Hong Kong's Original Grant Patent, Reciprocity And Hong Kong's Future As Legal Hub

On the last day one can send his or her opinion on the patent registration system in Hong Kong to the government, you will find an overview of what we can expect and what we can hope for. The patent system of Hong Kong, largely influenced by the re-registration patent system it inherited as a dependent territory of the United Kingdom, will be history soon. The Hong Kong government acknowledges that there is room for improvement. Reading the consultation paper makes clear that it is safe to say that Hong Kong will take this opportunity to set up a full fledged patent system, which will include original grant patent (OGP) and that the possibility to re-register existent patents of SIPO, UKPO and EPO will be maintained or extended. 


In this article:

• I will first give a view of the old system;
• followed by the expected new system;
• then this author will make a case for reciprocity; namely that patents granted by Hong Kong will be mutually recognised, and thus re-registrable by China, the UK and the other members of the European Patent Convention. 
• Hong Kong's new patent system could be an important building block to realise the position of legal hub for inter-Chinese and Sino-International commercial conflicts.

The Old System
Before June 27, 1997, Hong Kong re-registered and enforced patents obtained in the United Kingdom (UKPO) and the European Patent Office (EPO) designating the United Kingdom. After the sovereignty change on July 1, 1997 Hong Kong started to re-register patents obtained in China (SIPO) next to patents obtained at UKPO and the EPO designating the United Kingdom. Hong Kong has accepted patents from SIPO, UKPO, EPO, but because Hong Kong does not grant any standard patents on its own there could be no reciprocity in this respect, so far.

Currently, you can get two kinds of Hong Kong patents:
- Standard patent. You can apply for a standard patent if you have already a patent granted by SIPO, UKPO or EPO, within six months of publication of a patent application in one of the before-mentioned designating patent offices (POs). The Hong Kong's Registrar needs to record the application and publish the request to record in the Hong Kong's Gazette. After both the publication of the request to record the application and the patent was granted in one of the before-mentioned POs, the request for registration of the designated patent and grant of a Hong Kong standard patent can be filed. Then, the Hong Kong Registrar will register the designated patent, grant a Hong Kong standard patent, issue a certificate of the Hong Kong standard patent and publish the specification in the Hong Kong's Gazette. Hong Kong's standard patent has a term of 20 years.
Please note that the substantive examination (novel=not belonging to the prior art, non-obvious and useful)  is not done in Hong Kong but in one of the before-mentioned designating POs.
- Short-term patent. There are two routes to apply for a Hong Kong short-term patent.
If you have done an international application or via one of the designating POs for a utility model patent designating China, once that application entered its national phase you have six months to apply for a Hong Kong short-term patent. If you use these route you can use the search report of the international application.
The other route is to file the application with a specification with a description, one or more claims but only one independent claim, an abstract and a search report (prior art search by prescribed searching authority; Austria, Australia, Japan, Russia, Sweden, U.S. and EPO) to Hong Kong Registrar. The Hong Kong Registrar is only going to do a formal but no substantive examination.
A Hong Kong short-term patent has a term of 8 years. If you want more information on the current patent system in Hong Kong, I recommend you to read Professors Michael Pendleton and Alice Lee's authoritative book called 'Intellectual Property in Hong Kong' (published 2008 by LexisNexis).

New System
October 4, 2011, the Hong Kong government invited the public and stakeholders to give their view (until December 31, 2011) on how Hong Kong's patent system can be improved. See the consultation paper here. Three questions were posed:

• 1A. Should Hong Kong be able to grant its own patents (OGP)? 1B If so should Hong Kong outsource search and substantive examination? IC. If Hong Kong gets OGP, whether it should still re-register patents granted by other POs, and if so which POs? 
• 2. What should happen to the short-term patent? 
• 3. Should the profession of patent agents be regulated?

Questions 2 and 3 are easier to answered:

2. Hong Kong's short-term patent should be more aligned with China's utility-patent and the EPO's  and conform this patent the term should be extended to 10 years.

