Intellectual Property Enforcement in China - Part I: Patents
by See Wee Lee
It is important for startups and venture capital firms that are interested in expanding their business market into China to have a good overview of China’s intellectual property enforcement laws and regulations to ensure the protection of their intellectual property.
In last month’s article titled “Overview of China’s Intellectual Property Laws”, we explained how China mainly classifies intellectual property rights into three broad classes, including patent rights, trademark rights and copyrights. This article discusses patent enforcement in China. In the next two issues, we will discuss the enforcement of the other classes.
Part I: Patent Enforcement in China
Types of Patents in China:
There are three types of patents in China, and the following table shows their details and the scope of protection they provide.
Non-Registrable Patents in China:
In some cases, patents that have been successfully registered in the United States may not be able to be filed in China due to the country’s patent laws.
The following patents are not allowed to be registered in China, and if they are submitted for registration, an Office Action of rejection might be issued by the China Office.
No patent right shall be granted for any invention-creation that is contrary to the laws of the State or social morality or that is detrimental to public interest.
For Example:
Contrary to the laws: "A gambling device", "A drug paraphernalia", "A device for counterfeiting banknotes".
Violating social morality: "Cloning or methods of cloning human beings", "Methods of altering human germline genetic identity".
Detrimental to public interest: "A device to blind thieves".
For any of the following, no patent right shall be granted:
Scientific discoveries.
Rules and methods for mental activities.
Methods for the diagnosis or for the treatment of diseases.
Animal and plant varieties.
Substances obtained by means of nuclear transformation.
Protection of Patent Rights
Once your patents have been authorized and then registered, you will enjoy the following protection. The Chinese government may order the infringers to bear civil liabilities, in accordance with the law:
The infringers will be ordered by the department in charge of patent enforcement to make rectifications, and the department shall make the matter known to the public.
The infringers’ illegal earnings shall be confiscated and, in addition, a fine may be imposed of not more than five times his illegal earnings.
If there are no illegal earnings or the illegal earnings are less than RMB 50,000 Yuan, a fine of not more than RMB 250,000 Yuan may be imposed.
If the infringement constitutes a crime, he shall be investigated for his criminal responsibility in accordance with the law.
Amount of Damages
Below are guidelines for determining damages for patent infringement.
If it is difficult to determine the losses suffered by the right holder or the profits earned by the infringer, the amount shall be reasonably determined by reference to the multiple of the amount of the royalties for the patent license.
For intentional infringement of a patent right, if the circumstances are serious, the amount of compensation may be determined at not less than one time and not more than five times the amount determined in accordance with the above-mentioned method.
If it is difficult to determine the losses suffered by the right holder, the profits earned by the infringer and the royalties for the patent license, the people's court may determine the amount of compensation, which is not less than RMB 30,000 Yuan( c.a. USD 450K) and not more than RMB 5,000,000 Yuan ( c.a. USD 750K), in light of such factors as the type of the patent right, the nature and the circumstances of the infringing act.
The amount of compensation shall also include the reasonable expenses of the right holder paid for putting an end to the infringement.
If interested in protecting your intellectual property rights in China, please contact See Wee Lee.