China Law Insight : China Business and Intellectual Property Lawyers & Attorneys : King & Wood Law Firm : IP, Arbitration, Litigation, Securities, Foreign Investment

 The terms "technology," "technical problem," "technical effect," and "technical feature" are clearly defined in the Patent Law, or the Regulations and the Guidelines. Further to Paragraph 1 of Article 2 of the Patent Law, Part II, Chapter 1 of the Guidelines for Patent Examination (2010 Edition by the SIPO) ("Guidelines") further provides that "'[i]nvention in the Patent Law means any new technical solution relating to a product, a process, or improvement thereof. ...technical means is generally embodied by technical features...a solution not employing technical means to solve a technical problem to obtain technical effects in conformity with natural law does not fall under the scope as set forth in Paragraph 2 of Article 2 of the PRC Patent Law..."

Therefore, the Guidelines instruct an applicant to first consider whether a solution provided by an invention is under the scope of Paragraph 2 of Article 2 of the Patent Law and further defines a technical solution as “a collection of technical means employing natural law to solve technical problems.” When analyzing this definition, the following should be considered. A "technical solution" should be construed to have employed 1) technical means, 2) solved technical problems, and 3) achieved technical effects in conformity with the law of nature. The entirety of the claim should be examined and analyzed to determine whether technical means are employed.

Case Study:

An umbrella with an ornamental umbrella head that features a transparent umbrella head with an airtight inner cavity, an anti-freezing aseptic liquid is encapsulated in the inner cavity of the umbrella head and a small free-flowing ornament is immersed in the liquid. The description discloses that the problem the invention intends to solve is to make the umbrella more alluring.

Case Analysis

Because the umbrella head has a three-dimensional and dynamic ornament, the present application employs technical means. On the surface, this patent application aims to solve the technical problem by making the umbrella more alluring. However, the present invention modifies the umbrella structure by employing the technical means of filling a transparent, airtight inner cavity in the umbrella head with liquid and a small ornament to solve the technical problem that displays the said ornament floating in the umbrella head. As a result, this modification achieves the technical effect that the ornament floating in the umbrella head visibly and aesthetically. On the other hand, the alluring appearance of the umbrella is merely a derivative of the visual effect of the technical solution and cannot conceal its feature in constituting the technical solutions. Consequently, the features specified in the claim form a technical solution.

The present application utilizes the umbrella head's structural feature as a technical feature. By exploiting the said technical feature with technical means, it solves a technical problem by displaying the small ornament flowing in the transparent umbrella head. Furthermore, the naturally achieved effect is a technical effect.

From this example, it can be determined that if technical means consists of technical features, its solved problem is generally a technical problem, and its achieved effect is generally a technical effect in conformity with the law of nature. Essentially, contents recited in most inventions in the art of machinery can generally constitute a technical solution so long as the technical means employed consists of technical features.

The court found that although the result of rejecting the Bilski claims were correct, the Federal Circuit wrongly assumed that the Benson, Flook and Diehr line of cases required the machine-or-transformation test as the sole test for determining patentability of process claims. Instead, it found that while a useful tool, the machine-or-transformation was never intended to be the sole test. While under §101, patentable process is very broad, but there are limitations. The Benson, Flook and Diehr line of cases taught that abstract ideas, such as those in the Bilski claims, were not patentable process under §101.

The decision also left undisturbed the rejection of the “useful, concrete and tangible result” test from State Street Bank & Trust Co. v. Signature Financial Group, Inc., (1998). That case led to a torrent of business method patents in the past decade and its rejection should help to reduce the number of dubious business method patents going through the Patent Office.

In In re Bilski, the Federal Circuit threw down the gauntlet and challenged the Supreme Court to do something about the deluge of business method claims since the State Street case. Instead of accepting the challenge, a divided Supreme Court merely found business method claims are not categorically unpatentable and tossed the glove back to the Federal Circuit to find the proper test for limiting patentability of such claims. Interestingly, the Supreme Court came one vote short of changing the game. Bilski came close to dealing a death blow to business method claims, but it provided a glimpse of the struggle among the justices on the issue. Retiring Justice John Paul Stevens’ lengthy concurrence was joined by three other justices. But for one vote, his would have been the majority opinion which would have held that methods of doing business are not patentable processes under §101 of the Patent Act.