3. The lower the barriers to enter this profession the better. The market is well-equipped to come up with some self-regulation.

1A It is important for Hong Kong as a regional innovation and technology hub that Hong Kong can grant its own patents. This will improve the investment climate for R&D activities. Now companies and universities that want to protect their inventions have to first get a patent from SIPO or UKPO or EPO before they can get a patent to protect and enforce their patents in Hong Kong.


1B The consultation paper is less neutral than one would expect. "For an economy like Hong Kong where the size of the local market is a relatively small part of the global market, going straight to route (a) in paragraph 1.45 above [i.e. in-house substantive examination] is probably out of the question, as it may well result in disproportionately high registration fees up-front." According to the writers of the consultation paper, which are the Commerce and Economic Development Bureau and Intellectual Property Department, it is more viable that on the short to medium term the substantive examination is outsourced (just as in Macao and Singapore) and on the long term, when Hong Kong has gained expertise is this area, to do the substantive examination. I agree with that. Hong Kong will not get any expertise if they do not start. Hong Kong should establish a HKPO and sent some of the HKPO employees to other Patent Offices around the world, to get experience and recruit some experienced Patent Office people from other countries. Search and substantive examination could not only be done in Hong Kong for the HKPO, but for other POs as well. If Denmark, with a population of only 5.5 million can do that for Singapore, then Hong Kong might be able to do it for other countries, if they got some expertise in this field. If Hong Kong is doing in-house search and substantive examination, a whole knowledge intensive industry will be created, which includes professionals that can establish and search databases for the state of the art in all kinds of technologies, and draft, examine and grant patents. In such a climate more R&D would flourish.

1C Next to the possibility of getting an OGP, the re-registration route of patents from SIPO, UKPO or EPO should continue to be possible. However, this possibility of re-registration should be based on the principle of reciprocity. So if other POs are willing to re-register Hong Kong's OGP then Hong Kong will be willing to re-register the patents they granted.

Reciprocity
The willingness of other countries to accept patent's granted by Hong Kong depends on the quality of Hong Kong's patents but foremost on politics. Since Hong Kong has re-registered patents from SIPO, UKPO and EPO without any reciprocity. Therefore Hong Kong seems to be in an excellent situation to start with these POs to strike deals. Now the good news is that there have been discussions between the Mainland and Hong Kong during the 16th Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held February 28, 2011 in Guangzhou, see here. Possibilities of fostering mutual recognition of patent system between the two places under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). It is thought that "if the Mainland enterprises could apply for internationally recognized standard patents for the products in Hong Kong, it would help them tap the overseas market, thus creating huge business opportunities for the patent industry in Hong Kong.

Legal hub
For Hong Kong the Mainland is the opportunity and threat. When the Renminbi will be convertible somewhere in the future (expected within 5 to 10 years), Hong Kong's position as a financial hub will be outflanked by Shanghai. Hong Kong aspires to become a regional innovation and technology hub. I think Hong Kong is well positioned here. But there are many Mainland cities, such as sistercity Shenzhen, that compete for the same kind of position in the region or a little further away but a formidable competitor: Singapore. But Hong Kong is much nearer the Mainland than Singapore, and Hong Kong has something the Mainland does not have yet. A lot of experience with the rule of law. This is Hong Kong's biggest asset, potentially much more valuable then trading reclaimed land. The rule of law is a crucial condition for sustained economic growth (read professor Randall Peerenboom's paper about it here). For economic growth innovation is a necessity. And innovation is harnessed by patents. In other words: patents can be important for economic growth. And Hong Kong's rule of law creates the right precondition for a effective patent system.
Another strength of Hong Kong is that it is still a trait-d'union between China and the rest of the world. The great universities of Hong Kong prepare skilled professionals that speak English, Chinese and Cantonese.  All litigation in Hong Kong can be done in either English or Chinese. This makes it the natural place to bring legal cases, which include Chinese and overseas businesses. Hong Kong could become a legal hub, for litigation, arbitration and mediation where Mainland, Hong Kong and international businesses can solve their legal conflicts.



