China has both administrative and judicial routes for addressing patent and trademark infringement. The proposed changes discussed here place particular emphasis on the powers of administrative authorities.
SIPO began work on amending the Patent Law in November 2011 and released a draft fourth amendment for public comment on August 10, 2012. Its focus is stronger patent protection and enforcement. The principal proposals are as follows.
Principal proposed changes
(1) Give courts and administrative authorities powers to investigate and compel production of evidence, and penalise refusal to cooperate. At the patent holder’s request, a court would require the defendant to provide accused products, accounts, records and other relevant materials. The Civil Procedure Law already contains related provisions for courts, so the substantive change concerns the investigative powers of administrative authorities.
(2) Allow patent administrative authorities to award damages. This is intended to address the lack of enforceability of administrative mediation, protect patentees, reduce the burden of repeated litigation and avoid wasting administrative and judicial resources. However, the draft does not clearly state whether such damages decisions would be final, what procedure would apply, or whether judicial review would be required.
(3) Clarify the effective date of invalidation decisions and subsequent procedures to shorten the patent-enforcement process. A Patent Reexamination Board decision would take effect upon announcement, and courts and patent administrative authorities would handle infringement disputes promptly on that basis.
(4) Introduce punitive damages for wilful infringement, allowing courts and patent administrative authorities to award up to three times the amount of damages.
(5) Permit patent administrative authorities to investigate and stop infringement suspected of disrupting market order on their own initiative, and impose administrative penalties. The aim is to reduce enforcement costs and improve efficiency.
(6) Require the State Council’s patent administrative department to organise investigations into patent infringement with a significant nationwide impact.
Comments on the proposals
(1) The draft expands administrative powers to a level comparable to those of courts in hearing and determining patent disputes. For patentees, an administrative route combining patent grant and enforcement would add to the available means of protection. The evidence-related changes could be particularly positive if patentees could use evidence obtained in administrative proceedings to establish damages.
(2) In the author’s view, replacing the model of administrative decisions subject to judicial review with parallel administrative and judicial enforcement routes raises concerns under the TRIPS Agreement. It may also hinder an independent, fair and transparent patent legal system, the division of responsibility between granting rights and resolving disputes, final adjudication by the judiciary, and coherent enforcement procedures.
(3) Judicial experience indicates that patent litigation has increased modestly and steadily, unlike trademark and copyright disputes. China has a large number of granted patents, but their quality still needs improvement. Combining grant and dispute-resolution functions within administrative authorities may create a risk of undue intervention. A fair, transparent, equal and authoritative route for resolving disputes is particularly important.
Measures strengthening patent enforcement are positive, but changes affecting basic institutional arrangements, such as the allocation of powers between authorities, require careful and comprehensive consideration. The proposals are likely to generate substantial debate among academics, judges and lawyers, and consensus within the legislature may also be difficult. Without other factors changing the position, the author expects that these amendments will be difficult to advance smoothly.