It is customary for each Supreme Court justice to author at least one decision in each term, so speculation was that Justice Stevens, who retired at the end of the term, was chosen to write the majority decision in this case. All justices agree that the Bilski claims were unpatentable and that the Federal Circuit was wrong on finding the machine-or-transformation test as the sole test for patentability of process claims. Thus, Justice Stevens may have been assigned the task of writing the opinion for the court and he concluded that business methods are not patentable. Three other justices agreed with his conclusion.

He could not convince five justices that the high court should ban business method patents outright. Perhaps, this was a factor in the unusual delay in the court's issuing the decision. The inability of convincing one more justice shifted Justice Stevens’ opinion from majority opinion to a concurrence and Justice Kennedy's shorter and less detailed opinion, which has the style of a concurrence, became the court's opinion instead.

Justice Kennedy recognized the problems of vagueness and suspect validity in some business method patents. He felt the need to set a bar high enough to reduce the flood of claims asserted by business method patent holders that may “put a chill on creative endeavor and dynamic change” but he left it to the Federal Circuit to search for a limiting principle. He stated that although some business method claims may qualify under §101 as “processes”, §101 is only a threshold. A business method claim must also be novel (§102), nonobvious (§103) and fully and particularly described (§112) before it can be patented. Justice Kennedy felt that these safeguards are sufficient to maintain a balance in the U.S. patent system.

There will be no wholesale changes to the U.S. patent system as the result of the Bilski case. Instead, what Bilski did was to say that the machine-or-transformation test will remain a useful tool for determining patentability of process claims, but not as the “sole test” as claimed by the Federal Circuit. Section 101 construes process broadly but there are limitations which bars patenting of abstract ideas. Finally, the Supreme Court hammered in the final nail to the “useful, concrete and tangible result” test enunciated in State Street Bank so business method claims that “ranged from the somewhat ridiculous to the truly absurd” should no longer see the light of day in the Patent Office..

Will this decision affect PCT applications with business method claims in China?

As discussed in our earlier posting  on In re Bilski, while China does not have a specific category for business methods, claims incorporating technical features to achieve business or commercial purpose are patentable in China. The rejection of the “useful, concrete and tangible result” test may help ensure fewer dubious business method patent applications are filed under the US system and business method claims that survived the initial screening should be more substantive and meritorious. The improvement in quality may make it easier for such claims to pass muster under the Chinese patent system. In this sense, Bilski helps bring US and Chinese patent law closer together.
 

One opinion is that patent ownership claims should be subject to the 2-year statute of limitations principle provided by Article 135 of the Civil Law, as there are no other provisions under the Patent Law stipulating otherwise. The date should be calculated from the date of announcement for granting the patent right.

Others argue that patent ownership disputes should be deemed as disputes under patent infringement and be handled under Article 23 of the Several Provisions of the Supreme People's Court on Issues Relating to Application of Law in the Trial of Patent Disputes (Judicial Interpretation [2001] No.20) (Interpretation), which provides that, while the patent is effective and infringement continues, patent infringement actions shall not be restricted by a statute of limitations.

A third opinion holds that the patent right is an absolute right and right in rem. Therefore, it has the same judicial characteristics as jus in re in conventional civil law. Under PRC law, the provisions on statute of limitations do not apply to enforcement by action in rem. Accordingly, patent ownership disputes is not subject to the 2-year statute of limitations.

Discussion

According to legislative intent, the statute of limitations only applies to the right to petition. Other rights, such as ownership, personal right, are rights of property dominion in nature, and thus are not subjected to the statute of limitations. Therefore, statute of limitations should not apply to non-credit patent ownership disputes.

