Glenn He of Ocean Tomo China shares a legal update focused on the 2020 Amendment to Chinese Patent Law, the formation of a new Chinese IP Court and trade secret guidelines.
On October 17, 2020, the Standing Committee of the National People’s Congress passed the 4th amendment to the Patent Law, which will become effective on June 1, 2021. The amendment is the first in 13 years. Highlights of the amendment include:
- An increase in punitive damages up to 5 times; statutory damages up to RMB 5 million (up from RMB 1 million).
- Extension of design patent protection term from 10 to 15 years. Partial design is now subject to design patents (changed from “whole product” requirement).
- Potential patent term extension due to prolonged examination. Pharmaceutical patents may be extended by up to 5 years, but no longer than 14 years after the new drug is available on the market.
- Damage calculation based on patent assignee’s actual loss, a change from the infringer’s profit.
- Newly introduced pledge of “Open License” commitment, which may result in a reduction to maintenance fees.
In addition to amendments to the Patent Law, a new Chinese IP Court was established in Hainan’s Free Trade Port, marking the 4th IP Court following Beijing, Shanghai, and Guangzhou.
In parallel, trade secret protection has been further detailed in a legal guideline in Unfair Competition Law, last updated in 2007. The guideline specifically defines “Technical Information” and “Client Information,” terms crucial to determining trade secret misappropriation. Further, the Amendments provide guidance to determine public information and business value information, along with a more up-to-date explanation of the due process for confidentiality protection.