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Sino-U.S. Investment Vehicle To Bring U.S. Medicines Into Chinese Pharmaceutical Market

In the U.S. the pharmaceutical industry has proprietary technology, but China has enough financial resources and a huge domestic market. Therefore an opportunity presents itself for those who can bridge these two markets.

Michelle Jarboe McFee has an interesting article about a partnership between Newsummit Pharmaceutical Group, a biomedical company in Shanghai and Cleveland Bio Fund, a venture led by Mr A. Eddy Zai.

Newsummit has received 100 US dollar from Chinese investors. That money will be invested via the Cleveland Bio Fund in companies with U.S. medicines that have been approved by the U.S. Food and Drug Administration and are selling them in the U.S. but have no strategy to enter China. The partnership is also filing for Chinese patents for the medicines that have U.S. patents, Mr Zai was quoted saying.

Ms McFee writes: "Zai said the Cleveland Bio Fund is working with advisors including the Jones Day law firm and accounting firm Ernst & Young in China to navigate the regulatory system and avoid intellectual-property theft, a challenge for foreign companies."

Read Ms McFee's article for Cleveland.com here.

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Pfizer Starts R&D in China After IPR in China Challenges

Photo Danny Friedmann
Perilous hills, but nice view.
Climb worth the risk?

As one of the first U.S. companies pharmaceutical giant Pfizer has decided to start doing R&D in China. This way the company can probably take advantage of indigenous innovation preferential rules if it invents and patents in China. Read here.

Pfizer had some IP challenges in China. To brush up your memory, here is a summary of how Pfizer bot back its Viagra patent:

• September 19, 2001 SIPO granted a patent for Viagra's active ingredient;
• A dozen Chinese pharmaceutical companies file a petition to invalidate the patent, alledging that it failed adequate disclosure under article 26 Patent Law (at the time Patent Law 2000) and lacked novelty as required by article 22 Patent Law (at the time Patent Law 2000);
• July 7, 2004 Patent Reexamination Board invalidated Pfizer's Viagra patent because it failed to meet the disclosure requirement;
• September 28, 2004, Pfizer appealed the Patent Reexamination Board's decision at the Beijing No. 1 Intermediate People's Court;
• June 2006 Beijing No. 1 Intermediate People's Court reversed the invalidation and remanded the case to SIPO for further determinations;
• The Chinese pharmaceutical companies appealed to the Beijing High People's Court;
• September 7, 2007 Beijing High People's Court upheld the Beijing No. 1 Intermediate People's Court.

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China Launched 10-Year National Patent Development Strategy

During the 4th China Patent Week China launched the National Patent Development Strategy (2011-2020). The strategy focuses on:

• International cooperation in patent protection and utilisation;
• preferential policies to encourage R&D by high-tech companies, research institutes and colleges;
• Overseas IP websites so that foreign companies can check patent info;
• Establishment of organisations for patent trading in big cities.

To have a long term vision of a decade (the life-span of a utility patent and also design patent and half the life-span of an invention patent) is praiseworthy, although we have to see what the preferential policies exactly entail.

Read Hao Nan's China Daily article here.

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The Implementing Rules of the Third Amended Patent Law Are Coming

At the end of December 2009, the State Council approved the Determination on the Revising of the draft version of the Implementation Rules of the Patent Law. Read more here.

UPDATE:

The Regulation will be effective February 1, 2010 and will consist of 123 articles in 11 chapters.
Read more here and more about the backgrounds here.

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Revolutionary Lessons For China From Michael Carrier's Book 'Innovation for the 21st Century'

'Innovation for the 21st Century, Harnessing the Power of Intellectual Property and Antitrust Law' by Michael A. Carrier. Oxford University Press.

