On December 11 – before the end of the year 2023 – the State Council of China approved the new Implementation Regulations (“IR”) of the Patent Law. The entire text was released several days later along with the new Patent Examination Guidelines. The new IR has come into effect on January 2, 2024.

 

  Good faith as one of the fundamental disciplines was again emphasized in the new IR. Combatting abnormal filings has been one of the most important tasks on the CNIPA’s working agenda in recent years. It is now stipulated in the new IR that the patent prosecution shall be carried out in good faith and must originate from true and genuine activities of invention and creation without the occurrence of any fraudulent events.[1] Violation of the good faith obligation will be subject to a fine.[2] Furthermore, the delayed examination for invention patent applications was officially established in the new IR, followed by the lower-hierarchy operative document – the Invention Patent Delayed Examination Guidelines – which was released a few months ago.[3]

 

  Other important highlights are set forth below.

 

  Removal of mailing buffer time

 

  According to the old rule, the time of delivery of the CNIPA’s document was presumed to be 15 days from the sending date, regardless of whether it was sent by mail or electronically. Under the new IR, this 15-day buffer time period does not apply if the documents are sent electronically. For example, if the first Office action is sent electronically to the applicant’s patent attorney, the applicant needs to respond within the prescribed time window (usually four months) without the addition of a further 15 days.

 

  Priority

 

  The 2020 Patent Law opened the door for design applications to claim domestic priority. The new IR further increases the range of applicable priority basis. When a design patent application claims priority to an invention patent or a utility model application, the design(s) disclosed in the drawings of the prior application may serve as a lawful basis for priority. The invention patent or utility model application as the priority basis will not subsequently be deemed withdrawn.[4]

 

  Restoration of priority is now available. Within two months of the expiry of priority, the applicant for an invention patent or a utility model may request for the priority to be restored.[5] Furthermore, for an invention or utility model application with lawfully claimed priority, the applicant is permitted to add or rectify priority claim(s) within 16 months of the priority date or four months of the filing date.[6]

 

  For an invention patent or a utility model application filed with priority right(s), if the claims or description are completely or partially missing or are incorrect, the applicant may correct the error through “incorporation by reference” of the priority application(s) within two months of filing or in a timeframe specified by the CNIPA, in order to preserve the filing date.

 

  Patent Evaluation Report

 

  Designs and utility models are not substantively examined; hence their validity may be vulnerable. The new Patent Law 2020 provides that not only the patentee but also the parties of interest and the accused infringers can request an Evaluation Report. In accordance with the IR, when the applicant makes such a request in conjunction with the process of patent grant, the CNIPA shall produce and publish the report within two months of the date of grant.[7]

 

  Patent term adjustment (PTA)

 

  To compensate for any unreasonable delay in the course of the examination, a request must be made by the applicant within three months of the patent being granted. An unreasonable delay (in terms of number of days) refers to the time between the date of grant and the date that is four (4) years from the filing date or three (3) years from the date of request for substantive examination, whichever is later, excluding any delay caused by the applicant.[8] Reasonable delays refer to delays caused by re-examination, ownership disputes, and preservation measures during civil litigations, among others. On the contrary, unreasonable delays to be subject to PTA are failure to respond to Office actions, delayed examination, and supplementation of application materials, among others.[9] Moreover, as a special rule, for granted invention patents in the event of parallel filing, PTA is not available.

 

  For PTA requests lawfully made after June 1, 2021, the CNIPA will start to examine these requests as per the Implementation Regulations on January 20, 2024.

 

  Patent term extension (PTE)

 

  The new Patent Law 2020 stipulates that the compensation term for patents related to new drugs during the examination of Chinese marketing approvals is up to five years.[10] The total remaining patent term after the launch of the new drug for sale shall not exceed fourteen years. The patents of a new drug eligible for PTE are those directing to a new product, preparation method, or medical use.[11] A PTE request must be made within three months of the issuance of the marketing approval.

