4.1 Outline of China’s Patent Law and patent case trials
4.1.1 Formulation and evolution of China’s Patent Law
220.127.116.11 Promulgation of the Patent Law
The Temporary Regulations for the Protection of Invention Right and Patent Right and its detailed implementation rules, which were enacted in 1950, were the first regulations on patent rights since the founding of the People’s Republic of China.
On March 12, 1984, the Standing Committee of the Sixth National People’s Congress (NPC) reviewed and adopted the 1984 Patent Law.1 The 1984 Patent Law had 69 articles. The then Director General of the World Intellectual Property Organization (WIPO), Mr. Árpád Bogsch, commented that the Chinese language was wonderful, as the three types of patents (invention, utility model, and design) were clearly stated in only 60-odd articles.2
18.104.22.168 Four amendments to the Patent Law
The first amendment to the Patent Law,3 in 1992, included:
- deleting the provision in the 1984 Patent Law that no patent right shall be granted for drugs, foodstuffs, beverages and condiments;
- additionally granting a right of importation to the patentee;
- extending the protection of method patents to products directly obtained by those methods;
- increasing the term of protection of invention patents from 15 years to 20 years and increasing the term of protection of utility model patent and design patent rights from 5 years with a 3-year renewal to 10 years;
- abolishing the obligation of the patentee to implement patents in China and amending the conditions of compulsory licensing; and
- improving the patent application and approval procedures, adding domestic priority and replacing the pre-grant opposition procedure with a post-grant revocation procedure.
The second amendment to the Patent Law,4 in 2000, included:
- clarifying that the legislative purpose of the Patent Law included “promoting scientific and technological progress and innovation”;
- improving the system of invention and creation ownership and allowing the employer of an inventor or designer to make an agreement on the ownership of a patent to inventions and creations made with the material and technical conditions of the employer;
- abolishing the requirement that state-owned units hold the patent rights to enable the state-owned units to enjoy the full right to dispose of the patent rights acquired by them as other economic entities;
- giving a patentee the right to offer to sell;
- consolidating the revocation and the invalidation procedures into a single invalidation procedure;
- abolishing the power of the Patent Reexamination Board to make final decisions on utility model patents and design patents and stipulating that parties have the right to appeal to a people’s court with respect to the reexamination decision or invalidation decision made by the Patent Reexamination Board on utility model patents and design patents;
- defining the obligations to be performed by China as a contracting state of the Patent Cooperation Treaty;
- providing for a search report system for utility model patents; and
- strengthening the protection of patent rights by introducing pre-litigation temporary injunction and property preservation measures and stipulating that the amount of compensation for infringement may be determined by reference to a reasonable multiple of the patent license fee.
In June 2008, the Outline of the National Intellectual Property Strategy was officially promulgated.5 A third amendment to the Patent Law was consequently necessary for the implementation of the National Intellectual Property Strategy, for the development of an innovative country, for adapting to the international development trend of intellectual property rights and for China to adjust its economic structure, transform its development model and achieve sustainable scientific development. The third amendment to the Patent Law,6 in 2008, included:
- the explicit inclusion of “enhancing innovation capability” in the legislative purpose;
- setting higher requirements for granting design patents by replacing the standard of “relative novelty” with “absolute novelty”;
- making further stipulations regarding the conditions for granting design patents;
- extending the scope of “conflicting applications” that undermine novelty to include the applicant’s own prior applications;
- stipulating that only one patent right can be granted for the same invention and creation and defining the conditions for transfer between invention patents and utility model patents;
- stipulating that offering to sell constitutes an infringement of design patents;
- collectively referring to the acts of “counterfeiting another person’s patent” and “passes off any unpatented product or method as a patented one” as “counterfeiting a patent” and setting higher administrative penalty standards;
- clarifying that the amount of compensation also includes the reasonable expenses paid by the right holder to stop infringements;
- imposing pre-litigation evidence preservation measures and delegating the administrative power to the patent administration department of the State Council to investigate and handle patent counterfeiting;
- amending the provisions on compulsory licensing for patents in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement);7
- stipulating exceptions to the administrative approval of patents for pharmaceuticals and medical devices; and
- introducing provisions on genetic resources and traditional knowledge.
