About the Amendment of the Patent Law of China Yin Xintian WAN HUI DA Law Firm & Intellectual Property Agency 17 April 2013

BACKGROUND Historic development of the Patent Law of China Enacted on April 1, 1984 and enforced on April 1, 1985 Revised 3 times: 1992, 2000, th revision pending : November of 2011, State Council opinion on IP enforcement August of 2012, SIPO first Draft for public comments March of 2013, SIPO second Draft submitted to State Council

SCOPE OF THE PROPOSED REVISION This revision concerns two aspects: Strengthening the enforcement of patent rights Extending the protection term of design patents from 10 years to 15years in accordance with the Hague Agreement of 1999

MAIN POINTS OF THE AMENDMENT Patent Re-examination Board (PRB) decision comes into effect immediately after public announcement Administration has the power to investigate and collect evidences of patent infringement Administration has the power to punish the infringer Court may triple the amount of compensation for willful infringement

Effective date of the PRB decision The current situation : Accused infringer very often challenges the validity of the patent right as a defensive measure The PRB decision: either declaring patent invalid or maintaining the patent valid are appealable to court The court usually suspends the trial until the final decision of the court

Effective date of the PRB decision The situation after the revision: The decision of the PRB comes into effect immediately on its publication date (Amended Article 46) Administration or court shall timely handle the infringement dispute cases in accordance with the PRB decision (Amended Article 60) In case PRB decision maintaining patent right valid is reversed by the final court decision, this has has no retroactive effect on the decision (administrative or judgment) about the infringement, if such decision has already been executed ( Current Article 47)

Investigation powers of the administration The current situation: The parallel system of patent enforcement: administrative enforcement and judicial enforcement Administration has no investigation powers, the plaintiff has the duty to collect evidences of, just the same as judicial procedure

Investigation powers of the administration The situation after the revision: The Administration may investigate ex-officio the evidence of patent infringement The investigation includes: On-the-spot investigation Duplicate contracts, invoices, accounting books Examine relevant products and material Seal off and seize the infringing products for the intentional infringement disrupting the market order

The current situation: The administration may only order the infringer to stop the infringing act, no administrative punishment at all The administration may only order the infringer to stop the infringing act, no administrative punishment at all The administration may approach the court for compulsory execution if the infringer does not follow the order The administration may approach the court for compulsory execution if the infringer does not follow the order Administrative sanctions for infringement

The situation after revision: For “intentional infringement such as group or repeat infringement disrupting market order, The administration may: Confiscate and destroy infringing products and special equipment for the production Impose a fine on the infringer If illegal turnover > 50,000 RMB: Minimum fine = illegal turnover x 1 Maximum fine = illegal turnover x 5 If turnover < 50,000 RMB : maximum fine = 250,000 RMB Administrative Sanctions for infringement

As for the evidence for determining the damages, the revised Article 60 provides: The court may order the infringer to deliver accounting books, material etc.. If the infringer refuses to deliver the evidences or provide false ones, court may grant damages in accordance with claim and evidence of the plaintiff Compensation ordered by the Courts

According to the situation: Intention of infringer scale of infringement and of prejudice, The court may double or triple the damages, the so called “punitive damages” Compensation ordered by the Courts

From the plaintiff viewpoint: Higher efficiency, less cost, quicker speed, more compensation, Good news Administration will help him to investigate evidences : Quite happy From the defendant viewpoint : New Article 46 combining together with new Article 60 and current Article 47 will be a serious threat The definitions for “group infringement ”and “repeat infringement ”are not clear, and possibly trouble some COMMENTS

It is worth noticing that : The number of patents has dramatically increased The quantity of infringement litigation will follow The chances to be a plaintiff one day and a defendant another day are becoming more and more equal COMMENTS

patent applications filed from 2003 to 2012

applications filed by domestic and foreign applicants

patent rights granted from 2003 to 2012

patents granted for domestic and foreign owner

Thank You For Your Attention