Professor Michael Carrier of Rutgers University School of Law, wrote an excellent book about intellectual property rights (IPR) law and antitrust law, the intersection between the two disciplines and how both systems can be improved. IPR and antitrust law have the same goal, but use opposite methods: where IPR law grants, protects and enforces monopolies that give positive incentives to innovation, antitrust law is trying to avoid and combat monopolies that give negative incentives to innovation. Not only does Mr Carrier explains in a very clear language with a lot of good examples what the problems are, regarding patents, trademarks and copyrights, but he also comes up with ingenious, concrete and concise answers. In fact he comes up with ten revolutionary (which is defined in the I Ching as "fire ignites within the lake, defying conditions that would deny it birth or survival") proposals to resolve the biggest problems of the US IPR-antitrust system.

To some degree these solutions could be applied to other jurisdictions, such as China (innovation is crucial for China's economic growth), as well. Let’s look at his proposal to reduce invalid patents, which could limit competition and thus increase price which leads to adverse effects on innovation and complicated, complex and expensive antitrust cases. Bad patent award legal rights that are far broader than what their relevant inventors invented, in regard to technologies that are economically significant:

"1. A post-grant opposition system that would allow any party to challenge a patent after it is issued. This would target the most valuable patents and provide a quicker and cheaper determination of validity that litigation."

Advantages:

• Instead of perfecting the application process, post-grant opposition makes use of the knowledge of competitors and patent applicants;
• Litigation is costly, skewed incentives (patentees spent more than infringers and a successful validity challenge benefits all infringers so you get a free-rider problem);
• Reexamination (limited participation for requesters as well as estoppel provisions);More information can lead to higher quality patents;
• Post-grant does not require early disclosure: there is no risk that sensitive information fill fall into the hands of competitors.

Disadvantage:

• Mark Lemley, Douglas Lichtman and Bhaven N. Sampat propose in their 2005 article ‘What to do about bad patents?' (free download at SSRN via pdf) also the post-grant opposition system. They also warn about the risk of collusion: “If an applicant can get a buddy to raise a straw man challenge to his patent and, through that, walk away with a stronger presumption of validity, the whole process will collapse.”

Could this be applied to China's patent system? Like many countries the China Patent Office has the problem of issuing invalid patents. Valid patents could foster innovation, while invalid ones “threaten to increase price and limit competition without any countervailing benefits”, according to Carrier.

1984 Patent Law: First China had an pre-grant opposition procedure (sometimes also called dissenting procedure). Before patents were granted the China Patent Office would publish them three months before, so any person could lodge their opposition at the China Patent Office. If at the end of the three month period no opposition procedure was filed, the patent was granted. Any person could initiate an invalidation procedure at the Patent Re-examination Board (PRB).

1992 Patent Law: Post-grant revocation procedure was set up. Within six months after the grant of patent anyone could request the Patent Office to revoke the patent (article 41). The patentee or the requester of the revocation procedure can file a request for re-examination of the decision at the PRB. The decision (invention patent, but not utility patent nor design patent) of the PRB can be appealed at a People’s court within three months. After the six months after the grant of a patent had expired any person could use the invalidation procedure at the PRB to invalidate the patent. The decision of the PRB (invention patent, but not utility patent nor design patent) can be appealed at the People’s court within three months.

2000 Patent Law: Post-grant revocation procedure was eliminated. A change in the invalidation procedure is that the PRB decision regarding utility patent and design patent can now also be appealed at a People’s court within three months.

2008 Patent Law: Invalidation procedure Every patent infringement case is met by an invalidation procedure.

China never had a post-grant opposition. However, they had a pre-grant opposition system, but because there were few oppositions and they wanted to shorten the examination time and quicken granting of patents, they god rid of it. The last two reasons could also be solved by implementing a post-grant examination. Mr Carrier's book is interesting and can be read by a wider audience interested in patent reform. China's Third Amendment to its Patent Law did not make any great changes in its patent prosecution provisons. Maybe, some of Mr Carrier's lessons will be taken into account for the next amendment.

