China Goes Strict with IP Infringement
The Standing Committee of the National People’s Congress in China introduced stricter punishment for IP infringement leading to up to maximum prison terms of seven to ten years, creating more significant criminal penalties. Concerning implanting gene-edited and cloned human embryos into humans and animals, the new Article 336(1) of the criminal law creates penalties for the same attempting to stop intellectual property theft.
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Such increased imprisonment penalties were welcomed by various IP owners to reduce IP theft. China has been seeing multiple thefts, counterfeiting, illegal gains in the past years. Such elevation of higher sentences will provide a deterrent effect to the infringer. Moreover, the Court will also exercise the relevant sentences that can be ordered in serious crimes.
Criminal Liability for Counterfeiting
For patents, China provides the provision of criminal liability for patent counterfeiting if an infringer does not infringes but pretends to do so. Article 216 of the Patent Law specifies that whoever counterfeits other people's patents, and when the circumstances are serious, is to be sentenced to not more than three years of fixed-term imprisonment, criminal detention, and may in addition or exclusively be sentenced to a fine.
The new law will make the implantation of the genetically edited or cloned human or animal embryo into the body of a human being or animal as a criminal offense where serious crimes will have prison terms of less than three years but for more serious crimes it will be three to seven years, including fine in both the case.
According to Article 27(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights, of which China is a member state, “members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.”
In China, Article 5(1) of the Patent Law similarly provides that the patent office may not grant a patent for an invention that is against the laws or social morality or is detrimental to the public interest. According to the Guidelines on Patent Examination published by the China National Intellectual Property Administration, a process for cloning human beings or a cloned human being, use of human embryos for industrial and commercial purposes, and process for modifying the genetic identity of animals which is likely to cause them suffering without any substantial medical benefit to human beings or animals, are contrary to social morality and shall not be granted patent rights
The recent introduction of Patent Term Extension in China
Bringing multiple amendments recently, China also introduced PTE which allows the extension of the 20-year term of the patent. This extension is done to compensate for the period being used for the process of market approval being undertaken for a patent. This period is generally used to check the efficacy of the pharmaceutical product thereby losing out a lot of period in the 20-year term. This PTE will be effective from June 2021.
Paragraph 3 of Article 42 of the Amended Patent Law says
- To compensate for the time taken for review and approval of a new drug for marketing, the CNIPA shall extend the term of the patent for an invention related to the new drug for which marketing approval is obtained in China, at the request of the patentee, and
- The patent term extension shall not exceed 5 years, and the resulting total effective patent term shall not exceed 14 years from the approval for marketing of the new drug.
The draft PTE rule explains the PTE and its applicability. It states that the PTE is available to the patents related to products and preparation methods or medical use of new drugs. The chemical drugs, biological products, and Chinese traditional medicine will also come under the purview of PTE. The draft explains "New drugs" as active ingredients of new drugs that are approved for marketing for the first time by the regulatory authority. Therefore those patents covering the active pharmaceutical ingredients approved for marketing for the first time in China will be eligible for PTE. (More detailed article on Patent Term Extension can be accessed here)