The fourth amendment to the Patent Law,8 in 2020, included:
- increasing the amount of statutory compensation and introducing a punitive damage system;
- improving the rules of evidence relating to compensation for infringement and reducing the burden of proof on the right holder;
- improving relevant provisions on patent administrative enforcement, imposing more severe penalties on patent counterfeiting and raising the amount of penalty;
- stipulating a new system for drug patent term extension and a mechanism for early settlement of drug patent disputes;
- extending the term of a design patent to 15 years, providing protection for partial designs and stipulating the domestic priority system for design patent applications;
- further improving the provisions related to service invention-creation, providing that the State encourages the entities to which the patent rights are granted to implement property right incentives and to share innovation returns reasonably with inventors or designers by means of equity, options, dividends and so on;
- stipulating an open licensing system for patents;
- improving the provisions on the grace period of novelty and supplementing a circumstance where the first disclosure is made for the purpose of public interest in case of national emergency or extraordinary circumstances;
- improving the system of patent evaluation reporting and expanding the scope of subjects entitled to apply for a patent evaluation report; and
- optimizing the provisions on the procedure for claiming priority and extending the time limit for submitting copies of priority documents.
4.1.2 Patent application trends
Figure 4.1 shows the total number of patent applications (direct and Patent Cooperation Treaty (PCT) national phase entry) filed in China from 2000 to 2021.
4.1.3 Legal basis to hear patent cases
China’s legal system is a civil-law system, as opposed to a common-law system, with only statutory law, not case law. Chinese courts adjudicate civil and administrative patent cases in accordance with laws such as the Patent Law, administrative regulations such as the Rules for the Implementation of the Patent Law, judicial interpretations and by reference to guiding cases.
According to Article 63 paragraph 3 of the Administrative Procedure Law,9 “the people’s courts shall refer to the regulations when hearing administrative cases.” Therefore, Chinese courts may refer to the Guidelines for Patent Examination formulated by the China National Intellectual Property Administration (CNIPA) when hearing administrative patent cases involving a reexamination or invalidation procedure.
Laws are enacted by the top legislative body of the State – namely the NPC and its Standing Committee – and promulgated by the Order of the President of the People’s Republic of China, signed by the President. Laws have higher authority compared to administrative regulations, local regulations and rules. In addition to the Patent Law, Chinese courts that hear patent cases are also governed by applicable substantive laws, including the Civil Code.10
The Civil Code, reviewed and passed on May 28, 2020, at the Third Session of the 13th NPC, is the first law to be named a “code” since the founding of the People’s Republic of China. The Civil Code has no separate section on intellectual property but has some special provisions on the same in Chapter V (“Civil-Law Rights”). Article 123 of the Civil Code stipulates the following:
The persons of the civil law enjoy intellectual property rights in accordance with the law.
Intellectual property rights are the exclusive rights enjoyed by the right holders in accordance with the law over the following subject matters:
- (1) works;
- (2) inventions, utility models, or designs;
- (3) trademarks;
- (4) geographical indications;
- (5) trade secrets;
- (6) layout designs of integrated circuits;
- (7) new plant varieties; and
- (8) other subject matters as provided by law.
Article 1185 of the Civil Code stipulates the following: “In case of an intentional infringement of another person’s intellectual property rights, where the circumstances are serious, the infringed party has the right to request for corresponding punitive damages.” The provisions of the Civil Code apply to co-ownership, contracts, security, succession, joint infringement, aiding and abetting infringement, civil liability and so on when they are related to patent rights.
In terms of procedural law, Chinese courts hear patent cases, enforce decisions and make decisions related to the preservation of evidence, property or acts in accordance with the provisions of the Civil Procedure Law,11 Administrative Procedure Law, Criminal Procedure Law12 and applicable judicial interpretations. On October 26, 2018, the Decision on the Litigation of Intellectual Property Cases was revised and adopted at the Sixth Session of the Standing Committee of the 13th NPC.13 According to the decision, the Supreme People’s Court shall hear cases on appeal over patent and other intellectual property rights involving professional technologies throughout the country.
According to Article 42 of the Legislation Law:14
The power to interpret a law shall be vested in the Standing Committee of the National People’s Congress.