Illuminating book for everyone interested in innovation and the IPR and antitrust systems that can harness it.

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EU Afraid To Share Sensitive Proprietary Info With China

The executive summary of the 2009 Position Paper of the European Union Chamber of Commerce about China shows the concerns the EU has about China's alleged industrial-intervention policies and foreign investment restrictions.

"The results of the European Chamber Business Confidence Survey 2009, [..], indicate that European investors in high-tech and branded goods are more interested than ever in the Chinese market. However they are extremely cautious about further investment. They have concerns about the protection of Intellectual Property Rights if they transfer technology, and about the relatively unpredictable mergers and acquisitions policies. Meanwhile, the barriers to market entry – the establishment costs in capital requirements, licensing, forced joint ventures and ownership caps – are making China less and less appealing as an investment destination for European companies."

The executive summary of the paper states that the EU is more important for China than vice versa. China's exports to the EU represent 7 percent of China's GDP, while the EU's export to China represents only 0.7 percent of the EU's GDP. Therefore, the EU claimes it is in the interest of China, to open up its markets, so that EU companies will continue to invest in China.

The paper itself consist of four themes:

• market access (An important channel of knowlegde transfer is the licensing of patent-pending or patented inventions, which “typically involves the purchase of production or distribution rights and the underlying technical information and know-how”, according to Keith E. Maskus, who wrote extensively about the subject. See 'Transfer of Technology and Technological Capacity Building. ICTSD-UNCTAD Dialogue,' 2nd BellagioSeries on Development and Intellectual Property. Sept. 2003, pg 18-23. So, when the protection/enforcement of IPRs in a developing country is less than perfect, chances are bigger that companies from developed countries transfer technology via exports or foreign direct investments, instead of licensing. Also, according to the executive summary China made a not very generous offer during the negotiations of the World Procurement Agreement (WPA), which would delay China's accession. I hope to speak about the IPR implications of the WPA with
• transparency "The promulgation by ministries ofadministrative rules and interpretations is still generally characterised by a disturbing lack of transparency.";
• administrative coordination;
• IPR: "there is a growing concern amongst European companies about the leakage of confidential information which can occur at various stages of business development, such as: project approvals, product certification, environmental impact assessments, patent filings, marketing approvals and registration. For example, during the CCC process (China Compulsory Certification, a precondition to market access for 130 product categories), highly confidential information, which goes far beyond the scope of information necessary for the approval concerned, is frequently requested by testing labratories."

In the same vein: the EU has problems with article 19 of the Third Amendment of the Patent Law (passed on December 27, 2008) which prescribes any entity or individual intending to file a patent application abraod for an invention-creation made in China, shall apply in advance for a confidentiality examination conducted by the patent administrative department under the State Council.

So in order to get market access or intellectual property protection EU companies need to share confidential information. However, they are afraid that if they do, there is a chance that this information is misappropriated. For example given to a Chinese company that can register first or make sure that the information belongs to the prior art or prior design.

Read the executive summary here (10pg PDF).

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News From The Front Lines

Guest article and picture by Mikołaj Rogowski

Writing that the all-front global IPR war between the owners and the infringers is well underway might sound a bit of a truism so I will simply skip to the notable news from the trenches.

Chinese government owned China Daily and Taiwanese China Post both have some worth reading articles regarding details of the Beijing No 1 Intermediate People's Courts recent decision. The amount of +67000 dollars of compensation is by no means a substantial sum for a corporate giant of Microsoft’s size but it’s more than sure that it will be a motivation for the likes of Strongwel to make sure that no one under their roof is selling computers with illegal software.

Remember how some of the commentators used to mention that a time will come when the entire trend of litigation against Chinese based entities will turn against some weiguo firms? The time is now, it seems : China Post reports that Wall Mart and Best Buy have been sued in US court, by a Chinese company on the grounds of patent infringement. The article has some interesting data regarding the number of Chinese patent applications.

