IP LAWS
What do amendments to Chinese patent laws mean for the life sciences?
Changes to China’s patent laws sees registration, review and litigation fall in line with established international IP systems, say Venable partners Keith Haddaway and Christopher Loh.
On June 1, 2021, the fourth amendment of the Chinese patent law went into effect. The amendment contains generally applicable provisions and makes specific changes to design patent law and Life Science-related patents.
Alongside this, the Chinese National Intellectual Property Administration (CNIPA) issued revised patentability guidelines in January 2021 directed to patent prosecution in the Life Sciences.
Fourth amendment – linkage system
The fourth amendment creates a linkage system for patent listing and pre-approval adjudication of patent claims, similar to the Hatch Waxman system in the US, and involving the National Medical Products Administration (NMPA) and CNIPA. The law also creates a patent information platform for marketed drugs, similar to the US Orange book, and introduces patent term extension for regulated drugs.
Marketing authorisation (MA) holders, typically the patent owner or licensee, can now list patents in the platform for chemical drugs including patents directed to the active ingredient, formulations containing the active, and medical uses.
The platform also allows for listing of patents related to biologics and traditional Chinese medicines. Listed patents can include the active ingredients and medical uses for biologics; and new formulations, methods of extraction, and medical uses for traditional medicines. The MA holder is responsible for authenticity, accuracy and completeness. While the law implies an ability to challenge listings, there is no particular mechanism in place for doing so.
Applicants for approval of generic chemical drugs (but not biologics and traditional medicines) must certify that:
- There is no relevant listed patent information.
- Any patent applicable to the drug has expired or been invalidated
- The product will not be marketed until the patent expires.
- Or the listed patent is invalid or not infringed.
If the applicant offers one of the first three certifications, NMPA will proceed with the drug approval process. If the applicant asserts invalidity or noninfringement, they must notify the MA holder, which then has 45 days to file a suit for adjudication of validity and a judgement of whether the drug is within the scope of the listed patent claims. This is a change from the initial implementing regulations which did not require notification, and thus placed the burden on MA holders to monitor posted NMPA notifications for new applications and take action within the 45-day period.
Adjudication to determine whether the product is within the scope of the listed patent claims can be filed in two different forums, as an administrative proceeding within CNIPA or a judicial proceeding before the Beijing Intellectual Property Court (BIPC). If the MA holder does not file for adjudication, the applicant can file suit. The prior filing of a judicial proceeding will bar a subsequent request for a CNIPA administrative action. However, any invalidity assertions are handled in a CNIPA administrative process.
”China continues to adopt patent laws that are more consistent with other countries to create more confidence in its IP system.”
Keith Haddaway
Christopher Loh
Upon filing for adjudication, regulatory approval is stayed for nine months. During the nine-month stay, NMPA will proceed with consideration for approval, but will withhold final approval. In principle, NMPA will consider the decision of an adjudicating body before approval, but if the adjudication is not complete, NMPA likely will issue the final approval after the nine months are up.
There is a twelve-month exclusivity period after the adjudication process for a first filer that successfully challenges the MA holder.
If the patents are successfully challenged, the applicant may assert that the MA holder abused its rights and seek damages for the delay in approval. Abuse of rights may be shown if the lawsuit is withdrawn without a justifiable reason or on a finding that not all claims are supported by the allegations.
An applicant may need to prove that the MA holder had some knowledge that the claims were not supportable, but if successful can seek compensation for losses due to the delay in approval and reasonable expenses incurred in the lawsuit.
Open questions and comparison to other jurisdictions
The nine-month stay in China is the same as in Korea, but significantly shorter than the 30-month stay in the US and 24-month stay in Canada. At least for Canada and Korea, the stay can be sufficient for litigation to be completed.
Right now, it is unclear whether pharmaceutical litigation can be completed in China within the nine-month timeframe. Because NMPA will proceed with final approval even with ongoing litigation, some uncertainty in the impact of the new system remains. MA holders should thus consider pursuing parallel administrative and judicial proceedings to maximise the chances of obtaining a decision within nine months.
