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The PRC (China) Patent Law (Chapter 6) sets forth details regarding compulsory licensing of patents. To provide more clear and precise guidelines for handling cases involving compulsory patent licensing, on 15 March 2012, the State Intellectual Property Office (IPO) announced the Regulations Governing Compulsory Patent Licensing (hereinafter referred to as “Regulations”) via its Publication No. 64, which took effect as of 1 May 2012. The SIPO simultaneously announced that two previous and relevant regulations (i.e., the Regulations Governing Compulsory Patent Licensing” announced on 13 June 2003 via Publication No. 31 as well as the Regulations Governing Compulsory Patent Licensing as Related to Public Health Issues announced on 29 November 2005 via Publication No. 37) have been terminated. The major content of the “Regulations" includes the following:
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1.
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The SIPO is in charge of handling cases involving requests for compulsory patent licensing, requests for licensing fees for compulsory patent licensing, as well as requests for termination of compulsory patent licensing grants (Article 2).
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2.
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Where, without any proper reason, a granted patent has not been practiced or has not been properly practiced within 3 years from the date of patent grant and within 4 years from the date of patent filing, an enterprise or an individual, who is capable of practicing the said patent, may, pursuant to Article 48(1) of the Patent Law, file a request for compulsory licensing of the patent. Where the owner of a patent has been confirmed as having abused his/her patent right when enforcing the said patent right, for purpose of diminishing or reducing the adverse impacts caused to competition by the said act, an enterprise or an individual, who is capable of practicing the said patent, may, pursuant to Article 48(2) of the Patent Law, file a request for compulsory licensing of the patent (Article 5).
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3.
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Where there is an emergency or unusual situation for the state (country), of where there is a need for serving public interests, the concerned agencies of the State Council may, pursuant to Article 49 of the Patent Law, suggest the SIPO to issue compulsory patent licensing grant to the enterprise capable of practicing the patent, as designated by the State Council (Article 6).
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4.
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For public health purposes, an enterprise capable of practicing the said patent, may, pursuant to Article 50 of the Patent Law, file a request for compulsory licensing of the patent so that it may manufacture the pharmaceutical products concerned and export the same to the following countries or areas (Article 7):
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(1) |
the least developed countries; and
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(2) |
the developed countries and developing countries of World Trade Organization (WTO), who, in accordance with the relevant international treaties, have notified the WTO and expressed their willingness of becoming the imported counties and areas of the concerned pharmaceuticals.
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5.
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Where, as compared with an earlier granted patent, an invention or utility model covered by a later granted patent covers important improvement of technology with obvious economic significance, and where the practice of the later granted patent must reply on the practice of the earlier granted patent, the SIPO may, pursuant to Article 51 of the Patent Law, grant a compulsory licensing of the earlier grant patent. If such compulsory patent licensing is granted, the owner of the earlier granted patent may also apply for a compulsory licensing grant of the later granted patent (Article 8).
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6.
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Where a compulsory licensing grant is issued pursuant to Article 48(1) or Article 51 of the Patent Law, the petitioner applying for such grant must submit evidence proving that the petitioner has proposed reasonable terms to the patent owner for patent licensing but still failed to receive a licensing grant within a fair/reasonable time period. Where a compulsory licensing grant is issued pursuant to Article 48(2) of the Patent Law, the petitioner applying for such grant must submit the judgment or decision issued by the judicial agency or government agency in charge of anti-monopoly matters, confirming that the patent owner’s act of enforcing patent right has constituted monopoly (Article 11).
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7.
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Where the concerned agencies of the State Council makes a suggestion for issuing a compulsory patent licensing grant in accordance with Article 49 of the Patent Law, it shall specify the following (Article 12):
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(1) |
there is an emergency or unusual situation for the state (country), or there is a need for serving public interests, for which a compulsory patent licensing grant is needed; and
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(2) |
the title, patent number, filing date and the grant date of the specific patent for which compulsory licensing is suggested, as well as the name of the patent owner.
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(3) |
the duration of the compulsory licensing grant as suggested.
