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22 October 2020PatentsRory O'Neill

China finalises ‘patent-friendly’ legal reforms

China has finalised long-awaited reforms to its patent laws, which will come into effect on June 1, 2021.

After multiple drafts, legislators have approved the Fourth Amendment to China’s Patent Law, which will cement higher damages awards for infringement, and quicker enforcement procedures.

Under the new law, courts may award statutory damages as high as RMB 5 million ($749,000), which could be multiplied by five in the case of wilful patent infringement.

It will also be easier to obtain preliminary injunctions, which Chinese courts have historically been reluctant to grant to plaintiffs.

Some of the most notable reforms will come as a particular boost to the pharmaceutical industry. The new law will introduce the concept of “patent linkage” to China’s legal system, meaning marketing approval for new drugs can be withheld until any relevant patent disputes have been resolved.

Patent owners will also be able to obtain adjustments to the term of protection in the case of “unreasonable delay” on the part of the Chinese National Intellectual Property Administration (CNIPA).

Applicants will be eligible for this relief if it takes the CNIPA four years to process a filing through to granting the patent, and if this delay is not the applicant’s fault.

The law also allows for patent term extension for pharmaceutical companies of up to five years in the case of regulatory delay, as long as the term of protection does not last for more than 14 years after a drug is approved for market.

Other reforms include the creation of a state-run open licensing scheme, designed to encourage the use of patents which are otherwise lying idle.

Parties will be able to submit details of their patents and licensing fees to the State Council, and these patents then be offered to all on an open licensing basis.

Lawyers at Hong Kong-based Eagle IP have said the reforms will strengthen China’s patent laws to “match international patent law standards”.

“These changes, once implemented, will make China a much more patent-friendly jurisdiction, benefiting innovators worldwide,” wrote Jennifer Che and Yolanda Wang, principals at the firm.

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