The twelve-month exclusivity period is longer than the 180 days in the US and the nine-month exclusivity period in Korea. While Canada does not have an exclusivity period, a successful applicant may seek compensatory damages based upon delayed market entry.
Because there is no notification process and pre-approval adjudication for biologics and TCM listings, there is some question as to whether companies with approvals of these types of drugs will bother including them in the platform.
The Chinese patent linkage system specifies one forum for judicial proceedings—the BIPC— whereas US Hatch Waxman suits are not so restricted. In the US, questions may arise over whether a district court properly has jurisdiction or venue over a Hatch Waxman suit. Litigants in China will not have to deal with those questions, and having a single court determine claim scope for pharmaceutical patents may encourage greater uniformity of decisions.
Fourth amendment — other provisions
The fourth amendment provides two mechanisms for “patent term compensation”. First, patents granted after June 1, 2021 are eligible for compensation due to unnecessary delays in prosecution —defined as issuing four years after the filing date and three years after requesting examination. An application for compensation must be submitted within three months of patent issuance and it is unclear if applicant delays will be subtracted from patent office delays.
”The Chinese patent linkage system specifies one forum for judicial proceedings—the BIPC— whereas US Hatch Waxman suits are not so restricted.”
Secondly, patent term extension (PTE) is available for regulatory approval delays for chemical drugs, biologics and TCM approved after June 1, 2021, and must be applied for within three months of approval.
Only one patent can be extended for each drug, patents with multiple drugs are extendable for only one drug. Also, extended patents cannot be the subject of any prior PTE, and there must be more than six months left in the patent term. PTE is limited to five years and cannot extend beyond 14 years from the approval date.
Several other provisions of the fourth amendment may impact patent litigation more generally in China. Procedural requirements for injunctions have been relaxed, and pretrial injunctions to preserve evidence are also more widely available. The fourth amendment also allows courts to impose punitive damages up to five times actual damages.
There is now a burden-shifting provision for asserting damages. If a patentee presents evidence of damages from due diligence and the infringer refuses to disclose key evidence to refute the damages, the burden shifts to the infringer to show that the proposed damages are too high and demonstrate the actual damages.
Also, the cap for statutory damages, which can apply when actual damages are difficult to prove, has increased from about $155,000 to about $775,000.
Examination guidelines
The newly revised examination guidelines provide five important changes directed to:
- Claiming a composition per se
- Monoclonal antibody claim format
- Novelty considerations
- Inventiveness
- Use of post-filing data.
Cap for statutory damages (increased from approx. $155,000)
Under prior guidelines, claiming a composition “per se” required disclosure of multiple uses or property differences in the application as filed. The new guidelines require disclosure of only a single-use or property. A monoclonal antibody can now be identified by structural features in addition to being defined by the deposited hybridoma producing it.
Evidence that can be used to demonstrate novelty are also expanded. For example, a patent applicant can show that a cited prior art compound could not be obtained before the filing date. Also, where structural similarity is unclear, differences in physical and chemical properties and in synthetic methods can be used to distinguish the claimed compound.
The guidelines also change the evaluation of inventiveness from a “technical solution” approach to a “problem-solving” approach. Under these provisions, structurally similar compounds with different uses are generally considered inventive.
Examples demonstrate how to distinguish compounds with similar structures and uses by showing there is no indication in the prior art to modify the earlier compounds and obtain the advantage of the invention. Finally, the new guidelines allow for more liberal use of post-filing test data, thereby providing further ways to demonstrate inventiveness.
Conclusion
The fourth amendment seeks to encourage branded companies to obtain protection and approval while at the same time encouraging generic competition.
China continues to adopt patent laws more consistent with other countries to create more confidence in its IP system. While these efforts seem favourable to patent owners, the outcome will depend on how the implementing regulations and the judicial and regulatory process implement these changes.
Keith Haddaway is a partner at Venable. He can be contacted at: kghaddaway@venable.com
Christopher Loh is a partner at Venable. He can be contacted at: cloh@venable.com
Images, from top: Shutterstock / aslysun, Elena Elisseeva, Barbol