China currently rejects adverse possession, because of its inherent conflict with traditional Chinese values and social principles. If the People's Courts refuse to grant trial due to statute of limitations, the rightful patent owner may lose his patent rights, and the announced patentee will, in all practicality, obtain the patent rights. The result is nothing short of adoption of adverse possession in China and conflicts with legislative principles of the Civil Law.

A statute of limitations only deprives the plaintiff's right to file suit, but the substantive right of ownership still exists. Dismissal due to statute of limitations does not mean that the People's Court has recognized the patentee as the legitimate patent owner and neither affirms nor denies the patent ownership status granted by the SIPO. As a result, it causes a strange situation, where legal ownership of the patent is in limbo. The ambiguities in law disrupt the social and legal relations derived from the patent rights, and will hinder the actuation of patented technology.

A patent not only brings economic benefits to the patentee, but also good reputation or recognition. Therefore, patent ownership disputes inherently involve a matter of deprivation of right to good reputation or recognition. This is pertains to a personal right, which does not vanish with the expiry of the patent right. Statute of limitations is not applicable to personal rights.

In general, the purposes of a statute of limitations are: (a) to stabilize social legal relations; (b) to encourage the timely protection of rights; (c) to avoid evidentiary difficulties. However, there is no reasonable basis for applying the statute of limitations to patent ownership disputes.

Settlement of patent ownership disputes does not affect already established legal relations. Patents are, in essence, intangible knowledge or information. Neither the patent owner nor any others can control technology or design in the same way as a tangible object. Possession and transfer of patent rights are not legally enforceable without SIPO's registration and announcement procedures. If a third party obtains a patent license in good faith, his reliance interest is protected by law and won’t be affected by the rightful patent owner's claim. The rightful patent owner's claims for compensation, license fees and assignment fees are obviously the creditor's claims and subject to the statute of limitations. In short, established legal relations, as protected under the systems of public credibility and statute of limitations, will not be undermined by rectification of ownership.

The loss of evidence due to the extended lapse of time is only a theoretical presumption. Such presumption might be correct in certain cases, but not in all cases. If the plaintiff fails to meet his burden of proof, the court may apply the Right Presumption Principle. Any such plaintiff willingly risks defeat, if he does not exercise his rights timely. This basic principle of civil proceedings is not unique to the nature of a statute of limitations but inherent in litigation. Therefore, evidentiary difficulties cannot justify application of statute of limitations to patent ownership disputes.

The second opinion asserts a statute of limitation exemption for continuous infringement is applicable to patent ownership disputes. Article 23 of the Interpretations exempts patent infringements, namely, exploitation of the patent without the patentee's consent and authorization. Since the patent infringements are not patent ownership disputes, such opinion that an exemption is available is unconvincing. Furthermore, although this opinion addresses the issue of statute of limitations in duration of patent, it does not indicate whether patent ownership disputes are subject to the statute of limitations after expiration of the patent.

The third opinion asserts that patent ownership disputes are peculiar and should not be subject to the statute of limitations. This opinion is feasible in practice for it reasonably settles conflicts between jurisprudence and legal provisions through the interpretation of laws, and thus incorporate jurisprudence and judicial practice.

Conclusion
As Chinese law has not yet explicitly stipulated the application range of the statute of limitations, judges should be allowed to exercise judicial discretion on a case-by-case basis and exclude the patent ownership disputes from the provisions of Article 135 of the General Principles.

We hope that the future PRC Civil Law may provide more reasonable and detailed stipulations on this issue.

Patenting Drug Product Inventions

In China, patents can be granted to inventions, utility models, and industrial designs. Invention patents are available to both product and method inventions. The term for invention patents is 20 years and the term for utility model and design patents is 10 years, from the filing date of patent application. The primary criteria for granting a patent are novelty, inventiveness, and industrial applicability. A finished drug or biological product (such as a vaccine and an antibiotic), typically consisting of active ingredients is generally eligible for product invention patents. However, active ingredients in a drug are also eligible for separate product patents. The invention patent for a finished drug must be defined in terms of usage. In other words, the applicant must clearly state in the application the diagnostic or therapeutic application of the drug.

