China passes Patent Law Amendments 2020 and introduces Drug Patent Linkage and Supplemental Protection Period systems

Earlier in July 2020, NPC had published the second draft of the Patent Law amendments (the "Second Draft of the Patent Law") for public opinion (see our previous article in July 2020 - China releases Latest Draft Amendments to Patent Law).

The Patent Law Amendments 2020 are broadly consistent with the Second Draft of the Patent Law and introduce Drug Patent Linkage and Supplemental Protection Periods, which had been raised in the "Opinions on Deepening the Reform of the Review and Approval System and Encouraging the Innovation of Drugs and Medical Devices" of the General Office of the CPC Central Committee and General Office of the State Council on 8 October 2017.

Patent Linkage

The provisions on Patent Linkage are contained in Article 76 of the Patent Law Amendments 2020 and are relatively high-level. Article 76 contains three parts and provides that:-

1. During the drug marketing authorization ("MA") review period, if there is patent dispute between the MA applicant and the patentee/interested party related to the drug, which is the subject matter of the MA application, the relevant party may file court proceedings, requesting a judgment on whether the drug falls within the patent protection scope. The National Medical Products Administration ("NMPA") may, within the prescribed time limit, decide whether or not to stay the MA approval based on the effective court judgment.
2. The MA applicant and the patentee/interested party may also request an administrative ruling on the patent dispute from the China National Intellectual Property Administration ("CNIPA").
3. NMPA and CNIPA will formulate the specific patent linkage measures and report to the State Council for approval for implementation.

Article 76 does not include any time limit for filing proceedings nor the term of any stay period (or moratorium) by the NMPA; such detail has been left to the NMPA and CNIPA to formulate.

On 11 September 2020, NMPA and CNIPA issued the draft "Implementing Measures for Drug Patent Dispute Early Resolution Mechanism (Trial for Implementation) (Draft for Public Opinions)" (the "Draft Patent Linkage Measures") for public consultation (see our article in September 2020 - NMPA and CNIPA issue Draft Patent Linkage Measures in China). The public consultation will end on 25 October 2020, and it is likely that there will be further revisions to the Draft Patent Linkage Measures.

Based on Article 76 of the Patent Law Amendments 2020:-

• An MA applicant could file a declaratory judgment of “non-infringement” before the court as "the patentee/interested party" (which appeared in the Second Draft of the Patent Law) has been changed to "the relevant party".
• The types of drugs for patent linkage system are not limited (however, in the Draft Patent Linkage Measures, there is a 9-month moratorium on the review of chemical drugs only; biologics and traditional Chinese medicines are not included).
• NMPA can only stay an MA approval on an effective court judgment; CNIPA rulings are not included.

This may, of course, change as more detailed provisions on the patent linkage system are expected to be published shortly. In addition, according to the Supreme Court's Judicial Interpretation Formulation Scheme 2020 issued in March 2020, the Supreme Court is also enacting the "Provisions on Several Issues Concerning the Application of Law in the Trial of Drug Patent Linkage Disputes", which will provide more guidance for the judicial practice.

Supplemental Protection Period

Supplemental Protection Periods ("SPP") for new drugs have now been introduced in Article 42 and CNIPA can, on the application of a patentee, grant an SPP for an invention patent of up to 5 years, provided that the total patent valid duration term after the new drug is approved for marketing shall not exceed 14 years.

However, the terms "new drug" and "relevant invention patents" have not been defined in Article 42. We expect the CNIPA to publish new Implementing Regulations or Guidelines, which will set out the criteria on how SPP applications will be examined, how they will be granted and the duration of the SPP.

Other Key Amendments

The Patent Law Amendments 2020 include other notable new provisions, although their introduction came as no surprise as they have been discussed for many years. The key amendments are:-

• A new six-month grace period of novelty for the first publication for the public interest during a national emergency/extraordinary situation (Article 24).
• Supplemental protection period for unreasonable delay during the examination of an invention patent (Article 42).
• Open license system introduced so a patentee can publish its willingness to license the patent for any person and also the license fee standard (Articles 50-52).
• Punitive damages of up to five times original damages against serious wilful infringements (Article 71).
• The cap of statutory damages has been increased to RMB 5million (Article 71).
• The burden of proof on damages now requires the infringer to provide the accounts and relevant information for the determination of the damages as required by the court (Article 71).
• Statute of limitation has been extended to three years, in line with Civil Codes of the PRC (Article 74).
• Optimization on the design protection: protection of partial design (Article 2), domestic priority for design (Article 29), and the extension for design patent duration to 15 years (Article 42).

It has been 12 years since the Patent Law was last amended in 2008 and these new amendments contain significant changes to the patent system in China. The introduction of a patent linkage system and SPP will change the landscape of the life sciences industry in China, although originators and generics will have to wait for the publication of the associated Measures and Judicial Interpretations, which will hopefully provide clarity on how the patent linkage system will be implemented. Bird & Bird will keep monitoring the status and provide further updates.