On December 23, 2018,the Patent Law Draft Amendment (the “Draft”) was submitted to the Seventh Session of the Standing Committee of the National People's Congress (NPC) fordeliberation. During the session, Shen Changyu, Director of the China National Intellectual Property Administration, made a statement on the Draft Amendment of the Patent Law of the People's Republic of China.

He specifically noted that strengthening IP protection and improving independent innovation capabilities had become an intrinsic demand to accelerate the transformation ofeconomic development mode and implementation of innovation-driven development strategies. The current China Patent Law, which has undergone three amendments since it first came into effect in 1985, has played an important role in encouraging innovation, protecting invention-creations, and promoting scientific and technological development and innovation. However, along with the development of economics and change of circumstances, there have been some new issues  and problems in the patent field. Therefore, in order to further implement the requirements of the Party Central Committee (CPC) and the State Council, and to solve the problems arising in practice, it has become necessary to amend the current patent law.

The Draft aims to strengthen protection of the legitimate rights and interests of patent holders, promote enforcement and utilization of patents, and set a number of empirical practices that provemature into legal norms:

1. In order to increase costs of law violationand fully demonstrate the deterrent effect of legal sanctions, the Draft proposes to significantly increase compensation awarded in patent infringement, stipulated as follows:

For intentional infringement of patent rights, in terms of severe violation of law, the amount of compensation may be determined in a range of one to five times the amount of losses suffered by the patentee, of the earnings gained by the infringers, or of the patent license fee; and if the amount of compensation is difficult to calculate, it shall be at the discretion of the court to determine the compensation in a statutory range from 100,000 CNY to 5,000,000 CNY, while such range in the current patent law is from 10,000 CNY to 1,000,00 CNY.

2. In order to overcome the difficulty of evidence submission and improve the provisions for burden of proof, the Draft proposes to add provisions as follows:

Under the circumstance that the right holder has made every effort to provide evidences but the ledgers and materials relevant to the infringement are substantively controlledby the infringer, the People's Court may order the infringer to provide relevant ledgers and materials in order to determine the amount of compensation. If the infringer refuses or provides false books or materials, the People's Court may determine the amount of compensation solely by reference to the claims and evidences from the patentee.

3. In order toprove administrative enforcement of patents, the Draft intends to stipulate as follows:

The patent administration department under the State Council may, at the request of the patentee or interested parties, handle patent infringement disputes which have significant, nationwide influences; the patent authorities may, at the request of the patentee or interested parties, handle multiple cases involving infringement of the same patent right within its administrative region in combined proceedings; and the patent administration department of a superior-level people’s government may handle cases of cross-regional infringement of the same patent right upon request.

4. As a response to increasing internet patent infringement and to clarify the joint liability of network service providers, the Draft intends to further stipulate as follows:

On the basis of effective judgment, ruling document, mediation document by the people's court,or a decision of order to stop infringement by the patent authorities, the patentee or interested parties may notify an internet service provider to take necessary measures such as deleting, blocking, and disconnecting the links ofan infringing product, wherein the provider shall bear joint liability if fail to take such measures in time.

5. In order to promote the enforcement and utilization of patents and clarify the right of employers to dispose of service invention-creations, the Draft proposes to add provisions as follows:

An employer may dispose of its right to submit a patent application a service invention-creation and the patent right thereof in accordance with the law; the inventors or designers shall be entitled to a reasonable share of the innovative profits by way of property rights incentives, such as equity, options, dividends and other means, topromote the enforcement and utilization of relevant invention-creations.

6. In order to strengthenservices for patent transformation, the Draft proposes to stipulate as follows:

The patent administration department under the State Council shall improve public service system of patent information, providing basic data on patent information and promoting the dissemination and use of patent information; the patent administration department under the State Council and patent managementauthorities of the local people's government shall, jointly with relevant departments, take measures to strengthen patent public services and promote the enforcement and utilization of patents.

7. The Draft proposes to newly establish a patent open licensing system, by stipulating as follows:

A patent may be announced to open patent licensing by the patent administration departmentunder the State Council upon a written declaration of the patentee, stating his willingness to license the patent to anyone and clarifying the payment method and standard of the license fee; and a patent license may be obtained by anyonethat is willing to implement the open-licensed patent by notifying the patenteein writing and paying the license fee in accordance with the manner and standard in the announcement.

In addition, in terms of improving the patent prosecution system, the Draft proposes to establish adomestic priority system for design patent applications, optimize the priority procedures, and extend the term of a design patent from ten years specified in the current Patent Law to fifteen years. The Draft also specifies the principle of honesty and credibility and the principle of prohibition of abuse of rights, newly establishes a compensation system for the patent term of innovative drug invention, and more.