Under any of the following circumstances, a law shall be interpreted by the Standing Committee of the National People’s Congress if:
- (1) the specific meaning of any provisions of a law requires further clarification; or
- (2) any new circumstances appearing after the issuance of a law require clarification of the basis for the application of the law.
The interpretation of law adopted by the Standing Committee of the NPC has the same effect as the laws enacted by it. The Standing Committee of the NPC has not made any legislative interpretation of the Patent Law.
22.214.171.124 Administrative regulations
Administrative regulations are drafted by relevant departments under the State Council or by the State Council’s legal affairs organ and are promulgated by the Decree of the State Council of the People’s Republic of China, signed by the Premier of the State Council. Administrative regulations in the field of patent law include the Rules for the Implementation of the Patent Law and the Regulations on Patent Commissioning.15
Alongside the amendments to the Patent Law, the Rules for the Implementation of the Patent Law have been amended several times accordingly. After the promulgation of the 1984 Patent Law, the State Council approved the Rules for the Implementation of the Patent Law – which was formulated by the Patent Office of China – on January 19, 1985, and it came into force together with the Patent Law on April 1, 1985. In 1992, the Standing Committee of the NPC made the first amendment to the Patent Law, and, on December 12 of the same year, the State Council approved the amended Rules for the Implementation of the Patent Law, which came into force together with the amended Patent Law on January 1, 1993. In 2000, the Standing Committee of the NPC made the second amendment to the Patent Law, and, on June 15, 2001, the State Council promulgated the new Rules for the Implementation of the Patent Law, which came into effect together with the second amended Patent Law on July 1, 2001. At the same time, the rules that were approved by the State Council for amendment in 1992 were repealed. The existing rules were amended in 2002 and 2010.
To be consistent with the fourth amendment to the Patent Law, the CNIPA worked on amendments to the Rules for the Implementation of the Patent Law and developed a draft accompanying explanatory notes, which were published in November 2020 for comment from all sectors of society. As the Rules for the Implementation of the Patent Law are still in the process of amendment, the CNIPA formulated the Interim Measures for the Amended Patent Law to ensure the appropriate implementation of the amended Patent Law.16
126.96.36.199 Judicial interpretations
Article 18 paragraph 1 of the Law on the Organization of the People’s Courts17 stipulates the following: “The Supreme People’s Court may interpret the issues concerning the application of law in trial.” According to Article 104 of the Legislation Law:18 “The interpretation of the application of specific law in the judicial or procuratorial work made by the Supreme People’s Court or the Supreme People’s Procuratorate shall be aimed at the specific legal provisions and in line with the legislative purpose, principle, and original intention in respect of the legislation.”
According to the Provisions on Judicial Interpretation Work,19 the judicial interpretation issued by the Supreme People’s Court shall have legal force. The judicial interpretation shall be given in accordance with law and legislative spirit and depend on the actual needs of trial. Judicial interpretations may be made in any of five forms: “interpretations,” “provisions,” “rules,” “replies” and “decisions.” Judicial interpretations on the specific application of a certain law in the trial work or the application of law in the trials of cases of a certain category or of certain kinds of problems are made as “interpretations.” Judicial interpretations on the formulation of the norms or opinions that are necessary for the trial work based on the legislative spirit are made as “provisions.” Judicial interpretations on the regulation of trial and enforcement of decisions are made as “rules.” Judicial interpretations on the requests for instructions on the specific application of law in the trial work by the higher people’s courts or the Military Court of the People’s Liberation Army are made as “replies.” The amendment or abolishment of judicial interpretations is made as a “decision.”
Draft judicial interpretations made by the Supreme People’s Court are adopted after discussion by the Adjudication Committee, issued by the president or executive vice-president of the Supreme People’s Court, published in the form of a public announcement by the Supreme People’s Court and submitted to the Standing Committee of the NPC for the record within 30 days from the date of publication.