The examiner will usually examine the ingredients of a finished product and their contents when determining the novelty of the product. In general, a finished product is considered novel if its active ingredients are novel. The standards for the inventiveness and industrial applicability of a finished product are not high. In general, a new drug will satisfy the inventiveness requirement as long as a new drug delivers beneficial effects which are not commonly seen in the existing treatments.

Advantages and Disadvantages

A product patent for a drug entitles the patentee the exclusive right to manufacture, market, and sell the drug. Any other party manufacturing or marketing the same product, regardless if a identical method being used for production or not, will be regarded infringing upon the patent holder's rights.

As a new drug is subject to a long clearance process before it can be marketed, the European Union, the United States and Japan have extended the patent term for drugs. However, China has yet to establish an extended term for pharmaceutical patents which shortens the time of protection compared to other jurisdictions. In addition, the 2008 Amendments to the PRC Patent Law ("2008 Patent Law"）, which came into force on October 1, 2009, also specifically provides an infringement exemption for generic drug manufacturers similar to the "Bolar exception" in the United States, namely, "manufacturing, using or importing patented drugs or medical devices solely for the purpose of acquiring information necessary for obtaining administrative approval, and manufacturing or importing patented drugs or medical devices for an enterprise for the purpose of seeking administrative approval, shall not constitute patent infringement." This enables a generic drug manufacturer to embark upon the preparation for manufacturing of a patented drug well before the patent expires and to be ready to compete with the patent holder immediately after the patent expires.

Administrative Protection

In addition to patent protection commonly accepted around the world, China also offers a special administrative protection system for drugs. The Chinese pharmaceutical administrative authorities (SFDA and its local branches) provide administrative protection to pharmaceutical companies by granting licenses and permits, which gives these companies certain exclusive rights.

China promulgated the PRC Patent Law ("Patent Law") in 1984. However, the Patent Law did not provide patent protection for drugs until it was amended for the first time in 1993. Before 1993, drugs were primarily protected by administrative measures. After patent protection was established upon the revision of the Patent Law in 1993, some administrative protection measures remained in force in addition to patent protection for pharmaceuticals. Until then, administrative protection for drugs covered new drugs, traditional Chinese medicines, foreign-related drugs, and protection during the trial period. With the constant improvement of China"s IPR system, the administrative protection for new drugs and foreign-related drugs may eventually be abolished, as the protection to these two types was provided due to specific historical reasons.

China introduced administrative protection for drugs during their trial periods in 2002. The varieties of new drugs subject to administrative protection of this type include traditional Chinese medicines, natural drugs, chemical drugs, therapeutic bio-products and preventive bio-products. The monitoring period of a new drug is 5 years from the date of approval to manufacturing the drug. During a new drug"s monitoring period, the SFDA will not give permission to other enterprises to make, modify or import drugs of the same type to ensure that the protected drug manufacture enjoys certain degree of exclusivity.
 

In paragraph 106, he expanded deductibility as capital expenditure of the purchase of registered trademarks, copyrights, and registered designs. Under the current scheme, only purchase of patent rights and industrial know-how are deductible. The purpose of the expansion is to promote wider application of intellectual property and to help develop the creative industries in Hong Kong. Actual formulation for deductions will be prepared by the Inland Revenue Department. This addition brought in the most common types of intellectual property rights transferred in Hong Kong and will serve as a boon for creative entrepreneurs.

The second item concerns funding for patent applications. Currently, the Hong Kong Government provides funding assistance for Hong Kong inventors and enterprises to help them pay for the cost of filing their first patent application. The current ceiling of such grants and funds is HK$100,000. In paragraph 107, Mr. Tsang raised the ceiling to HK$150,000. Hong Kong has a recordation system for patent registration that requires the granting of a patent in another jurisdiction before a Hong Kong standard patent may be issued. To obtain a Hong Kong standard patent, an inventor must file in an approved jurisdiction where substantive review is conducted and a patent granted before a Hong Kong patent can be registered. In essence, the inventor has to pay for two patent applications to have a Hong Kong patent granted. The increase in the funding should be helpful for small inventors.

