Analysis on the Revisions of Implementing Regulations of Patent Law：To Strengthen Patent Service and Promote the Creation and Transformation of Patents

View: 116     Date: 2024-01-15 10:22

Authors: Huaiyuan XU, Na ZHANG

“The Outline for Construction the Strong Country with Intellectual Property (2021-2035)” pointed out to comprehensively improve the level of creation, application, protection, management and service of intellectual property, and construction the strong Country with intellectual property with efficient operation and convenient service, so as to provide a solid guarantee for building an innovative country and a great modern socialist country. In order to improve patent public service and promote the creation, transformation and application of patents, the revisions of the Implementing Regulations of the Patent Law (hereinafter referred to as “the Regulations”) added related requirements for public service capacity building, and made detailed provisions on the open license system.

1.      Capacity building for public service of intellectual property information

Rule 16, paragraph 2 of the Regulations stipulates that the patent administrative department under the State Council shall enhance the public service capacity of patent information, publish patent information in a complete, accurate, and timely manner, provide basic patent data, and promote the open sharing and interconnection of patent related data resources.

The search and utilization of patent information is the basic skill of intellectual property practitioners and an important part of their daily work. If patent information is not released in a complete, accurate and timely manner, enterprises may have to bear high costs in the search of patent information. At present, for patent application, office action, statement opinion of applicant, rejection decision, invalidation decision, etc., the search and query system of CNIPA either does not provide the channels for search and download, or the functions of search and download are not convenient. After the implementation of the Regulations, CNIPA will take various ways to improve the completeness, accuracy and timeliness of patent information release, which is conducive to reducing the workload and economic cost of patent data search.

In Rule 106 of the revised Regulations, the items recorded in the patent register are added, including decryption of national defense patents and confidential patents, compensation for patent term, and open license for patent implementation. Rule 107 of the Regulations further stipulates that compensation for patent term and open license for patent implementation shall be announced in the published patent Gazette. These provisions are conducive to the public searching and inquiring the status of patents, and are conducive to innovative entities accurately using patent information to carry out various kinds of analysis work.

2.      Detailed provisions of the open license system

In order to promote the transformation and application of patent rights, the Patent Law has introduced the open license system, that is, if the patentee declares in writing that he/she licenses any entity or individual to implement his/her patent with a clear license fee standard, after announced by CNIPA, and the potential implementer pay the license fee according to the conditions and notify the patentee, that is, a patent license contract is completed.

According to the provisions of Article 14 of the "Transitional Measures on the Implementation of the Revised Patent Law and its Implementing Regulations for the Business Handling in Examination ", the open license system is applicable to all the currently valid patent rights.

Rule 85 of the Regulations stipulates that the open license declaration shall specify the patent number, the name of the patentee, the method and standard of payment for the license fee, and the term of the patent license, etc. These matters are reflected in the template document of the Patent Open License Declaration issued by CNIPA on January 11, 2023. The payment method and standard of the license include: the combination of entry fee and royalty fee, in which the entry fee is   RMB, and the royalty fee is extracted by    % of the net sales amount of the contract product in the current year; In the form of a lump sum payment, all royalties    shall be paid in one lump sum within   days after the contract becomes effective; The method adopted installment within the total payment. The first batch of    RMB shall be paid within    days after the effective date of the contract, and then within    days before the end of each accounting month/quarter/year, the    batch shall be paid, and    RMB each batch, including the first payment, the total amount     RMB paid for    times; Or any other clearly reasonable method and standard of payment for the license fee.

Article 51, paragraph 2 of the Patent Law stipulates that during the period of implementation of the open license, the patent annual fee paid by the patentee shall be reduced or exempted accordingly. The industry still has different views on this, the first opinion is that the patentee declares the license conditions and the patent annual fee can be waived by CNIPA announcement, the second opinion is that in accordance with the provisions of Rule 87 of the Regulations through the open license to reach a patent license contract and recorded by CNIPA can be waived the patent annual fee. According to the method of system interpretation, combined with the provisions of Rule 88 of the Regulations, the understanding of the conditions for annual fee reduction should be the latter opinion. That is, only to make an open license declaration and announcement is not enough to reduce the annual fee, the licensee needs to pay the fee in accordance with the conditions of open license, reach a patent license contract and file with CNIPA to reduce the annual fee. Up to now, CNIPA has not released the specific operating measures for patent annual fee reduction. According to Rule 117 of the Regulations, the measures for the reduction of annual patent fees shall be determined by the Ministry of Finance, the National Development and Reform Commission together with CNIPA.

3.      Reward and remuneration system for inventors

The Patent Law, which came into effect on June 1, 2021, added a new clause for the reward and remuneration system for inventors: "The state encourage the entity to which a patent right is granted to implement property incentive measures, such as equity, options, and dividends, to enable inventors or creators to reasonably share innovation benefits"

The Regulations on the reward and remuneration system for inventors, is firstly, to adapt to the change in the Patent Law, adding the provision of property rights incentive; Secondly, the money prize standard is raised to no less than RMB4,000 for a patent for invention, and no less than RMB1,500 for a patent for utility model or design; Thirdly, specify that the remuneration standard for inventors shall be implemented in accordance with provisions of the “Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements”.

Article 45, paragraph 1 of the “Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements” stipulates that: Where the entities that have accomplished scientific and technological achievements have neither stipulated nor agreed with the scientific and technological personnel the methods and amounts of reward and remuneration, the personnel who have made important contributions to the completion or transformation of the scientific and technological achievements shall be rewarded and remunerable according to the following standards: (1) In the case of transferring or licensing the scientific and technological achievement to others, not less than 50 percent of the net income from the transfer of such scientific and technological achievement or the net income from the license achievement shall be taken; (2) Where the scientific and technological achievement is used for investment, not less than 50 percent of the shares or the proportion of capital contribution formed by the scientific and technological achievement; (3) Where the scientific and technological achievement in question is implemented on its own or in cooperation with others, no less than 5 percent of the operating profits from the implementation of the scientific and technological achievement shall be taken every year for three to five consecutive years after the transformation is successfully put into operation.

4.      Rule for exception of mandatory agency involving foreign countries

China's patent system adopts a foreign-related mandatory agency system for foreigners and foreign enterprises who are inconvenient to contact, and must entrust patent agencies to handle various patent affairs on behalf of them. Article 18, paragraph 1 of the Patent Law stipulates that any foreigner, foreign enterprise or other foreign organization that has no habitual residence or business office in China to apply for a patent or handle other patent matters in China shall entrust a patent agency established according to law to handle the matter.

In practice, with the development and progress of technology, for some affairs such as the payment of patent annual fees, patent agencies are not the only choices for providing best quality or the most efficient, and the handling of these affairs is a matter of fulfilling obligations for patent applicants, which does not involve the disposition or derogation of rights, and there is no need to submit a power of attorney to indicate their identity. Therefore, from the perspective to optimize the business environment as well as streamline administration and delegate power, the Regulations added the exception of mandatory agency involving foreign countries.

Rule 18 of the Regulations stipulates that: if a patent agency is entrusted to apply for patents and handle other patent affairs in China according to Article 18 (1) of the Patent Law, and the following matters are involved, the applicant or patentee may handle them on their own:

（1） For applications that claim priority, submitting a copy of the first patent application (hereinafter referred to as the prior application);

（2） Payment of fees;

（3） Other matters prescribed by the patent administration department under the State Council.