came into force in its original form in 1985, with subsequent amendments in 1992, 2000, and 2008. The amendment will come into effect on June 1, 2021.
The amendment for the first time codifies certain notable changes for pharmaceutical-related patents, including the introduction of a patent linkage system in China to align with international practices.
In addition, the amendment (i) increases statutory damages, introduces punitive damages, and shifts the burden of proving damages in patent infringement actions; (ii) enables the China National Intellectual Property Administration to determine patent infringement disputes of significant national impact; (iii) expands the scope of protection over design patents (particularly on subject matter) and extends their term of protection; (iv) allows disclosure under a national emergency or an extraordinary state of affairs that is not novelty-destroying; and (v) allows patentees to file a declaration to implement open license.
With the amendment, patent lawsuits concerning generic drug applications may be instituted under the new patent linkage system and more design patent applications may be filed in view of the expanded scope of protection and the extended term of protection to 15 years. The increase in the amount of statutory damages, the introduction of punitive damages and the shift of burden in proving damages in patent infringement actions may motivate patentees to enforce their patent rights before courts in China. It is expected that Chinese authorities will continue to refine the existing legal regime to put the amendment into action and practice.
The following highlights several key changes brought by the fourth amended Patent Law of the People's Republic of China.
On October 17, 2020, the Standing Committee of the National People's Congress in China promulgated the fourth amended Patent Law of the People's Republic of China (the "Amended Patent Law"), which came into force in its original form in 1985, with subsequent amendments in 1992, 2000, and 2008. The Amended Patent Law will come into effect on June 1, 2021, with a view to strengthen the protection of legitimate rights and interests of patentees, to promote the implementation and application of patent rights in China, and to refine the overall patent grant mechanism in response to the ever-changing patent usage environment in the past decade and the increase in demand for patents from domestic and foreign enterprises.
NOTABLE CHANGES FOR PHARMACEUTICALRELATED PATENTS
The enhanced scope of patent protection offered by the Amended Patent Law represents notable progress for pharmaceutical-related patents. In line with the draft Implementation Measures for the Early Resolution Mechanism for Drug Patent Disputes (Trial) ("Draft Implementation Measures") recently released by the National Medical Products Administration ("NMPA") and the China National Intellectual Property Administration ("CNIPA"), the Amended Patent Law provides for patent term adjustment and introduces the long-awaited patent linkage system in China.
PATENT TERM EXTENSION AND ADJUSTMENT
Article 42 of the Amended Patent Law provides for patent term extension to compensate for the delays caused by regulatory review and approval of a new drug. At the request of the patentee, CNIPA may grant a compensation term for patents covering a new drug that has been approved for marketing in China. The compensation term shall not exceed five years, and the total effective patent term after the new drug is approved shall not exceed 14 years. Further clarifications are needed on what constitutes a "new drug" and whether patent term extension is available for drugs approved prior to the effect of the Amended Patent Law.
Article 42 of the Amended Patent Law further allows CNIPA to, at the request of the patentee, adjust the term of an invention patent to compensate for unreasonable delays in the patent examination process, except those caused by the applicant. Such an adjustment is available only when the patent is granted after at least four years from the filing date, and at least three years after the request for substantive examination was filed.
PATENT LINKAGE SYSTEM
Similar to the Hatch-Waxman Act in the United States, Article 76 of the Amended Patent Law introduces a patent linkage system for early resolution of patent disputes concerning generic drug applications.
The amendment provides a legal basis for commencing offensive actions against a generic drug applicant during a new drug application in cases where a patentee or a stakeholder believes that such a drug application falls within the patent scope. The patentee or stakeholder can file a lawsuit before a court or a request for administrative adjudication before CNIPA. The drug applicant may also institute a declaratory judgment action of non-infringement.
The amendment further provides that NMPA may suspend its approval process for the new drug application if the generic drug is found to fall within the patent scope. The suspension may apply pursuant to an effective court judgment, subject to the time limit to be prescribed by NMPA. Although the Amended Patent Law is silent on whether the approval process would be suspended pursuant to a court's appealable decision or CNIPA's decision of infringement, the Draft Implementation Measures have made it clear that non-final decisions can still trigger the suspension, wherein the approval process will not resume until the decisions become final.
The patent linkage system is intensified by the Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Drug Marketing Review and Approval of Patent ("Provisions") issued by the Supreme People's Court for public comments on October 29, 2020. The Provisions set forth rules for adjudicating patent linkage dispute cases, and designate Beijing Intellectual Property Court as the sole court to hear patent linkage disputes in the first instance.
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