1	Patent Practice in China & Latest Development Stephen Yang Peksung Intellectual Property Ltd. March 19, 2009 Cleveland Intellectual Property Law Association
2	"I" I. Prosecution II. Enforcement III. Third Amendment
3	History April 1, 1985 Patent Law came into effect Sept 4, 1992 First Amendment Aug 25, 2000 Second Amendment Dec 27, 2008 Third Amendment New law comes into effect Oct 1, 2009
4	Patent Type & Term Patent Type & Term Invention 20 years Utility Model 10 years Design 10 years Counted from filing date no extension no adjustment
5	No. of Patent Applications
6	No. of Patent Applications for Invention
7	No. of Patent Applications in 2008
8	Jurisdictions Valid only in mainland China Invention patents extendable to H.K & Macao Patents in H.K., Macao & Taiwan H.K.: 2-step process Macao: 1-step TW: priority not recognized
9	Publication & Examination
10	Rejection & Appeal Rejection appealable to the Patent Re-examination Board (P.R.B) Patent Re-examination Board (P.R.B) Re-examination Invalidation PRB decisions appealable to Court Court: 2 instances
11	Post-grant Proceeding: Invalidation Request for invalidation at P.R.B Anyone could file invalidation request after grant, including patentee itself No re-issue or central limitation (EPC 2000)
12	Patent Application Flow Chart
13	Novelty Local novelty* - World wide publication - Domestic use Grace period: 6 months before filing date - limited scenarios - not recommended to rely on * = change
14	Exceptions to Patentability Scientific discoveries Rules and methods for mental activities Methods for the diagnosis or for the treatment of diseases Animal and plant varieties separate legislation on plant varieties Substances obtained by means of nuclear transformation
15	Computer Program - Related Inventions Business method method of doing transactions not patentable Patentable subject matter: a technical solution technical means technical problem technical effect
16	Computer Program - Related Inventions Mental activities algorithm software product computer program computer game computer readable medium (distinguishing feature?)
17	Utility Model Available only to products with features of shape and structure Newly allowed: Substitution of the material making up a product without changing the shape or structure Molecular structure, composition, metallurgical phase structure of a substance excluded
18	PCT National Phase Entry 30 months from the earliest priority date 2 months extension available
19	Voluntary Amendment At the time of request for substantive examination 3 months from receipt of Notification of Entering Substantive Examination Procedure No voluntary amendment allowed in response to OA Replace old set of claims with a new set of claims Introducing new independent claims
20	Divisional Application Deadline for filing divisionals 2 months from receipt of Notice of Grant for parent application Voluntarily filing divisional from divisional parent application must not have been granted Always deliberately make divisional lack of unity
21	Applications in Chemical Area Sufficient disclosure - very strict practice Late submission of experiment data To meet sufficiency: must be included in original disclosure To prove inventiveness: late submission allowed as evidence, cannot be added to description
22	New Matter Amendment going beyond original disclosure Very strict practice Amendment directly & unambiguously determined from original disclosure No other way of interpreting the relevant content Abstract NOT part of original disclosure
23	"I" I. Prosecution II. Enforcement III. Third Amendment
24	Infringement Act For invention/utility model Make, use, offer to sell, sell, import the patented product Use the patented process Use, offer to sell, sell or import the product directly obtained by the patented process For design* make, sell or import the product incorporating a patented design
25	Exceptions to Infringement* Use, offer to sell or sell following the right exhaustion of the patentee Continuation of prior use or make Use in the means of transport temporarily passing China Research exemption
26	Act Not Liable for Compensation Use or sale of patent infringing products not liable to compensate, if Not knowing infringement, & Proof of legitimate source
27	Two-Track Handling System Administrative resolution - local IP office not a court not a necessary procedure prior to judicial resolution Judicial resolution – court of law
28	Administrative Track Administrative authorities’ power: Order to stop infringement; and Mediate amount of damages upon request Corresponding potential remedies: Order ® administrative lawsuit Mediation ® civil lawsuit
29	Remedies at Administrative Authority※ Seize and preserve infringing goods Impose a fine - based on infringer’s profit Inspection on the accused infringer’s premises – raids If infringement is found seal and seize infringing products or devices used to produce the infringing products, access to the accounting record of the infringer, if infringement is found ※ for trademarks
30	Chinese Court System Uniform Court System Judicial system Supreme People’s Court High People’s Court Intermediate People’s Court Basic People’s court
31	Chinese Court System Courts qualified to handle patent case usually start at Intermediate People’s Court Two instances of trials Civil or administrative lawsuit
32	Existence of Two Suits Infringement & validity handled separately Possible co-existence of: Infringement proceedings in court & Invalidation procedures at the PRB Decision appealable to court (different court)
33	Procedure of Civil Patent Litigation Acceptance Service of document to the defendant Written reply of defendant Presentation of evidence Exchange of evidence (optional) Trial Judgment Appeal
