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Compulsory Licensing of Patents Granted in China

2013.12.23

A year ago, on March 15, 2012, the State Intellectual Property Office (“SIPO”) published the Measures for Compulsory License for Patent Exploitation ([2012] No.64, “the Measures”). The Measures emphasize that under any of the following circumstances, SIPO may, upon the application of an eligible entity or individual, grant a compulsory license to exploit the patent for an invention or utility model:

  • The patentee, after three years since the date the patent right was granted and four years since the date the patent application was submitted, fails to exploit or to fully exploit its or his patent without any justifiable reason.
    A petitioner requesting such a compulsory license shall provide evidence to prove that such petitioner, under reasonable terms, has requested a license from the patentee for the exploitation of the patent, but failed to obtain such a license within a reasonable period of time.

  • The patentee’s act of exercising the patent rights is determined as a monopolizing act and such compulsory license is to eliminate or reduce the adverse consequences of the said act on competition.  
    A petitioner requesting such a compulsory license shall submit an effective judgment or decision of a judicial organ or anti-monopoly law enforcement institution that held the patentee’s exercise of the patent right constitutes a monopolizing act.  

  • Where a national emergency or any extraordinary state of affairs occurs, or where the public interest so requires, the patent administrative department of the State Council may grant a compulsory license.

  • For the purpose of public health, the patent administrative department of the State Council may grant a compulsory license for a patented medicine so as to produce and export it to the country or region which conforms to the provisions of the relevant international treaty to which the People’s Republic of China has acceded.  

    A petitioner requesting such a compulsory license shall provide evidence to prove that such petitioner, under reasonable terms, has sought a license from the patentee for the exploitation of the patent, but failed to obtain such a license within a reasonable period of time.

Compulsory licensing is not applicable to external design patent. The application and submission documents for compulsory licensing shall be presented in Chinese. Otherwise the request will not be accepted by SIPO. After accepting the request, SIPO will examine the reasons stated, the information provided and the relevant evidentiary documents submitted by the petitioner as well as the opinions stated by the patentee in response; where on-site verification is required, SIPO will assign two or more staff members to conduct an on-site verification.

Where a petitioner or patentee requests a hearing, SIPO will hold a hearing. The petitioner, the patentee and other interested parties shall be notified within seven days before such hearing. However, the hearing procedure shall not apply in circumstances where the patentee’s act of exercising the patent right is determined to constitute a monopolizing act or where a national emergency occurs.

Before making a decision on granting a compulsory license, SIPO will notify the petitioner and patentee of the decision to be made and the reasons for the decision. Unless specified otherwise, both parties may state their opinions within 15 days after receiving such notice. The decision shall specify the scope and term of the compulsory license granted.

The Measures also include special articles of request for royalty determination. To request a determination of the royalty for a compulsory license, the petitioner shall submit a written request and include the basic information of the petitioner and the respondent, as well as the document number of the decision on granting a compulsory license. The respondent shall make a statement of opinion within 15 days after receiving the request.

SIPO will make a decision on the royalty for a compulsory license within three months after receiving a written request. Any party who disagrees with such decision may file an application for administrative reconsideration or administrative lawsuit against such decision.

To the best of our knowledge, no compulsory license has been issued to date. The procedures are now well available for interested parties. Patentees who have obtained patent right in China are alerted of this procedure that might work its way to your desk on a busy day.