The Standing Committee of the National People's Congress passed thedecision of 4^th amendment to the Patent Law on October 17^th,2020, which will take effect upon June 1, 2021. Please refer to the attachment for a complete table of the amended Chinese Patent Law in comparison with thecurrent version. We have also summarized the key points of thisamendment below for your kind review.

Improved system for protection of design patents:

-       the protection scope of design patents will beexpanded to include designs for the whole or part of a product (Article2, paragraph 4);

-       the terms for design patents will be extended fromten (10) years to fifteen (15) years (Article 42, paragraph 1);and

-       priority may be claimed from prior domestic design patent applications within six (6) months since the prior filingdate (Article 29, paragraph 2).

Newly added non-patentable subject matter:

-       "Substances obtained by means of nucleartransformation" has been amended to "methods of nucleustransformation and Substances obtained by means of nucleartransformation", indicating that both methods and products of nucleartransformation will be non-patentable subject matter (Article 25, paragraph 1).

New legal situation for not losing novelty:

-       “… … where it was first disclosed for thepurpose of public interest when a national emergency or any extraordinary stateof affairs occurs” (Article 24, paragraph 1).

Term compensation for invention patents andespecially for drug patents:

-       for unreasonable delays in the prosecution processof an invention patent, the patentee may request a term compensation forthe patent (Article 42, paragraph 2); and

-       for the time delay caused by the administrativeapproval of new drugs, a term of no more than five (5) years can berequested, where the total effective term of the patent since the approval ofthe new drug shall not exceed fourteen (14) years (Article 42, paragraph3).

Open licensing system of patents:

-       a patentee may voluntarily request the patentadministration department of the State Council to publish a withdrawable “open license statement” which may be accepted by any entity orindividual (Article 50);

-       the patentee may be granted a reduction or exemptionof patent annuities for the time being of patent open licensing (Article51, paragraph 2); and

-       open licensing is limited to non-exclusive licenses only (Article 51, paragraph 3).

Strengthenedenforcement against patent infringements:

-       the statute of limitations for patentinfringement and for disputes over requesting royalties for using a published,pre-grant invention patent application has been amended from two years to three(3) years, in consistency with the latest Civil Procedure Law (Article 74);

-       it has been clarified that thecompensation for patent infringement shall be calculated “according to theactual loss suffered by the right holder due to the infringement or theenrichment gained by the infringer due to the infringement”, which eliminatesthe debates about the priority of the calculation methods (Article 71,paragraph 1);

-       punitive damages may be determined for intentionalinfringements of serious circumstances at one to five times theamount of compensation determined in accordance with the law (Article 71,paragraph 1);

-       the statutory compensation for patentinfringement will be increased from 10,000 ~ 1,000,000 RMB to 30,000~5,000,000 RMB (Article 71, paragraph 2);

-       as for the burden of proof for determiningthe amount of compensation, the court may order the infringer to provideaccounting books and materials related to the infringement, where theinfringer, if failing to provide or provide false materials, may bear adverseconsequences as the court may then refer to the claims and evidences from theright holder to determine the amount of compensation (Article 71, paragraph 4);and

-       as for passing off patents, the upperlimit of administrative fines will be increased from four times to five times the illegal enrichment, or, if the illegal enrichment being zero or lessthan 50,000 RMB, from 200,000 RMB to 250,000 RMB (Article 68).

Patent linkage system for drugs:

-       during the marketing review and approval processof new drugs, the applicant of the marketing authorization, relevant patenteesor interested parties may request the patent administration department of theState Council or the court to confirm whether the drug falls within the scopeof patent protection, where the food and drug Administration may determinewhether to suspend the approval process based on the court’s decision (Article76, paragraphs 1 and 2); and

-       the food and drug administration and thepatent administration departments shall formulate specific measures forimplementing patent linkage of drugs (Article 76, paragraph 3).

Preventingpatent abuse:

-       patentees are required to apply for orenforce patent rights under the principle of good faith and must not abusetheir patent rights (Article 20, paragraph 1); and

monopolies constituted with the abuse of patent rights will be struckunder the Anti-Monopoly Law (Article 20, paragraph 2).