Filing patent licensing contracts

Documents to be submitted for the filing of licence contracts

According to the Old Measures, the following documents shall be submitted to the patent administrative authorities when filing the patent exploitation and licence contracts: 1) application form; 2) copy of the contract; 3) Patent Certificate or a copy of the Notice on Acceptance of the Application; 4) identity certificate of the transferor; and 5) other documents as required. Since the administrative authorities responsible for the filing of the contracts are in control of the status of the patent rights or patent applications, the New Measures have released the applicants from submitting the Patent Certificate or the Notice on Acceptance of the Application. In addition, in order to simplify the application documents, the New Measures have deleted the requirement that all application documents should be submitted in duplicates.

Circumstances where the contracts should not be recorded

The Old Measures prescribed five circumstances in which the contracts should not be recorded, while the New Measures have expanded such a scope to 11 circumstances, which are specifically provided in Article 12 of the New Measures.

In addition, the New Measures also provide that where a patent administrative authority decides that a patent licence contract should not be recorded, it should issue a Notice of Rejecting the Filing of Patent Exploitation Licence Contracts to the parties concerned. Also, proceedings for revocation after the filing are added.

Issues to be noticed by foreign patentees when filing patent licence contracts

Relationship with the filing of Technology Import and Export Contracts under the control of Ministry of Commerce

Patent exploitation licence contracts between foreign patentees and Chinese entities (including foreign-invested enterprises established in accordance with the PRC Law) or individuals that involve Chinese patents are a kind of technology import and export contract, and therefore should be filed both at the administrative authority of technology import and export as technology import and export contracts and at Sipo as patent exploitation licence contracts. In other words, a single contract of this kind should be filed at two administrative authorities. If the technology involved is free to import and export, the two filing procedures by themselves will not affect the validity of the contract. However, it should be noted that when the Chinese licensee pays royalties to the foreign patentee, certificates of the two filing procedures will be required for verification purposes when the designated foreign exchange bank conducts the foreign exchange payment – neither of them can be omitted.

In addition, the type, term, method for calculation and sum of royalties of a patent exploitation licence contract that has been filed at Sipo can be used as reference for the patent administrative authorities when they conduct mediation over the sum of compensation for infringement. In practice, when a court determines the sum of compensation in a patent infringement case, a patent exploitation licence contract that has been filed will have a higher probative value.

Time limit for the filing of contracts

The parties should conduct the filing within three months after the patent exploitation licence contract comes into effect. In case a contract is filed after the three month period comes into effect, the filing authority will not accept such a request for filing. In such a circumstance, if the parties still want to file the contract, they will need to sign a new patent exploitation licence contract or submit a declaration executed by both parties to affirm the validity of the original patent exploitation licence contract. In practice, although remedies are available after expiration of the time limit, it is more often that the parties sign a new contract to delay the effective date of the contract. However, this may be inconsistent with the original agreement between the parties and will probably cause disputes afterwards. Therefore, the parties should conduct the filing in a timely manner after the patent exploitation licence contract comes into effect.

Documents to be submitted by foreign patentees

When filing a contract, the foreign entity should submit the original copy of its certificate of incorporation and append a copy of Chinese translation thereto. If the certificate is a photocopy, notarisation and legalisation shall be required; said notarisation refers to that the foreign notary office certifies that the photocopy is consistent with the original copy; said legalisation refers to that the Chinese embassy in that foreign country certifies the authenticity of the signature and stamp on the notary document. As for other application documents, if some of them are written in foreign language(s), copies of a Chinese translation thereof will all be required. The Chinese translation can either be done by the entity on its own, or be translated by an engaged patent agency or translation company.

Foreign patentees should entrust an agency to conduct the filing of the contracts

As it is the same as the application procedure prescribed under the Patent Law, the New Measures require that any foreigners, foreign enterprises or other foreign organisations that have no habitual residence or places of business in China shall entrust lawfully established patent agencies to go through the relevant procedures for filing.

Frank Qian, Watson & Band Law Offices, Shanghai