Final piece of news: not surprisingly my previous post on the topic of the health reform in china and what it means for the “western” medical companies is not the only material that focuses on the opportunities and threats that come with this Chinese reform. Go to Reuters. Once again, some very interesting numbers are attached.

This is the third guest contribution of Mikołaj Rogowski, law student at Jagiellonian University, author of several IP articles and Polish-English translations, specializes in Polish, European, Chinese and American IP law, China assistant to MEP Jan Olbrycht. His first guest contribution can be found here, second here.

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Professor Mossoff's Historical Paper About Patent Thicket, Patent Troll and Patent Pool: Relevant Today

Can we learn from history? Or are we doomed to make the same mistakes over and over? Professor Adam Mossoff of George Mason University School of Law wrote an excellent paper about the Sewing Machine War of the 1850's which illustrates that the challenges we are facing in this day and age with patent thickets, patent trolls and patent pools are not new. Professor Mossoff draws the conclusion that "[t]he denouement of the sewing machine patent thicket in the Sewing Machine Combination of 1856, the first privately formed patent pool, further challenges the widely held belief that patent thickets are best solved through new statutes, regulations or court decisions that limit property rights in patents."

The paper illustrates in great style the titanic battle between Elias Howe (who did not do anything other with the patent then using it for injunctions to compel licenses from manufacturers) and Isaac Merritt Singer (who was an incremental inventor). In this battle Singer was looking for prior art to invalidate Howe's patent:

"Singer first attempted to uncover prior art in the patent offices in England, France, and, of course, the United States, and he even went so far as to argue that the sewing machine had long been invented in China, but this was all to no avail."

Download and read professor Mossoff's great SSRN-paper 'A Stitch in Time: The Rise and Fall of the Sewing Machine Patent Thicket', here (52 pages PDF).

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"China Will Reshape International Intellectual Property Policy"

I just read a great paper by Andrea Wechsler 'Intellectual Property Law in the P.R. China: A powerful Economic Tool for Innovation and Development', Max Planck Institute for Intellectual Property, Competition & Tax Law Research Paper No. 09-02, November 12, 2008, download at SSRN here.

In 56 pages Ms Wechsler takes you on a journey to see the changing purposes in and rationales for international IP protection, the political economy of IP protection and the Chinese approach to IP policy in the light of international IP law developments.

The Agreement on Trade-Related Aspects of Intellectual Property (TRIPs) is an integral part of the World Trade Organization (WTO)'s Agreement. Therefore this treaty (TRIPs) is a hybrid form which for most countries decreases the manoeuvring space in the field of IP protection policy. That China is an exception in this case Ms Wechsler writes on page 18: "The case of China thus demonstrates that – due to China’s sheer size but also due to its growing economic and political importance – China is to some extent defying the limitation of policy space in the field of IP protection through integration of this area into international trade policy."

Ms Wechsler shows how the Chinese government has changed its perception of intellectual property from a Fremdkörper that was transplanted in China from abroad, to uneasiness about the foreign pressure to reform its IP system in order for it to enter WTO, to China's autonomous realisation that IP protection is crucial to foster innovation and development, as evidenced by China's third amendment to its patent law (effective October 1, 2009). China is gradually opting for more country and industry specific intellectual property rights. Ms Wechsler writes: "it was argued that recent policy shifts in Chinese IP policy are to be considered as the first omens of the Chinese emergence as potent forces in reshaping the global intellectual property landscape according to their own political, economic, and social interests."

Read Ms Wechsler here.

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Discover Your Invention in China Or Lose Protection

Ms Patti Waldmeir has another interesting article about the upcoming patent law in China. She rightly zoomed in on the controversial articles. In February I posted a blog about the articles 49, 50 and 74 of China's third amended patent law, entitled 'Curb your enthousiasm', read here.

ZTE, the big Chinese telecommunications equipment company talked to the governement that it might be a problem to prove where the discoveries took place if foreign and Chinese R&D institutions cooperate. Exactly this route many R&D companies might take: establish some R&D presence in China, just in case.

