What impact does the fourth amendment to the Patent Law have on the agrochemical industry?

1. The Necessity and Main Principles of the Fourth Amendment to China’s Patent Law

On October 17, 2020, the 22nd Meeting of the Standing Committee of the 13th National People’s Congress adopted the Decision of the Standing Committee of the National People’s Congress on Amending the Patent Law of the People’s Republic of China. President Xi Jinping signed Presidential Order No. 55 to promulgate the decision, and the amended Patent Law has been in force since June 1, 2021.

The current Patent Law of the People’s Republic of China has been in effect since 1985 and has since undergone three amendments in 1992, 2000, and 2008. To further improve the patent legal system, address existing practical issues, effectively safeguard the legitimate rights and interests of patent holders, bolster the confidence of innovation entities in patent protection, and fully unleash the innovative vitality of the entire society, the Patent Law was amended for the fourth time in 2020.

The main guiding principles of the fourth amendment to the Patent Law are as follows: First, adopt a problem‑oriented approach, grounded in China’s national conditions and the practical needs of innovation entities, to further safeguard the legitimate rights and interests of patent holders and strengthen penalties for patent infringement and other unlawful acts. Second, refine mechanisms and systems that incentivize invention and innovation, enhance services for patent commercialization, expand the dissemination of patent information, and promote the implementation and utilization of patents, while at the same time preventing the abuse of patent rights. Third, improve the patent‑granting system to make it more convenient for applicants and to create a favorable environment for domestic enterprises seeking to expand internationally.

2 Key Points of the Fourth Amendment to the Patent Law

The fourth amendment to the Patent Law adds seven new articles, revises 22 articles, and deletes one article, introducing significant changes in areas such as strengthening patent protection, promoting the utilization of patents, and improving the patent examination system.

2.1 Design Patent

The fourth amendment to the Patent Law introduced partial protection for industrial designs and a priority right, while extending the term of protection for industrial designs to fifteen years.

As industries develop, product design has become increasingly sophisticated. With the overall aesthetic of mature products becoming ever more difficult to innovate, partial‑designs have gradually emerged as a key vehicle for design innovation, and innovators’ demand for protection of such partial designs is growing stronger. Accordingly, in response to the needs of innovators, Article 2, Paragraph 4 of the amended Patent Law explicitly provides patent protection for “partial” designs of products.

This amendment to the Patent Law introduces a national priority system for design patents, providing applicants with an additional opportunity to refine their applications and clarify the scope of protection. For design patent applications filed on or after June 1, 2021, applicants may submit a written declaration to the National Intellectual Property Administration to claim national priority for their designs.

In addition, to implement the “delegation, regulation, and service” reform and further facilitate applicants, this amendment to the Patent Law has appropriately adjusted the provisions governing the time limit for submitting copies of priority documents. Under Article 30 of the amended Patent Law, an applicant seeking priority for an invention or utility model patent must submit a written declaration at the time of filing and, within sixteen months from the date of the first filing, provide a copy of the patent application documents filed initially.

Article 2, Paragraph 3 of the Patent Law (Amended): An industrial design refers to a new design that is aesthetically pleasing and suitable for industrial application, and which is made to the overall or partial shape, pattern, or their combination, as well as to the combination of color with shape and pattern.

Article 29, Paragraph 2 of the Patent Law (Amended): If, within twelve months from the date on which the applicant first filed a patent application for an invention or utility model in China, or within six months from the date on which the applicant first filed a patent application for a design in China, the applicant files another patent application with the patent administrative department of the State Council on the same subject matter, such applicant shall be entitled to priority.

Article 30, Paragraph 2 of the Patent Law (Amended): Where an applicant claims priority for a design patent, the applicant shall submit a written declaration at the time of filing and, within three months, furnish a copy of the documents of the first patent application filed.

Article 42, Paragraph 1 of the Patent Law (Amended): The term of an invention patent shall be twenty years, the term of a utility model patent shall be ten years, and the term of a design patent shall be fifteen years, all calculated from the date of application.

2.2 Novelty Grace Period

When a state of emergency or extraordinary circumstances arises—such as a major epidemic—certain inventions must be promptly put into practical use to safeguard the public interest. However, because such public disclosure does not fall within the pre‑amendment patent law’s exceptions to the loss of novelty, these inventions risk losing their patentability due to the loss of novelty. To meet the needs of responding to emergencies like epidemic prevention and control, to facilitate the timely application of such inventions in areas such as disease treatment, to address public health concerns, and to respond to innovators’ calls for relaxing the rules on exceptions to the loss of novelty, thereby better protecting inventions, Article 24 of the amended Patent Law has added a new exception to the loss of novelty: namely, first disclosure made for the purpose of serving the public interest during a state of emergency or other extraordinary circumstances.

