1 April 2010Jurisdiction reports

Regulations and guidelines for patents

The new implementing regulations and the guidelines for examination include detailed provisions that reflect the changes in the law. Some changes will be of particular note to foreign businesses.

For inventions made in China, the new regulations require applicants to go through security examination by disclosing the technical solution to the State Intellectual Property Office (SIPO) before filing patent applications outside of China. This is similar to the US foreign filing licence system. The applicants could choose to simply request this foreign filing licence without filing any applications in China.

Alternatively, they could file such a request on or after filing a Chinese application. The third option is to file a Patent Cooperation Treaty (PCT) application, which will be automatically deemed as a request. The guidelines further prescribe that the technical solution is written in Chinese for security examination purposes and suggest that it be drafted in the format of the description of a patent application.

“The law also prescribes that the direct source and the original source of genetic resources shall be indicated in a patent application. If the applicant cannot provide an original source, it must give reasons. The new guidelines prescribe in detail the required information, such as the date, location and method of procurement, and details of the provider of the genetic material."

SIPO may issue a notification to the applicant if it thinks the invention relates to national security or crucial interests. If the applicant does not receive such a notification in four months, it can file outside of China. If the applicant does get this notification, it may have to wait six months for the security examiners to grant or deny the application for a foreign filing licence. If the applicant does not receive such a decision within six months, it can file outside of China.

It is to be noted that violation of this provision will lead to rejection and invalidation. Another important revision relates to genetic material. The new law prescribes that if an invention relies on certain genetic resources that were acquired or used illegally, the patent application will be rejected and, if granted, will be invalidated. China is the first country in the world to use illegal acquisition and exploitation of genetic sources as a ground for rejecting patent applications and invalidating patents.

The law also prescribes that the direct source and the original source of genetic resources shall be indicated in a patent application. If the applicant cannot provide an original source, it must give reasons. The new guidelines prescribe in detail the required information, such as the date, location and method of procurement, and details of the provider of the genetic material.

This looks like it could be a burden on many applicants. However, it is to be noted that these provisions do not apply to inventions that use genetic material but do not rely on the genetic function of the material.

The new guidelines define many relevant terms, such as genetic material, genetic function, genetic function unit, as well as direct source, original source and ‘rely on’. Hopefully, this clarifies the procedure. Furthermore, it is worth noting that disclosing genetic sources is not part of the sufficiency requirement for a valid patent.

A third interesting aspect of the new regulations relates to changes in the remuneration terms for inventions. The old implementing regulations only prescribed the level of compensation in state-owned companies; the new regulations remove this limitation, but also prescribe that employers can reach an agreement with the inventor and that these agreements take priority.

The level of compensation could be determined in a separate agreement or in an employment contract. In other words, the prescribed level of compensation applies only if there is no existing agreement between the inventors and their employer.

Stephen Yang is a partner at Peksung Intellectual Property Ltd. He can be contacted at: yyong@peksung.com

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