Compared to other ‘sweeteners’ offered in the speech, these two additional benefits offered for intellectual property rights are fairly minor but will have a relatively broad application. At least, the topic of IP rights is not completely left out of the speech. A full copy of the Budget report can be downloaded at www.budget.gov.hk.
 

China filed 7,946 applications, an impressive 29.7% increase over its 2008 filings. Two Chinese filers were among the top 100. Huawei Technologies Co., Ltd. came in with 1847 applications, second only to Japan's Panasonic Corporation and ZTE Corporation jumped 15 places to finish 23rd with 502 filings. Together, these two companies accounted for 30% of China's 7,946 filings. For the year, Huawei filed 110 more applications than in 2008, an increase of 6.3% while ZTE increased by 52.6%, submitting 173 more applications into the PCT system than in the previous year.

The prolific activities of these two equipment makers in the telecommunications industry indicate the importance of protecting intellectual property rights in multiple jurisdictions as Chinese companies expand beyond China's shores to become players in the global market. The WIPO statistics indicates that Chinese companies are taking advantage of using PCT applications for international protection.

The PCT procedure gives an applicant the convenience of filing initially only one patent application with one set of papers in one language with a receiving office designated by the PCT. At a later stage, should the applicant desires, it can then choose the jurisdictions where the patent application should be filed. Only at that stage would the applicant have to pay for necessary translations and filing fees of the national jurisdiction where the application is filed. The procedure gives the applicant much more control over the application process. Companies with proprietary knowhow or inventions interested in expanding overseas should consider this option as part of their patent application strategy.
 

By so ruling, the Federal Circuit effectively overruled its own “useful, concrete and tangible result” test formulated in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 143 F.3d 1368 (Fed. Cir. 1998). This test focused on practical applications of the invention to determine if it is patent worthy. That decision was said to have led to the boom of business method and software patents in the past decade. The rejection of the useful, concrete and tangible result test raises questions about the validity of many existing business method and software patents. Because of the high stakes, dozens of interested parties filed a total of 44 amicus or ‘friends of the court’ briefs to express their viewpoints and concerns.

Few observers believe Mr. Bilski’s claims can survive either the useful, concrete and tangible result or the machine or transformation test. It is also unlikely that the Bilski claims will meet the standard ultimately adopted by the Supreme Court.

However, there is no consensus on whether the Supreme Court will come out with a new test or even if it will fully addressing the harder question of what the proper test for patent eligibility of business method or software claims. Indeed, the issues are complex and from the questions asked during oral argument, the high court seemed to lack confidence in dealing with the complexity of this area of patent law.

The questions of the justices reflect their concerns about broadly worded business method patents that may foreclose use of business processes by other parties. They peppered Mr. Bilski’s lawyer with hypothetical questions on the patentability. They asked about patentability of claims relating to estate plan, tax avoidance, resisting corporate takeovers, choosing juries (Ginsburg, p. 5); processes that help business succeed (Breyer, p. 6); speed dating (Sotomayor, p. 7); teaching antitrust law without students falling asleep (Breyer, p. 9); compiling actuarial tables and their application to risks (Kennedy, p. 11); horse whispering (Scalia, p. 16); and alphabet as a process of forming words (Roberts, p. 22). Transcript of the oral argument is available at www.supremecourtus.gov/oral_arguments/argument_transcripts/08-964.pdf.

Section 101 of the U.S. Patent Act provides that new and useful processes, machines, manufacture and composition of matters are patent eligible. This is very broad language. So under a Section 101 analysis, these extreme examples are patent eligible. In fact, the justices may be surprised that patents actually have been granted for the extreme examples they cited.

