China's patent law to be amended again

The draft amendment relates to seven articles, all of them directed to enforcement.

A unique aspect of the Chinese patent system has been the administrative route for enforcing patent rights. In other words, a patentee does not necessarily need to go to court to enforce its patent rights. Instead, the Patent Law offers the option of going to local administrative bodies to file a complaint against the alleged infringers.

Currently the local administrative bodies are called local IP offices, spread across China in many cities. However, until now, apart from issuing an order to stop infringement and mediating possible damages among relevant parties, local IP offices have not been given the power to take action against infringement. The draft amendment aims at strengthening the power of the local IP offices.

First, the draft amendment empowers local IP offices to award damages. Currently, if the relevant parties are not satisfied with mediation at the local IP office in terms of damages, they have to go to court. This amendment aims at considerably reducing the time needed to obtain damages.

The draft amendment also allows local IP offices to query the parties concerned, investigate the relevant circumstances of the suspected infringing act, carry out an onsite inspection of the site where the infringement takes place, review and reproduce the contracts, invoices, account books and other relevant materials, examine the products relevant to the infringing act and confiscate them. Under the current Patent Law, local IP offices have this power for patent passing-off cases but not for infringement cases.

This amendment draws on the relevant provisions in the Trademark Law which empower the local Administration for Industry and Commerce (AIC), the administrative authority for enforcing trademark rights, to take similar actions against trademark infringement.

“THE ALLEGED INFRINGER MAY BE SUBJECT TO CRIMINAL CHARGES, IF IT REFUSES TO PROVIDE THE EVIDENCE REQUESTED BY THE COURT OR MOVES, FORGES OR DESTROYS THE EVIDENCE.”

The draft amendment clarifies courts’ rights to investigate, confiscate infringing products and evidence such as invoices, account books and other relevant materials. In addition, the draft amendment provides that the alleged infringer may be subject to criminal charges, if it refuses to provide the evidence requested by the court or moves, forges or destroys the evidence. This amendment aims at coping with the difficulty in collecting evidence, which is considered the trickiest part of infringement litigation in China.

The draft amendment also includes provisions related to tripling the damages for wilful infringement. This is to create greater deterrence to potential infringers as the cost of infringement will increase, and to compensate the patentee for the time and energy spent on protecting its patent rights.

In order to curb the act of wilful infringement, repeated infringement and infringement by multiple parties, which usually requires the patentee to incur huge costs in terms of time and money, without the promise of meaningful compensation at the end, the draft amendment prescribes that if an infringing act is found to be one that disrupts the market order, the local IP office, or even the IP office at the state level, can order the infringement to cease, confiscate the illegal earnings, and confiscate or destroy the infringing products or any equipment specially designed for conducting the infringing act. In addition to these measures, the local IP office or the IP office at the state level can further impose a fine of up to four times the illegal earnings.

The draft amendment further includes important provisions that help to increase the efficiency of infringement litigation. Specifically, it prescribes that a decision on validity of the patent made by the Patent Re-examination Board (PRB) becomes effective when it is published and that the court and local IP offices should promptly deal with an infringement case when such a decision becomes effective.

Currently, an alleged infringer may delay the infringement suit by fighting against the decision of the PRB in court— usually not the same court that deals with the infringement suit. These new provisions allow the patentee to speed up the infringement suit, when its patent is found to be valid by the PRB.