In the field of patent law, there are primarily the following judicial interpretations:
judicial interpretations related to jurisdiction over cases, including:
judicial interpretations related to procedure and evidence, including:
judicial interpretations related to substantial issues of the Patent Law, including:
- Provisions on the Trial of Patent Disputes;26
- Interpretation of Patent Infringement Dispute Cases;27
- Interpretation (II) of Patent Infringement Dispute Cases;28
- Provisions on Patent Grant and Confirmation;29
- Provisions on the Patent Rights of Drugs;30
- Interpretation of Punitive Damages in Intellectual Property Civil Cases;31 and
- Reply on Compensation for a Plaintiff’s Abuse of Rights.32
188.8.131.52 Departmental rules
The Guidelines for Patent Examination are department rules formulated by the CNIPA. It details and supplements the provisions of the Patent Law and the Rules for the Implementation of the Patent Law. It also serves as the basis and standard for the legal administration of the CNIPA to refer to and follow in enforcing the relevant laws and regulations. The guidelines were amended in accordance with the 2008 Patent Law, the Rules for the Implementation of the Patent Law (2010 Revision) and based on actual requirements. The Guidelines for Patent Examination first came into effect on February 1, 2010, and have been amended six times since.
The first amendment came into effect on October 15, 2013, and primarily concerned the preliminary examination procedure for utility model and design patent applications. The second amendment came into effect on May 1, 2014, and primarily concerned the scope for the granting of design patents for graphical user interfaces. The third amendment came into effect on April 1, 2017, and primarily concerned the conditions for granting patents related to business models, the examination of patent applications for inventions involving computer programs, the supplemental submission of experimental data, and the examination of requests for the invalidation of a patent right. The fourth amendment came into effect on November 1, 2019, and primarily concerned the preliminary examination and substantive examination of patent applications for inventions, drafting requirements for graphical user interface design patents, and examination standards for patents related to human embryonic stem cells. The fifth amendment came into effect on February 1, 2020, and primarily concerned the examination of patent applications for inventions related to artificial intelligence, “internet+,” big data and blockchain, and the examination of patent applications for inventions having algorithmic features or business rules and method features. The sixth amendment came into effect on January 15, 2021, and primarily concerned the examination of invention patent applications in the field of chemistry, including the supplemental submission of experimental data, rules for determining the novelty and creativity of compounds, and the examination of monoclonal antibodies.
184.108.40.206 International treaties
International treaties are written agreements on mutual rights and obligations concluded between subjects of international law. To have a legal basis in China, such international treaties must have entered into force in China. If an international treaty concluded by China – or to which China is a party and has come into force in China – has different provisions compared to Chinese laws on the same matter, the provisions of the international treaty take precedence, except for such provisions for which China has declared its reservations. China has adopted a model of transformative application with respect to the TRIPS Agreement.
In terms of patent law, multilateral international treaties to which China is a party and that have come into force in China include:
- the Convention establishing the World Intellectual Property Organization (effective in China from June 3, 1980),33 administered by WIPO;
- the Paris Convention for the Protection of Industrial Property (effective in China from March 19, 1985);34
- the Patent Cooperation Treaty (effective in China from January 1, 1994);35
- the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (effective in China from July 1, 1995);36
- the Locarno Agreement establishing an International Classification for Industrial Designs (effective in China from September 19, 1996);37
- the Strasbourg Agreement concerning the International Patent Classification (effective in China from June 19, 1997);38 and
- the TRIPS Agreement (effective in China from December 11, 2001), administered by the World Trade Organization.
The Regional Comprehensive Economic Partnership was officially signed on November 15, 2020, by 15 Asia-Pacific countries (including China, Japan, Republic of Korea, Australia and New Zealand) and has been ratified by six Association of South-East Asian Nations countries (including Brunei Darussalam) and four non-Association countries (China, Japan, New Zealand and Australia). The Regional Comprehensive Economic Partnership entered into force on January 1, 2022. The agreement has a special chapter on intellectual property, covering copyright, trademarks, geographical indications, patents, designs, genetic resources, traditional knowledge and folklore, anti-unfair competition, intellectual property enforcement, cooperation, transparency, technical assistance and other fields.