Although concerned about the broadness of Section 101, they were also clearly uncomfortable with the rigidity of the machine or transformation test the Federal Circuit ruled as the sole test for determining patentability of process claims. The justices recognize that technological advances mean that inventions may not necessarily have physical attributes. Thus, they seemed inclined to reverse the Federal Circuit’s ruling but at the same time, they struggled with finding and enunciating an appropriate test of patent eligibility.

Business method patents in China

Chinese patent laws do not have a specific category for business method claims so the standard applied to such claims are no different than other technical or computer related applications. Business method claims are patentable under Chinese law if they incorporate technical features to achieve a business or commercial purpose. The claim must specify the technical features required to be implemented on a commercial or business purpose. A detailed description of a business method without showing the technical features necessary for its implementation will not be patentable under Chinese law. Technical features must be an integral part of the business method. Thus, the Chinese standard is similar to the machine branch of the machine or transformation test.

Applying Chinese law, the Bilski claims will also be rejected. But a Chinese granted business method patent will also survive scrutiny under the machine or transformation test. On the other hand, business method patents granted under the useful, concrete and tangible result test may not be patentable under Chinese law unless they also incorporate sufficient technical features.

How will the Supreme Court resolve the problem?

Our speculation is that the Bilski claims will be rejected and the Supreme Court will reverse the Federal Circuit ruling that the machine or transformation test is the only test for patent eligibility. Instead, the Supreme Court may try to find a compromise standard that will allow protection of some business method and software claims but will screen out broad and abstract claims such as the Bilski claims. If we are correct, the new ruling may widen the gap between Chinese and U.S. law that the machine or transformation test had narrowed.

What was interesting about the oral arguments was the lack of mention of Section 112 of the Patent Act. This section also covers patent eligibility and requires that an invention must be specified in “full, clear, concise, and exact terms as to enable” someone to make and use it. While Section 101 uses broad language, Section 112 requires specificity in the claims. This serves to prevent abstract claims from gaining patent protection. These sections work together to prevent an inventor from precluding others from practicing a useful art merely by making general and broad claims. To be patentable, a claim must be sufficiently specific to enable someone to practice its teachings.

Since Section 101 should be read in conjunction with Section 112, one would think that Section 112 would be raised during oral arguments. Even if the Bilski claims can survive the broad language of Section 101, it would not pass muster under the specificity requirements of Section 112. Thus, the failure to bring up Section 112 has been described by a commentator as the elephant in the room that no one mentioned. The Bilski claims cannot pass Section 112 analysis. This will allow the Supreme Court to sidestep the machine or transformation test completely.

How will the Supreme Court rule? We will find out sometime in the spring 2010 when the decision is expected to be announced.

Up to the present, no unified view has been formed regarding the scope of "common knowledge" among examiners, patent attorneys and academics in China. According to the Guidelines, common knowledge refers to technical means disclosed in publicly known textbooks or reference books, including technical dictionaries or manuals, and customary means in the art to solve a particular technical problem. It is generally accepted that technical dictionaries, technical manuals and textbooks can be used as evidences for ascertainment of common knowledge. But some believe that the scope of "common knowledge" provided by the Guidelines is too broad and that many technical dictionaries, technical manuals and textbooks should not be regarded as common knowledge although they are highly specialized.

Ascertainment of Common Knowledge

Regarding ascertainment of common knowledge, the majority view is that common knowledge should be "publicly known facts". It is also an established rule that publicly known facts (also known as "prominent facts") do not need to be proved. In general, publicly known facts refer to facts that are indisputable and known to all or most people in a certain region or specialized in a particular field. However, the following elements should be taken into account when one ascertains common knowledge as publicly known facts:

Firstly, publicly known facts do not necessarily be known to the general public but must be well known to those who are specialized in a certain field in a particular temporal and spatial scope. In other words, these facts are general technical common knowledge known to those skilled in the art prior to the filing date of the patent application.