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(4) |
The name, address, post code of the enterprise capable of practicing the concerned patent, the name and phone number of the contact window of the said enterprise; and
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(5) |
Other information as needed
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8.
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Where a compulsory patent licensing is applied for pursuant to Article 50 of the Patent Law, the petitioner must provide the information regarding the importer, the information regarding the concerned pharmaceuticals, as well as the information concerning the compulsory licensing grant (Article 13).
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9.
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An application for compulsory patent licensing shall not be accepted and the petitioner shall be thus notified under any of the following conditions (Article 14):
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(1) |
where the patent number of the patent involved in the compulsory patent licensing is unclear or is difficult to be identified;
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(2) |
where the petition document(s) is (are) not prepared in Chinese language;
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(3) |
where it is obvious that there exists no reason for seeking a compulsory patent licensing grant; and
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(4) |
where the patent under compulsory licensing petition has become expired or has been declared invalid.
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10.
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After receiving a petition for compulsory patent licensing grant, the SIPO shall timely serve the patent owner with a copy of the petition. The patent owner must file a response within 15 days from the date of service, unless a different response deadline is specified. Even if a response is not timely filed, it shall not affect the decision to be issued by the SIPO (Article 16).
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11.
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The SIPO shall examine the reasons, information/documents and supporting evidence submitted by a petitioner of a compulsory licensing grant, as well as the response filed by the owner of the concerned patent. If on-site inspection is deemed necessary, the SIPO shall assign two or more staff members to conduct the on-site inspection (Article 17).
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12.
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Where a hearing is applied for by a petitioner of a compulsory licensing grant case or by a patent owner, the SIPO shall schedule the hearing. The SIPO should serve the petitioner, patent owner and other interested parties regarding the hearing 7 days prior to the hearing date. Unless there is any state secrecy, trade/commercial secret or personal secret concerned, the hearing shall be conducted in public. During the hearing, the petitioner, patent owner and other interested parties may present arguments and conduct cross examination. When conducting the hearing, the SIPO shall prepare produce a written hearing record, which will be given to attendees of the hearing for verification and signature. Where a compulsory patent licensing is petitioned in accordance with Article 49 or where a compulsory patent licensing is suggested in accordance with Article 50 of the Patent Law, the hearing procedure does not apply (Article 18).
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13.
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Where a petitioner withdraws its petition for compulsory patent licensing grant before the SIPO issues a decision on the said petition, the procedure of the said compulsory patent licensing petition shall terminate. Where, before the SIPO issues a decision on a compulsory patent licensing petition, the petitioner and the patentee have entered into a patent licensing agreement, the SIPO shall be timely notified of the above-mentioned fact and the petition for compulsory patent licensing must be withdrawn (Article 19).
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14.
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Where a request for compulsory patent licensing or the qualification of the petitioner filing such request is found in violation of the requirements, where the reason(s) for seeking compulsory patent licensing grant is not justified, or where the reason(s), information and evidence filed by the petitioner is insufficient or untrue, the SIPO shall issue a decision rejecting the petition. Before issuing a rejection decision, the SIPO shall notify the petitioner of the proposed rejection with reason(s). The petitioner may file a response within 15 days from the date of service, unless a different response deadline is specified (Article 20).
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15.
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Where the reason(s) in support of a petition for compulsory patent licensing is found justified, the SIPO shall issue a decision granting the compulsory patent licensing. Before issuing a decision granting compulsory patent licensing, the SIPO shall notify the petitioner and the patent owner of the proposed grant with reason(s). The petitioner and the patent owner may file a response within 15 days from the date of service, unless a different response deadline is specified (Article 20). Before issue a decision granting the compulsory patent licensing. Before issuing a decision granting compulsory patent licensing pursuant to Article 49 of the Patent Law, the SIPO shall notify the patent owner of the proposed grant with reason(s) (Article 21).
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16.
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Where a decision granting a petition for compulsory patent licensing is issued, the SIPO shall serve the petitioner and the patent owner with the decision within 5 days from the date of decision (Article 22).
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17.