Read ms Waldmeir's article here.

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What Does The New Chinese Patent Law Have In Store?

Mr Charles C. Liu, Partner and Director of US Practice, Unitalen Attorneys at Law and Ms Jeanne J. Liu wrote a series of four installments (originally published in China Intellectual Property, 20:44-51, 2007) about the amendment of the Chinese patent law that will probably be ready in 2008.

Read here Mr Liu and Ms Liu's 'Waves of Changes in Chinese Patent Law and Regulations',
Part I here;
Part II here;
Part III here;
Part IV here.

Head tip to Philip Brook of Philip Brooks' Patent Infringement Updates whose blog has been chosen by the new Patent Law Center of LexisNexis as a Top Blog. IP Dragon, Patent Docs, Patent Troll Tracker, Patently-O, Peter Zura's 217 Patent Blog, Generic Pharmaceuticals and IP and IPKat were also selected as Top Blogs, as can be seen at the bottom on the right of the page of the Patent Law Center, see here.

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Patent Challenge in China: What's the State of the Art?

The last quarterly newsletter of the European Patent Office (EPO) has an interesting article about the difficulty for foreign patent applicants to determine prior art (state of the art) in China, because all prior art in China is in Chinese. To determine prior art is crucial, because the patent can only be granted to an invention that is both new and inventive. So what is already known and what is new in China if you cannot search in and read Chinese? Machine tranlations are expected to be possible in three years time.Mr. Ruud Peters, CEO of Philips Intellectual Property and Standards, who spoke at the EPO Patent Information Conference in Riga criticised "missing out the increasingly large collection of Chinese prior art". The translations of only the claims from Chinese into English is estimated to be 15 million euro per year. The EPO would like the funding to be done in a way that allows that the translations are published for free online, Commercial companies such as Thomson Scientific, East Linden and Beijing Zhongxian Tuofang Co. Ltd. of course want to earn money for their translations. Mr. Peters had some harsh words about the patent system in relation to China: "stifling" instead of "stimulating innovation". Then again, an amendment of the Chinese patent law is coming up, so maybe all is not so bleak.
Read the EPO article here.

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Let Your Protection Start Two Years Sooner: Filing Utility Models Together With Invention Patents

Article 2 Patent Law in China states: In this Law, "inventions-creations" mean inventions, utility models and designs.

Patent Agent in Hong Kong, who blogs about his experiences working for China Intellectual Property (HK) Ltd., explains that if you file for an invention patent in China you can file for a utility model at the same time, so you can gain two years of protection by the utility model, before the protection of the invention patent starts (if it is granted).

Read more here.

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Patent Law Draft About to be Adopted: How Will Patent Law Change?

China Daily's reports via People's Daily that China's third revision of its patent law is drafted.

On July 31, 2006 SIPO promulgated the Draft of Amendments to the Patent Law for public comments. Draft amendments to the law were handed to the State Council for deliberation on December 27, according to the State Intellectual Property Office (SIPO), which was in charge of drafting the amendments.

SIPO spokesman Yin Xintian said that half of the current 69 provisions will be changed.

If the draft will be adopted, what will change? The article 'China: Third Time Lucky' by Yong Li Wenping Chen of King & Wood published for Managing Intellectual Property sheds light over the possible outcome:

• the absolute novelty standard (currently it is a blended novelty standard; where prior art includes publication inside or outside China, but public use or other means of disclosure only in China); in the draft prior art is broadened to include public use or other means of disclosure outside in China;
• a design patent shall not be identical or similar to a prior design, but it shall also be significantly different from element combination of prior designs;
• the optional brief description of the design under the current rules will become compulsory for design applications;
• a design application for multiple similar designs of a product becomes possible.
• infringement determination standards will be incorporated, that strengthen patent protection, extend the scope of patent infringement exemptions and further clarifies stipulations on compulsory licenses;
• only inventions made during execution of employment duty or made mainly by using the employer's technical secrets are statutory service inventions. However, inventions made mainly by using the employer's other materials and technical means will be deemed as non-service inventions unless otherwise agreed. In the latter case, the employer has a non-exclusive and non-assignable right to use the inventions.
• SIPO is getting more powers, including examining witnesses and other relevant parties; reviewing and making copies of relevant contracts, receipts, accounting books and other documents; conducting inspections of premises; seizing infringing goods and specialized equipment for infringement; issuing orders to stop infringement; and confiscating infringing goods and specialized equipment for infringement in severe cases;
• the doctrine of equivalents, prosecution history estoppel, and defence based on practicing prior art in infringement are incorporated in the draft. Infringing equivalents are limited to equivalents of technical features rather than the whole solution, and the well-known function-way-effect test is adopted. Any written amendments or statements that restrict the patent scope which the patentee made during the patent prosecution or invalidation proceeding to comply with the granting requirements will have estoppel effects. No infringement shall be found if the alleged infringing product or process belongs to prior art;
• patentee is liable for bad faith actions;
• for injunctions issued by a court or a decision of an administrative authority, if the same infringer conducts a similar act infringing the same patent, the patent administrative authority may take the following actions: ordering the infringer to stop the infringement and publishing the order; confiscating the illegal revenue; and imposing a fine of up to three times the illegal revenue. Where there is no revenue, the fine can be up to Rmb100,000;
• pre-suit injunctions and property preservation orders are available under the current Patent Law, and include evidence preservation;
• the provision on statutory damages is incorporated in the Draft, and the upper limit is increased to Rmb1,000,000;
• parallel import is explicitly defined as non-infringement, and the Bolar exception is adopted for pharmaceutical related patents. According to the Draft, an entity may make, use or import patented pharmaceuticals or medical devices solely for acquiring information necessary for obtaining regulatory approval, and a third party may make or import and sell the patented pharmaceuticals or medical devices to that entity. The Bolar exception in effect shortens the protection term of pharmaceutical and medical device patents. However, the Draft has no corresponding provisions for possible extensions of the term of those patents. Even worse, the Draft does not provide a time limit for starting activities under the Bolar provision;
• after five years from knowledge of the infringement, no injunction may be issued if the infringer is willing to pay royalties as agreed by the parties or decided by the court.

Read Yong Li and Wengpin Chen's article here and the People's Daily article here.

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Compulsory Licensing: Philips About to Bring A WTO Case Against Taiwan

Taiwanese company GigaStorage has a conflict with Dutch company Philips about a patent for the manufacturing of CD's since 1999.

After a complaint at the Taiwan's Fair Trade Commission it applied for a compulsory license of Philips' patent for the manufacturing of CD's, based on article 79 Taiwan's Patent Law, which states:

"In the case of national emergencies or of non-profit-seeking use of a patent for the enhancement of public welfare, or in the case of an applicant's failure of reaching a licensing agreement with the patentee concerned under reasonable commercial terms and conditions within a considerable period of time, the Patent Authority may, upon application by the applicant, grant a compulsory license to the applicant to put the patented invention into practice provided such practice shall be restricted mainly to the purpose of satisfying the requirements of domestic market. (..)"

Philips is considering to take the case to the WTO, because Taiwan's patent law is allegedly compliant to article 31 TRIPs. Taiwan is since 2002 a member of the WTO.

See an analysis of this case and also about compulsory licensing in Mainland China entitled 'Trends in Compulsory Licenses in Greater China' by Lily Lim of Finnegan Henderson here.

H/T to Andrew Leonard of How the World Works

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SIPO's Patent ABC

SIPO is giving 19 answers to 19 questions about patents.
On a whole it gives an fast overview of China's patent law.

It is peculiar that SIPO is giving information (Q&A number 19) about the Special Administrative Region of Hong Kong, which has its own basic law and IPR system, separate from the PRC.

Read here.

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