Article 24 of the Patent Law (Amended): An invention or utility model for which a patent is sought shall not be deemed to have lost novelty if, within six months prior to the filing date, any of the following circumstances has occurred: (1) It was first disclosed for the purpose of public interest during a state of emergency or other extraordinary circumstances.

2.3 Patent Term Compensation

Article 42, paragraph 3, of the amended Patent Law provides that, to compensate for the time consumed by the review and approval process for new drugs entering the market, the National Intellectual Property Administration shall, upon request of the patent holder, grant a term‑of‑patent extension for invention patents related to new drugs that have obtained marketing authorization in China. The extension shall not exceed five years, and the total effective term of the patent after the new drug is approved for marketing shall not exceed fourteen years. As a complementary regulation to the Patent Law, the currently revised Implementing Rules of the Patent Law are refining the provisions governing the patent term‑extension system for pharmaceuticals, covering such matters as the scope of applicable drugs and patents, the method for calculating the extension period, the scope of protection during the extension period, and the conditions for granting the extension.

Article 42, paragraphs 2 and 3 of the Patent Law (Amended): Where an invention patent is granted four years after the filing date of the application and three years after the date on which a request for substantive examination was filed, the patent administrative department under the State Council shall, upon the request of the patentee, grant compensation for the unreasonable delay in the patent‑granting process; provided, however, that unreasonable delays attributable to the applicant shall be excluded.

To compensate for the time consumed by the review and approval process for new drug marketing, the patent administrative department of the State Council shall, upon request of the patent holder, grant a term‑of‑patent extension for invention patents related to new drugs that have obtained marketing authorization in China. The extension shall not exceed five years, and the total effective term of the patent after the new drug is approved for marketing shall not exceed fourteen years.

2.4 Open Licensing and Implementation

To promote the commercialization and utilization of patents and address issues such as information asymmetry between supply and demand in the patent market, this amendment to the Patent Law introduces an open‑license system. Article 50, Paragraph 1 of the amended Patent Law provides that if a patent holder voluntarily declares in writing to the National Intellectual Property Administration its willingness to license any entity or individual to practice the patent, specifying the methods and standards for royalty payments, the National Intellectual Property Administration shall publish such declaration, thereby establishing an open license. At the same time, any entity or individual wishing to implement an openly licensed patent may notify the patent holder in writing and, upon payment of the applicable fees, obtain the right to practice the patent.

(Added) Article 50 of the Patent Law: Where a patentee voluntarily declares in writing to the patent administrative department under the State Council that it is willing to license any entity or individual to practice its patent, and specifies the methods and standards for payment of the licensing fee, the patent administrative department under the State Council shall publish such declaration, thereby establishing an open licensing system. In the case of utility model or design patents, a patentability assessment report must be submitted when making an open‑licensing declaration.

If the patentee withdraws a declaration of open licensing, such withdrawal shall be submitted in writing and announced by the patent administrative department under the State Council. The withdrawal of an announced declaration of open licensing shall not affect the validity of any prior open licenses granted.

(Added) Article 51 of the Patent Law: Any entity or individual that wishes to practice a patent subject to an open license shall notify the patentee in writing and, upon payment of the license fee in accordance with the announced methods and standards for such payment, shall be deemed to have obtained a license to practice the patent.

During the period of implementation of open licensing, patent holders shall be granted corresponding reductions or exemptions from annual patent fees. A patent holder exercising open licensing may, after negotiating the license fee with the licensee, grant a non‑exclusive license; however, it may not grant an exclusive or sole license for that patent.

2.5 Employee Inventions

The system of official‑invention rights serves as the foundational framework for regulating the allocation of rights and interests between organizations and inventors, playing a crucial role in motivating both institutions and their R&D personnel to innovate and in facilitating the transfer and commercialization of inventive成果. To address the challenges faced by universities, research institutes, and other entities in the commercialization and application of patents, the revised Patent Law further clarifies that organizations may, in accordance with the law, dispose of rights related to official inventions, while emphasizing that the state encourages patent‑holding entities to implement property‑rights‑based incentives—such as equity, stock options, and profit‑sharing—to ensure that inventors and designers fairly share in the benefits of innovation.