 

  The definition of a new drug was for some time the subject of debate. Although the new IR does not determine which type of new drugs – either new globally or new in China only – can have their patent term extended, the answer seems to become obvious in conjunction of other reference documents. According to the Chemical Drug Production Registration Work Plan 2016, newly registered medicinal products are partitioned into five categories. Categories 1 and 2 are innovative drugs and modified new drugs, both of which are not yet on sale in China or abroad, while Category 5 refers to drugs that were previously marketed abroad then sold in China. In a further reference to the new Examination Guidelines, new drug eligible for PTE are either innovative drugs or modified drugs according to the regulations of the medical affairs authority.[12] Hence, a new drug qualifying for PTE is one that is new not only in China but globally. This is likely to encourage international drug companies to launch their products in China earlier for the benefit of Chinese patients in need.

 

  Compensation of the patent term for drugs is subject to several limitations. When a new drug is covered by multiple patents, only one of these patents can be extended. When a patent involves a new drug’s multiple marketing approvals, only one approval can be used to extend a patent. Furthermore, to qualify for a request for extension, the patent must remain valid and must not have been previously extended.[13]

 

  Only PTE requests lawfully made after June 1, 2021 will be examined. The CNIPA will start to examine these requests on January 20, 2024.[14] If a patent expires before January 20, 2024, the extended term will continue from the time of expiry if the CNIPA awards the extension following a review.

 

  The extendable term is the number of days between the date of patent filing and the date of issuance of marketing approval minus five years. In a form of an equation, extendable term = (Date of marketing approval issuance – Date of patent filing) – 5 years. Lastly, the scope of protection during the extended term is limited to the new drug and the claimed invention in relation to marketing approval’s indication(s).

 

  Open License

 

  After the patent is granted, a voluntary announcement of a license open to all can be publicly made, specifying the patent number, patentee name, royalty payment standards and license term, among other things. An open license is not allowed if the patent is preempted by a sole or exclusive license, has pending ownership dispute(s), is subject to a preservation order, has unpaid annuity fees outstanding, is under a pledge without the consent of the pledger, or has the full exercise of the patent right otherwise compromised.[15] Besides, any dishonest activities related to the open license in order to obtain an annuity discount will be subject to a fine.[16]

 

  Remuneration for Service Invention

 

  The new IR stipulates new remuneration methods for employee’s inventions during the performance of their duties, echoing the new Patent Law. Rather than just by means of cash, remuneration may be provided in the form of equity, stock options and dividends to the employees; this is intended to motivate them by rewarding a reasonable share of the revenue generated from the company’s innovative activities.

 

  More notably, without the company’s overriding work rule to govern the remuneration, the statutory minimum according to the new IR has been raised to CNY 4,000 per invention patent granted and CNY 1,500 per utility model or design patent granted.[17] There are no more revenue shares to the employee in a specific percentage when the patented technology is exploited to yield profits, as was the case in the past. Instead, if there is no special agreement regarding the distribution of profits to the employee resulting from the exploitation of patented technology, the provisions of the 2015 Technological and Scientific Achievement Law shall apply.

 

  Administrative Enforcement

 

  The CNIPA is empowered to adjudicate in infringement cases with significant nationwide impact at the request of patent holders or parties of interest. The definition of a case of significant nationwide impact is either (1) one where major public interest is involved; (2) one which exerts a major influence on industrial development; (3) any significant case which takes place across geographical jurisdictions (provinces, autonomous regions and municipalities); or (4) any other scenario in which the CNIPA is deemed to have a major impact.[18]

 

  Partial Design

 

  With the new Patent Law 2020, partial design became patent-eligible subject matter. As an operating rule, the IR provides that the drawings for the entire product submitted shall use a combination of solid lines and dashed lines or other means to indicate the area subject to patent protection. Should the applicant choose not to use solid and dashed lines, the claimed area in the drawing shall be illustrated in detail in the description of the application. In addition to the solid and dashed lines, a semi-transparent layer of single colors can be used to cover the unclaimed area. In order to distinguish claimed areas from those unclaimed, dotted-chain lines shall be used to indicate boundaries.[19]

 

  Hague Agreement

 

  The Hague Agreement became effective on May 5, 2022. As an ancillary provision, the IR affirms that international applications for industrial design registrations which have a registration day and designate China are deemed equally Chinese design applications. The international registration day is equivalent to the Chinese filing date. The CNIPA will conduct an examination after the publication of said international application. Finally, regardless of whether the CNIPA decides to approve or reject the application, the decision will be reported back to the International Bureau. To effect a divisional application(s) in the event of an international application including more than two designs, the applicant shall submit a request to the CNIPA for division within two months of the international publication.[20]

 

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