Secondly, according to evidence law, publicly known facts may be introduced into evidence by judicial notice. A court can admit judicial notice of a publicly known fact in a given lawsuit case in any procedure or phase of litigation where it believes necessary or upon the concerned party's request. Such notice is not subject to the time limit for submitting evidence.

Thirdly, where one party challenges the "common knowledge" asserted by the opponent party or confirmed by the Patent Reexamination Board, the opponent party or the Patent Reexamination Board should furnish pertinent materials and provide sufficient explanations. When one party raises opposition to a judicial notice taken by the court, the court should explain to the party the grounds on which and procedures via which the judicial notice is taken.

Fourthly, where there is counter evidence to overturn the facts confirmed through judicial notice, the party asserting the facts also needs to furnish evidence.

With regard to evidence, some think that common knowledge should be judged in accordance with knowledge of one skilled in relevant art and it is unrealistic to for the parties to adduce evidences for all common knowledge. Common sense in life does not need to be testified, nor does technical common knowledge. An exception is that the Patent Reexamination Board should bear the burden of proof when one party proves the confirmation of technical common knowledge by the Board is erroneous. Another view is that the coverage of common knowledge is wider than publicly known facts, which are not required to be testified, and the Patent Reexamination Board should only bear the burden of proof when a discrepancy exists between scopes of administrative notice and judicial notice regarding a particular fact.

Burden of Proof During Invalidation Procedures

a. A petitioner or the opponent party bears the burden of proof for its assertion that a certain technical means is common knowledge. If necessary, the Patent Reexamination Board can ask the party asserting certain technical means as common knowledge to adduce evidences.

b. Where one party explicitly raises opposition to the other party's common knowledge assertion, the challenged party bears the burden of proof.

c. The Patent Reexamination Board may ex officio introduce common knowledge in its decision-making process. But the Board may increase its burden of proof in the proceedings by doing so.

During patent prosecution or invalidation proceedings, the examiner, the applicant and the attorney should define the scope common knowledge in the art involved in the patent applicant in question from the perspective of one skilled in the art. Examining and analyzing what facts or technical means should be subject to common knowledge helps to evaluate the inventive step of a patent application in a fair and reasonable manner and avoid abuse of common knowledge in the art.
 

B. Reinforced Administrative Protection

The New Patent Law elevates the powers previously granted to the administrative authority including the power to inquire, conduct site inspections, duplicate relevant documents, etc. Furthermore, the new article also grants new powers of attachment and seizure, which are expected to reinforce the administrative protection of patent rights.

C. Increased Responsibility of Indemnification

The maximum fine for patent counterfeiting has been raised from 3 times the value of the illegal proceeds to 4 times. In cases where there are no illegal proceeds, the maximum fine has been raised from RMB 50,000 to RMB 200,000. The New Patent Law includes a provision concerning statutory compensation between RMB 10,000 to RMB 1,000,000, which the current Patent Law does not have any provision for. According to the judicial interpretation issued by the Supreme People's Court, the maximum statutory compensation that can be granted at the court's discretion is RMB 500,000.

D. Further Perfected Judicial Protection

The New Patent Law stipulates the procedure for pre-trial injunction, which was not previously provided for in the current Patent Law nor the PRC Civil Procedure Law. The New Patent Law also stipulates the procedures for pre-trial asset preservation. Such provisions will provide clearer guidelines to courts on the relevant procedures in the future.

E. Two Newly Added Causes for Non-infringements

“Parallel Importation” is expressly permitted in the New Patent Law. The existing patent law, and also other intellectual property laws, was silent on the legality of parallel importation.

The New Patent Law also provides an exception for infringement similar to the BOLAR exception in the US, which exempts pharmaceutical companies from infringement for the manufacture, use, and import of patented drugs or medical devices for the purpose of seeking administrative approval.

Generally, the amendment of patent laws has reflected the government's efforts to curb patent infringement and to protect intellectual property. Meanwhile, the public interest and the need for a healthy and competitive market have also been taken into consideration. The enforcement of patent rights in China is has now taken a step forward in its efficiency.