Article 6 of the Patent Law (Amended): Inventions and creations made in the course of performing the tasks of the unit or primarily utilizing the unit’s material and technical resources shall be deemed official inventions and creations. The right to file a patent application for such official inventions and creations shall belong to the unit; upon approval of the application, the unit shall be the patentee. The unit may, in accordance with the law, dispose of its rights to file patent applications for official inventions and creations as well as the patent rights themselves, thereby promoting the implementation and utilization of the relevant inventions and creations.

Article 15, Paragraph 2 of the Patent Law (Amended): The State encourages entities granted patent rights to implement property‑rights incentives, adopting measures such as equity participation, stock options, and profit sharing, so that inventors or designers may reasonably share in the fruits of innovation.

2.6 Principle of Good Faith

The newly amended Patent Law stipulates that the National Intellectual Property Administration may, in accordance with the principle of good faith, examine patent applications during the preliminary examination, substantive examination, and review procedures. The principle of good faith is one of the most fundamental principles of China’s civil law; as early as Article 4 of the General Provisions of the Civil Law adopted in 1986, it was established that civil activities shall adhere to the principles of voluntariness, fairness, equivalent compensation, and good faith. Furthermore, Article 7 of the Civil Code, which came into effect on January 1, 2021, provides: “Civil subjects engaging in civil activities shall abide by the principle of good faith, act with honesty, and honor their commitments.” As an important civil right, patent rights—whether in the application process or in the exercise of such rights—must be exercised in compliance with the principle of good faith. Obtaining patent rights through plagiarism, falsification, or other improper means is prohibited, and patent holders must not abuse their patent rights in violation of this principle.

Article 20 of the Patent Law (newly added): Applications for patents and the exercise of patent rights shall be conducted in accordance with the principle of good faith. No one may abuse patent rights to harm the public interest or the legitimate rights and interests of others.

Abuse of patent rights that excludes or restricts competition and constitutes monopolistic conduct shall be handled in accordance with the Anti-Monopoly Law of the People’s Republic of China.

2.7 The System of Punitive Damages

China has long been a nation that upholds the principle of the Doctrine of the Mean, and in addressing intellectual property infringement, it has followed the “make‑whole” principle commonly adopted by civil law jurisdictions. Under the former Patent Law, judgments for infringement were limited to compensating the actual losses suffered, resulting in very modest damages awards. By contrast, countries with common law systems typically apply a punitive damages regime, refusing to allow infringers to profit from their unlawful conduct. In line with the guiding principle—“We must strengthen penalties for intellectual property infringements and ensure that infringers bear heavy consequences” (Xi Jinping)—China needs to establish a legal framework that ensures “strict protection” of intellectual property rights. To this end, the fourth amendment to the Patent Law has introduced a series of legislative measures.

First, a system of punitive damages has been introduced. Recent amendments to the Anti-Unfair Competition Law and the Trademark Law, among others, provide for punitive damages ranging from one to five times the amount of actual losses or profits in cases of intellectual property infringement. Against this backdrop, the revised Patent Law stipulates punitive damages of one to five times the amount for intentional patent infringement, significantly raising the cost of patent infringement and strengthening the level of compensation. Second, statutory damages have been increased. The revised Patent Law raises the statutory damage range for patent infringement from “more than RMB 10,000 but no more than RMB 1 million” to “more than RMB 30,000 but no more than RMB 5 million,” with both the upper and lower limits being raised. Third, evidentiary rules have been refined. The revised Patent Law further improves the evidentiary framework for determining the amount of damages. Fourth, the advantages of administrative protection have been further leveraged, with related provisions on administrative enforcement being enhanced.

Article 68 of the Patent Law (Amended): Anyone who commits patent infringement shall, in addition to bearing civil liability in accordance with the law, be ordered by the department responsible for patent enforcement to make corrections and have such order publicly announced; any illegal gains shall be confiscated, and a fine of up to five times the amount of such gains may be imposed. If there are no illegal gains, or if the illegal gains do not exceed RMB 50,000, a fine of up to RMB 250,000 may be imposed. Where the conduct constitutes a crime, criminal liability shall be pursued in accordance with the law.

Article 71 of the Patent Law (Amended): The amount of compensation for infringement of a patent right shall be determined based on the actual losses suffered by the right holder as a result of the infringement or the profits obtained by the infringer through the infringement. If the right holder’s losses or the infringer’s profits are difficult to ascertain, the compensation shall be reasonably determined by reference to a multiple of the patent licensing fee. For intentional infringement of a patent right that is particularly serious, the amount of compensation may be determined at an amount exceeding but not more than five times the amount calculated in accordance with the foregoing methods.