34	Remedies in Judicial Action Remedies available at Court Injunctive relief Monetary relief Before formal legal proceedings preliminary injunction preservation of property
35	Statutory Limitation Statutory limitation for legal proceedings against patent infringement Two years, counted from the date of patentee’s or interested party’s knowledge of the infringing act
36	Applicable Rules Rules applicable to determining infringement, among others: Doctrine of equivalents Prosecution history estoppel
37	Amount of Compensation* Infringer’s illegal Profit Patentee’s Loss Based on reasonable royalties Statutory damages determined by court
38	Penal Liability Crime: only for patent passing off Punishment Detention: 1~6 months; Imprisonment: 6 months~3 years; and/or Pecuniary penalty
39	Administrative vs. Judicial Local IP office Investigation and/or on-site inspection Preliminary injunction not available Mediation on damages Appealable to court Less costly and time-consuming Court of law Evidence and/or property preservation Preliminary injunction available Award damages Appealable to higher court More costly and time-consuming
40	"I" I. Prosecution II. Enforcement III. Third Amendment
41	Patentability Absolute novelty adopted public use worldwide Definition of ‘conflicting application’ changed filed before filing date and published on or after filing date current: limited to applications filed by others new: applications filed by anyone
42	Patentability No Patent, if completion of invention relies on genetic resource; and acquisition and exploitation of genetic resource in violation of laws and regulations
43	Genetic Resources If completion of invention relies on genetic resource the direct source & original source of the genetic resource must be indicated in the application original source cannot be indicated – must explain violation possibly ground for rejection and invalidation
44	Enforcement Method of calculating damages firstly: loss of right holder secondly: gain of infringer thirdly: reasonable times of royalty finally: statutory damage determined by court Damages may include “reasonable expense for stopping infringement” including attorney fees? Statutory damages doubled to up to 100, 000 Euro
45	Enforcement Pre-trial evidence preservation available court decides in 48 hours bond required in most cases formal lawsuit in 15 days
46	Enforcement Passing off fine: 4 times gain of infringer (currently 3 times) fine up to 200K RMB (currently 50K) possibly criminal charges
47	Enforcement Administrative authority’s power strengthened in dealing with passing-off ONLY questioning, investigation, onsite inspection, access to contracts & accounting records, inspecting & confiscating products.
48	Enforcement -exceptions to infringement Parallel import considered exhaustion of rights importing products sold by patentee or licensee Bolar-type exemption available make, use or import patent medicament or medical devices for regulatory approval
49	Enforcement -prohibition of right abuse Prior art defense available to accused infringer special significance in China -- utility model & design not examined Evaluation report required for enforcing utility model & design not just search report must be done by SIPO
50	Compulsory License Conditions: 3 yrs after grant, 4 yrs after filing date; or patentee’s act considered as monopoly For domestic market unless otherwise prescribed Semiconductor inventions compulsory license granted for public interest only Manufacture a medicament & export to countries: as prescribed in treaties to which China is a member
51	Design -patentability Absolute novelty standard adopted Concept of conflicting applications introduced Inventiveness-like requirement Substantively different from prior design or the combination of features in prior designs No conflict with rights of others prior to filing date Planar printed matter primarily for identification purpose excluded
52	Design -prosecution Two or more similar designs for the same product may be filed in a single application Brief explanation must be filed
53	Design -enforcement Evaluation report required for enforcement Offering for sale an act of infringement Brief explanation usable to interpret scope
54	First Filing Requirement Abandoned Current: Chinese entity must first file in China for inventions made in China Security check from SIPO required to file overseas for inventions made in China Penalty for violation -- No Chinese patent Apply to invention and utility model ONLY No approval needed for design
55	Patent Agency International patent agency license available to every patent firm Currently special designation required
56	Double Patenting Same entity, same day files utility model & invention application allowed to abandon granted utility model and get patent for invention If not filed on same day – conflicting applications currently not considered conflicting
57	Joint Ownership If no agreement between owners, each owner individually exploit the invention; or non-exclusive license to others Royalty shared between joint owners All owners must agree on other activities
58	About Peksung IP Boutique IP: Patent (70%) + Trademark (30%) Prosecution & litigation 9 partners, professionals 55, total staff 80 3 offices: Beijing, Shenzhen, Palo Alto (liaison) All partners have overseas experience Language skills High profile litigation Represent prestigious clients, domestic and overseas
59	"Stephen Yang" Stephen Yang Partner, Patent Attorney Peksung Intellectual Property Ltd. 908 Shining Tower, 35 Xueyuan Road Beijing, 100191, China Tel: +86-10-8231-1199 Fax: +86-10-8231-1780 yyong@peksung.com www.peksung.com