By Mia Qu and Bessie Ye, King & Wood’s IP Department

To many foreign companies, China remains attractive as the world’s largest potential market for pharmaceutical products. As such products rely heavily on the protection of intellectual property rights, it is essential for foreign companies in this field to adopt a combination of IP protection methods to formulate a strategy for their products in China. To this end, China has established a relatively comprehensive legal system in relation to IPR protection where intellectual assets are protected by way of patents, trademarks, copyrights, and trade secrets.

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.