Where the rights holder’s losses, the infringer’s gains, and the patent licensing fees are all difficult to ascertain, the people’s court may, taking into account factors such as the type of patent right and the nature and circumstances of the infringement, award damages ranging from RMB 30,000 to RMB 5 million. The amount of compensation shall also include the reasonable expenses incurred by the rights holder in order to stop the infringing act.

To determine the amount of damages, where the rights holder has made every reasonable effort to produce evidence but the books and records relevant to the infringing act are primarily in the possession of the infringer, the people’s court may order the infringer to produce such books and records. If the infringer fails to produce them or submits false books and records, the people’s court may, by reference to the rights holder’s claims and the evidence it has submitted, determine the amount of damages.

3. The Impact of the Fourth Amendment to the Patent Law on the Agrochemical Industry

3.1 Institutionalizing Intellectual Property Law from a Strategic Perspective

Over the past four decades, China’s patent system has evolved from nonexistence to establishment and grown steadily in scale. In line with the requirements of the National Intellectual Property Outline, from 2021 to 2035, China aims to transform its patent system from being large in quantity to being strong in quality. The protection of patent rights has progressively advanced from a private right within the market economy to a national innovation strategy. With the state’s sustained investment in science and technology, the number of valid patents held by China should rank at an upper-middle level internationally.

Comprehensively strengthening intellectual property protection is a historic mission for national rejuvenation and the country’s rise; it is essential for high-quality development and the building of a modern economic system; it reflects the people’s aspirations for a better life; and, in the context of a complex international environment, it is also a prerequisite for new‑stage development. We must fully recognize that protecting intellectual property means protecting innovation. We should seize this window of opportunity to swiftly transition from a knowledge‑importing nation to a knowledge‑producing nation, shifting our focus from pursuing quantity to enhancing quality.

3.2 Enhancing the Quality of Patent Applications and Protection

A fair and impartial legal environment is the foundation for the sound development of the patent system. Article 1 of the Patent Law explicitly sets forth the legislative purpose: to encourage invention and innovation, promote the application of inventions and innovations, and enhance innovative capacity. Article 5 stipulates that patents shall not be granted for inventions or creations that violate laws, social morality, or harm the public interest. Abnormal patent‑filing practices in the patent‑application process not only contravene the legislative objectives of the Patent Law but also run counter to the fundamental principle of good faith enshrined in civil law.

To rigorously crack down on abnormal patent‑filing practices and promote the enhancement of patent quality at the source, the National Intellectual Property Administration has implemented a series of measures since 2007. In 2007, it issued Bureau Order No. 45, “Several Provisions on Regulating Patent Application Practices,” which set forth rules governing such practices and the corresponding enforcement measures. In 2017, this order was amended and replaced by Bureau Order No. 75, which expanded the criteria for identifying abnormal patent applications and strengthened enforcement actions. Pursuant to Order No. 75, from 2018 to 2020, the National Intellectual Property Administration conducted investigations and took corrective actions against abnormal patent‑filing activities, repeatedly alerting local authorities to leads concerning non‑innovation‑oriented, irregular patent applications. The recent amendment to the Patent Law has introduced the principle of good faith, providing a clear and direct legal basis at the statutory level for regulating patent‑filing conduct, thereby contributing to the improvement of patent quality.

3.3 Drawing on the Patent Protection Model in the Pharmaceutical Sector

In the fourth amendment to the Patent Law, the revisions concerning the pharmaceutical patent system represent a major highlight. These amendments primarily address two key aspects: first, the introduction of an early‑stage dispute‑resolution mechanism for pharmaceutical patents; and second, the establishment of a patent term‑extension regime for pharmaceuticals. To implement the early‑stage resolution mechanism, the National Medical Products Administration and the National Intellectual Property Administration have jointly issued the “Measures for the Implementation of the Early‑Stage Resolution Mechanism for Pharmaceutical Patent Disputes” (trial). Additionally, the National Intellectual Property Administration has promulgated the “Administrative Adjudication Measures for the Early‑Stage Resolution Mechanism for Pharmaceutical Patent Disputes.” These measures are expected to exert a significant impact on the innovative development of China’s pharmaceutical industry.

The research and development of agrochemical compounds and pharmaceutical compounds share commonalities; some multinational corporations simultaneously develop and market both pharmaceuticals and agrochemical products, and their intellectual property protection faces similar challenges. Enhancing the early‑stage dispute‑resolution mechanism for pharmaceutical patents holds significant implications for patent protection in the agrochemical industry.

Author: Zhao Lu

Source: China Pesticide Industry Association