Bilateral international treaties regarding patent law concluded by China and that have come into force in China include:
- the Memorandum of Understanding between the Government of China and the Government of the United States of America on the Protection of Intellectual Property (effective January 1, 1993);39
- the Economic and Trade Agreement between the Government of the United States of America and the Government of the People’s Republic of China (effective February 14, 2020; a first-stage economic and trade agreement between the US and China);40
- the New Zealand–China Free Trade Agreement (effective October 1, 2008);41
- the China–Peru Free Trade Agreement (effective March 1, 2010);42
- the China–Costa Rica Free Trade Agreement (effective August 1, 2011);43
- the China–Australia Free Trade Agreement (effective December 20, 2015);44
- the China–Republic of Korea Free Trade Agreement (effective December 20, 2015);45
- the China–Georgia Free Trade Agreement (effective from January 1, 2018);46 and
- the China–Mauritius Free Trade Agreement (effective from January 1, 2021).47
4.1.4 Guiding case system
Article 18 paragraph 2 of the Law on the Organization of the People’s Courts provides that “the Supreme People’s Court may publish guiding cases.” Cases that have a guiding effect on the judicial and enforcement work of Chinese courts are determined and released by the Supreme People’s Court, and the people’s courts at all levels refer to them when hearing similar cases. As of September 14, 2021, the Supreme People’s Court has issued 165 guiding cases in 29 batches, of which seven are related to patents.
Article 2 of the Provisions on Case Guidance Work48 stipulates that the guiding cases are those that have legally effective judgments and:
- are of widespread concern to society;
- involve legal provisions that are relatively general;
- are typical;
- are difficult, complicated or of a new type; or
- have a guiding effect.
According to Articles 9–11 of the Rules for the Implementation of the Provisions on Case Guidance,49 the application of guiding cases by reference involves the following aspects:
- At all levels, in trials of cases that are similar to the guiding cases issued by the Supreme People’s Court in terms of basic facts and the application of the law, the courts shall make decisions by reference to the rules of the decision in the applicable guiding cases.
- In dealing with cases, judges shall inquire about applicable guiding cases. Where any applicable guiding case is cited in the decision, the number of the guiding case and the main points of the decision shall be outlined in the reasoning for the decision section.
- If the public prosecution, the parties to the case and their defenders and litigants cite a guiding case as a reason, the judge shall respond in the reasons for the judgment whether the guiding case has been referred to and explain the reasons for the same.
- Guiding cases shall be cited as reasons for a decision but not as the basis for the decision.
4.1.5 Reform and development of China’s intellectual property case trials
Patent trials are an important part of the intellectual property trial system and are related to three trial areas: civil, administrative and criminal trials. Since 2012, firmly adhering to the concept that protecting intellectual property is to protect innovation, Chinese courts have put into practice the Opinions on Strengthening Reform and Innovation in Intellectual Property Adjudication and the Opinions on Strengthening the Protection of Intellectual Property Rights.50 They have further deepened reform and innovation in the field of intellectual property case trials to ensure the strict protection of intellectual property, resulting in beneficial results, as required in the Guidelines for Building a Powerful Country with Intellectual Property Rights (2021–2035).51
Continuously improve the capacity to try intellectual property cases. The Supreme People’s Court has formulated a series of judicial interpretations on patent infringement, the grant and confirmation of patents, pharmaceutical patents, e-commerce platform and network infringement, monopoly disputes, rules of evidence, preservation of acts, punitive damages and so on. This has helped consistently improve litigation standards in line with the trial rules of intellectual property cases, especially technical patent cases and universal adjudication standards; effectively solved the problems of “difficulty in providing evidence, long duration, low compensation, and high cost” in intellectual property litigation; and significantly increased the cost and price of infringement.
The Supreme People’s Court has formulated a series of judicial policies, including the China Program for Judicial Protection of Intellectual Property Rights, Opinions on Comprehensively Strengthening Judicial Protection of Intellectual Property, and the Plan for the Judicial Protection of Intellectual Property Rights by the People’s Courts (2021–2025) to promote the high-quality development of intellectual property case trials.52 It has exerted the demonstrating and leading role of judicial rules and issued timely guiding cases and typical cases. The Supreme People’s Court effectively performs the function of judicial review and supervision of administrative acts to promote the unification of standards for administrative enforcement and judicial adjudication of intellectual property rights. It has strengthened civil judicial protection, equally protected the legitimate rights and interests of Chinese and foreign right holders in accordance with the law, and properly heard major intellectual property cases involving standard-essential patents, information and communication, integrated circuits, artificial intelligence, big data, gene technology and other high technologies and emerging industries.
