IP authority recognises it cannot rule over the right to sue
September 03, 2011 | BY
clpstaff &clp articles &Sipo now responsible for all recordation of patent licence contracts
With the release of new intellectual property (IP) recordation rules, the governing body on IP matters has conceded it has no jurisdiction over ruling on civil actions.
China's State Intellectual Property Office (Sipo) has promulgated the Measures for the Record Filing of Patent Licensing Contracts (国家知识产权局专利实施许可合同备案办法) (Measures), which will take effect on August 1. It replaces its predecessor that was issued in 2001. The new Measures set out procedures for registration authority, documentation requirements and the timeframe for the recordation of patent licences in China.
In contrast with Article 6 of the 2001 measures, the new regulation does not have a provision authorising a patent licensee to initiate a civil action and seek preliminary injunction orders or Sipo's mediation for a patent infringement dispute, said Dixon Zhang, a Beijing-based partner at Fangda Partners.
“The purpose of such a change is probably to avoid the inconsistency between the 2001 measures and the judicial interpretation concerning the injunction order that was issued by the Supreme People's Court in 2001,” said Zhang.
Other legal commentators say that the removal of Article 6 in the new measures could be interpreted as avoiding the divergence between the regulation and judicial interpretation, and becoming compliant with the legislative law. “Sipo, as a department of the State Council, cannot rule on the right to sue, and now it is aware of this and has deleted Article 6 from the new measures,” said Yao Di, a Shanghai-based IP associate at King & Wood.
Additionally, the 2011 Measures have removed the requirements of recording patent licensing contracts with Sipo as a precondition for carrying out procedures for either remitting royalty fees out of China or recording the patent with customs.
The removal of the requirements has intellectual property specialists wondering whether a patent licence contract recorded with Sipo will even be required in the future.
“If this is the case, the 2011 Measures will affect those companies that are involved in the import or export of patented technologies or seeking intellectual property protection with customs in China,” said Zhang.
Furthermore, Article 12 of the 2011 Measures provides more circumstances under which Sipo may dismiss an application for the recordation of a patent licensing contract. For example, an application may be dismissed if the patent is within the grace period for payment of an annuity fee.
In relation to a dismissal, commentators also note that there are ongoing disputes concerning the ownership of the patent, circumstances where the patent is subject to the preservation measures under a court order, or where the patent has been pledged and its licence is challenged by the pledgee.
Regarding patent disputes, Zhang further referred to the PRC Administration of Technology Import and Export Regulations (中华人民共和国技术进出口管理条例). Article 24 of these rules imposes a mandatory obligation on foreign licensors to warrant their rights to own or control the patents and to indemnify the Chinese licensees who are sued for patent infringement by a third party when they exploit the licensed patents.
“Therefore, how to deal with the mandatory obligation needs to be carefully considered when foreign patentees structure a patent licence scheme in China,” he said. JQ
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