China’s patent law amendments – so far so good

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China’s patent law amendments – so far so good

IP practitioners are pleased with the changes made to China’s patent law amendments, one year after they come into effect, but some issues still need to be clarified

"There have been no big shocks or surprises," Doug Clark, partner of Hogan Lovells in Shanghai, told Managing IP.

The amendments came into effect on October 1 2009 with patent practitioners particularly worried about the sections dealing with inventor remuneration and foreign filing licences.

But the fears over both areas have not come to pass, although some IP practitioners would like to see more clarity.

For the section dealing with inventor remuneration, the Implementing Regulations to the Patent Act, which were not published until January 9, were key.

Initial drafts said that businesses would have to use the remuneration stipulated by the regulations of either 2% of licence fees or 10% of total sales.

But after a concerted lobbying campaign by QBPC and a coalition of Chinese businesses led by Huawei, the regulations were amended to allow internal company contracts to override these provisions.

Oliver Lutze, head of IPR for Bayer (China), which has around 200 people doing R&D work in Shanghai and Beijing, said that this was a satisfactory compromise.

"We were not so pleased with the numbers in the regulations [2% of profits or 10% of licensing revenue], but we believe that the remuneration package that we have can be well defended as reasonable," he said.

Bayer has had its own inventor remuneration system for three years that is not based either on sales or licensing revenue, which means that it is possible that an employee could challenge it as unfair. "We will have to watch the case law closely," he said.

Bayer has not had direct experience of the new regulation requiring firms that want to file first outside China for inventions that were created in China. This is because it automatically files first in China.

But fears that applicants could face lengthy delays while waiting for approval have not come to pass.

"Normally they will issue in about three weeks," said Tina Tai, a partner of China Patent Agent in Hong Kong and Beijing. She added that if the application is in Chinese and the patent agent goes to the office, it is sometimes possible to get approval in one day.

Provisions that made it easier to issue compulsory licences have also not been used.

Lutze added, however, that "there is still a lot to clarify". Lutze singled out the issue of how to define "created in China" in the section dealing with foreign filing licences.

He gave the example of a pharmaceutical company in which the scientists are based in Germany but are using a contract research institute in China who follow instructions and carry out tests.

In this example, the inventors would be based in Germany, but the physical act of invention might take place in China.

In terms of patent litigation, "the amendments didn't make any major changes," said Doug Clark, a partner of Hogan Lovells in Shanghai.

Clark did say that the amendment to make the offer to sell a product that infringes a design patent an offence could be useful, although it has not yet been tested in court.

He also said the making file wrapper estoppels "very clearly in the law" was a positive step, but added that further improvements to the litigation system are needed: "The fundamental issues around the legal system remain."

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