The Supreme People’s Court has significantly improved judicial protection capability and influence, safeguarded the legitimate rights and interests of right holders and service inventors in accordance with the law, and promoted the transfer and transformation of scientific and technological achievements. It also properly handles patent disputes arising from the determination of ownership, transfer of rights and determination of value and handles the distribution of benefits of scientific and technological achievements. China has become the country with the greatest number of intellectual property cases – especially patent cases – and one of the countries with the shortest trial periods. Between 2013 and June 2021, there were 143,000 patent cases concluded by the courts nationwide.
Deepen judicial reform in intellectual property case trials. Since 2014, intellectual property courts have been established in Beijing, Shanghai, Guangzhou and the Hainan free trade port. On January 1, 2019, the Intellectual Property Court of the Supreme People’s Court was set up and given the responsibility of further unifying the trial criteria of cases on patent and other intellectual property rights involving professional technologies, putting into operation the major reform task of “establishing a national-level appeal hearing mechanism for intellectual property cases.” Special intellectual property trial agencies have been founded in 24 places, including Nanjing, Wuhan and Shenzhen, with cross-regional jurisdiction over intellectual property cases involving professional technologies. The comprehensive “three-in-one” reform of criminal, civil and administrative trials over intellectual property cases has been carried out in an orderly manner in 21 high courts, 164 intermediate courts and 134 primary courts nationwide. Judicial interpretations and judicial policies related to technical investigators have been formulated to continuously improve the mechanism of ascertaining technical facts by technical investigators, technical consulting experts, technical appraisers and expert assistants when participating in litigation activities. A “national court technical investigator pool” and a sharing mechanism have also been established, including more than 450 expert technical investigators covering more than 30 technical fields.
Continuously optimize the working mechanism of intellectual property protection. The working mechanisms of intellectual property protection have been optimized by strengthening guidance on intellectual property cases; establishing a case guidance system consisting of guiding cases, gazetted cases and typical cases; building a database of intellectual property cases and rules for adjudication; providing guidance on strengthening the search of similar cases. This has also been achieved through actively carrying out the pilot work of diversification of simple cases from complicated ones and improving online and offline integration of trial methods to vigorously shorten the duration of intellectual property litigation. The Supreme People’s Court, in conjunction with the CNIPA, has established an online cooperation mechanism for the litigation and mediation of intellectual property disputes, improved the judicial confirmation system for administrative mediation agreements and improved the mechanism for the diversified settlement of intellectual property disputes. It has jointly promoted the specialized sharing of data and has continued to cooperate with the CNIPA in sharing patent talents.
Actively participate in international exchanges and cooperation on intellectual property. To comprehensively implement relevant cooperation matters outlined in the Memorandum of Understanding on Strengthening Exchanges and Cooperation signed with WIPO,53 the Supreme People’s Court has continuously developed and enriched the scope of cooperation and participated in global intellectual property governance under the WIPO framework. In addition to signing the memorandum of understanding with WIPO, the Supreme People’s Court has also co-organized WIPO’s “Master Class on Intellectual Property Adjudication,” jointly published the “WIPO Collection of Leading Judgments on Intellectual Property Rights – People’s Republic of China (2011–2018)”54 and participated in the development of the WIPO Lex-Judgments database. It has also coordinated the establishment of the WIPO Arbitration and Mediation Shanghai Service,55 which has successfully administered mediation of more than 60 intellectual property disputes involving multinational enterprises and broadened the channels for participation in resolutions of international intellectual property disputes. Judges of the Supreme People’s Court have been invited to serve as members of the WIPO Advisory Board of Judges to promote the international exchange of intellectual property judicial protection experiences.
Promote information and intelligence-based intellectual property trials and enforcement. Chinese courts have made full use of smart-court development, accelerated the development of technology-based courts adapted to intellectual property trials and actively used modern technologies such as 5G, augmented reality and artificial intelligence to improve the quality and efficiency of trials. The Rules of Online Litigation of People’s Courts and the Provisions on the Trial of Cases by Internet Courts have also been formulated,56 and a unified judicial blockchain platform for courts nationwide to support parties in online data storage and verification has been established. The Beijing, Hangzhou and Guangzhou internet courts have been actively exploring new internet judicial models. They have handled a large number of intellectual property cases online and have effectively overcome the impact of COVID-19.