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A request for determination of the licensing fee for compulsory patent licensing shall not be accepted and the SIPO shall notify the petitioner of the same under any of the following conditions (Article 26):
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(1) |
where a decision on the petition for compulsory licensing grant has not been issued;
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(2) |
Where the petitioner for licensing fee determination is not filed by the concerned patent owner or the petitioner for compulsory licensing;
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(3) |
where both parties have not yet started negotiation, or where both parties have reached an agreement.
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18.
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After receiving a petition from one party for a determination of the royalty fee under compulsory patent licensing" (hereinafter referred to as "compulsory licensing fee determination"), the SIPO shall timely serve the other party with a copy of the petition. The served party must file a response within 15 days from the date of service, unless a different response deadline is specified. Even if a response is not timely filed, it shall not affect the decision to be issued by the SIPO. During the procedure of handling the above-mentioned petition, both parties may submit written opinion. The SIPO may, as the case needed, receive oral opinion provided by both parties (Article 27).
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19.
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Where a petition for "compulsory licensing fee determination" is withdraw before the SIPO issues a decision, the procedure of such petition shall terminate (Article 28).
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20.
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With respect to a petition for "compulsory licensing fee determination", the SIPO shall issue a decision within 3 months from the date of receiving the petition (Article 29).
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21.
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A compulsory licensing grant shall terminate automatically under any of the following conditions (Article 31):
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(1) |
where the duration of the compulsory licensing grant has expired; and
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(2) |
where the patent under compulsory licensing grant has expired or has been declared invalid.
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22.
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Before the duration of the compulsory licensing grant has expired, if the reason warranting the compulsory licensing grant has become non-existing and will no longer exist, the patent owner may file a petition with the SIPO for terminating the compulsory licensing grant (Article 32). Where any of the application documents do not meet the requirements set forth in Article 32, the petitioner may, within 15 days from the date of notice, submit the qualified document(s). If the qualified document(s) is (are) not filed on time, the petition shall be deemed not being filed (Article 34).
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23.
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After receiving a petition for a "decision of terminating a compulsory licensing grant", the SIPO shall timely serve the party receiving the compulsory patent licensing grant with a copy of the petition. The served party must file a response within 15 days from the date of service, unless a different response deadline is specified. Even if a response is not timely filed, it shall not affect the decision to be issued by the SIPO (Article 35).
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24.
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With respect to a petition for "decision of terminating a compulsory licensing grant", the SIPO shall review the reason(s) submitted by the patent owner and the supporting documents filed thereby, as well as the response filed by the party receiving the compulsory patent licensing grant. If an on-site inspection is needed, the SIPO shall assign two or more staff members to conduct the on-site inspection (Article 36). Where a petition for "decision of terminating a compulsory licensing grant" is withdrawn before the SIPO issues a decision on the said petition, the procedure regarding the petition shall terminate (Article 37). If the petition as stated above is found not justified through examination, the SIPO shall issue a decision rejecting the petition. Before issuing a decision as stated above, the SIPO shall notify the patent owner of the proposed rejection with reason(s). The patent must file a response within 15 days from the date of service, unless a different response deadline is specified (Article 38).
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25.
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With respect to a petition for "decision of terminating a compulsory licensing grant", if the petition is found justified through examination, the SIPO shall issue a decision terminating the compulsory patent licensing. Before issuing a decision as stated above, the SIPO shall notify the party receiving the compulsory licensing grant of the proposed rejection with reason(s). The party receiving the compulsory licensing grant must file a response within 15 days from the date of service. After issuance of a decision terminating a compulsory licensing grant, the SIPO shall serve the patent owner and the party receiving the compulsory licensing grant the decision within 5 days from the date of decision (Article 39).
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26.
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All decisions granting compulsory patent licensing, decisions terminating compulsory patent licensing as well as automatic termination of compulsory patent licensing shall be recorded in the Patent Registry and published in the Patent Gazette (Article 40).
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27.
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Where a party to a compulsory patent licensing case is not satisfied with the decision issued by the SIPO, he/she may file a petition for administrative re-consideration or file an administrative suit to contest the matter (Article 41).
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There is no reported case involving compulsory patent licensing in China. However, industries still have concerned about the development of compulsory patent licensing practice in China as well as the impacts caused by such practice.
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