Who Can Be the Plaintiff for Bringing a Patent Infringement Lawsuit?
The patentee and relevant interested parties are entitled to initiate a patent infringement lawsuit. These interested parties encompass the patent licensee and the heir of the original patent holder.
Under PRC law, both the patentee and the exclusive licensee possess the independent right to file patent infringement lawsuits in court. The sole licensee is empowered to file a lawsuit jointly with the patentee or independently, provided it can furnish evidence that the patentee has expressly waived legal action or refrained from filing a lawsuit due to awareness of the infringement.
Furthermore, a non-exclusive licensee is authorised to file patent infringement lawsuits in its own name after obtaining explicit authorisation from the patentee. Notably, there is no mandatory requirement for the registration or recording of a licensee to bring legal action. The licensee can substantiate its rights towards the patent by providing the contract with the patentee.
In situations where the licensee can independently file the lawsuit, if the patentee does not consent to being a plaintiff, it shall not be joined as a defendant either.
Who Can File a Nullity/Revocation Action?
Any party or individual who contends that the granting of the patent right does not align with the applicable provisions may petition the relevant authority to declare the patent right invalid.
Defendants Involved in Life Sciences/Pharma Patent Infringement Cases
According to the PRC’s Patent Law, unauthorised entities or individuals are prohibited from manufacturing, using, selling, offering to sell or importing patented products or employing patented methods without the patentee’s permission for business purposes. This implies that suppliers, manufacturers, local distributors/wholesalers, pharmacists, doctors and hospitals could potentially face patent lawsuits as defendants. However, in practice, few pharmaceutical patentees sue doctors, hospitals or other health providers in China.
Notably, healthcare regulatory authorities (HRAs) and intellectual property offices (IPOs) also do not form part of infringement proceedings. However, if dissatisfied with an IPO’s decision on patent application or invalidation, a party can file an administrative lawsuit against such IPO, with the IPO listed as the defendant.
Preliminary Injunction Proceedings
Under PRC law, if a patentee or interested party possesses evidence demonstrating that another individual is currently infringing or is expected to infringe upon a patent, or is engaging or expected to engage in actions hindering the realisation of rights by the patentee or interested party, and such infringement could result in irreparable harm to the lawful rights and interests of the patentee or interested party if not promptly halted, the patentee or interested party has the option of seeking a preliminary injunction from the court. This injunction may include measures under the law such as:
Upon receipt of an application, the court, in urgent circumstances, is obliged to issue a ruling within 48 hours. If the court decides to grant the preliminary injunction, its execution is immediate.
During the examination of a preliminary injunction application, the court is mandated to take into account several factors, including:
Most preliminary injunctions are ordered based upon ex parte application. However, if needed, the court has discretion to hold an inter parte hearing over the application for preliminary injunction.
Requirements Before a Preliminary Injunction Request
The patentee or interested party can apply for a preliminary injunction only for granted patents. Patent applications or translations are not eligible as a legal basis for either infringement lawsuits or preliminary injunctions.
Quia timet relief is available in certain circumstances. The law sets forth the following that shall be considered as an “urgent situation”:
There are no specific procedural rules for patent litigation in life sciences cases. The same civil procedural rules apply to applications for preliminary injunctions in pharmaceutical patent cases.
How Is the Alleged Infringer Notified of a Preliminary Injunction Request?
Upon ruling to enact preservation measures or reject an application, the court is obligated to serve a ruling on both the applicant and the respondent. If delivering the ruling to the respondent might impact on the adoption of preservation measures, the court may serve the ruling on the respondent no later than five days after implementing said measures.
The court, relying on the applicant’s submission, may decide on granting a preliminary injunction, occasionally notifying the alleged infringer post-implementation of preservation measures and thereby limiting their chance to present evidence during the court review. Nevertheless, the alleged infringer retains the right to apply to the same court for the reconsideration of the preliminary injunction post-decision. In instances of preservation errors, a claim for damages is permissible.
Notably, Chinese law lacks a “protective letter” doctrine akin to that in Europe. However, as previously mentioned, the alleged infringer can seek reconsideration of the preliminary injunction ruling, affording them the opportunity to pursue compensation for any inaccuracies in the application process.
Infringement and Validity Proceedings
In China, patent infringement and validity proceedings follow a bifurcated structure. Patent infringement matters are adjudicated through litigation processes before the civil court, while patent invalidation procedures are submitted to the China National Intellectual Property Administration (CNIPA) via administrative channels.
In cases where the defendant requests to challenge the validity of a patent during the defence period in a dispute involving the infringement of an invention patent accepted by the court, or in a dispute concerning the infringement of a utility model or design patent that has been reviewed and upheld by the CNIPA, the court may proceed with the litigation without suspension. It is noteworthy that the patent invalidity examination typically takes approximately eight months, which is far less than the time period of a civil infringement lawsuit. Consequently, by the time the court renders a judgment, the CNIPA’s examination decision is usually already concluded.
In China, a nullity proceeding can only be filed against a patent after it has been granted by the CNIPA.
Proceedings Regarding the Infringement Case
The statutory timeframe for initiating legal action against patent infringement spans three years, commencing from the date when the patentee or interested party becomes aware or should have reasonably become aware of the infringement and the infringer.
In the course of an infringement proceeding, the court is responsible for serving the complaint to the alleged infringer. Within five days of docketing a case, the court is obliged to provide the defendant with a copy of the written complaint. The date affixed to the service acknowledgment by the recipient signifies the official date of service. Following receipt, the defendant must submit a written statement of defence within 15 days. For parties without domicile within the territory of the PRC, the court may employ special methods, such as service based on international treaties, diplomatic channels or other legally specified manners.
In practical terms, the initial judgment in the first instance typically takes between one year and one-and-a-half years for the court to deliver. Prior to the hearing, the court notifies the defendant to submit evidence; and in more intricate cases, the court may arrange a pre-hearing to facilitate the examination of evidence by the involved parties.
Proceedings Regarding Patent Invalidity
From the moment the CNIPA grants a patent right until its expiry, any entity or individual holds the right to petition for invalidation before the CNIPA. The CNIPA, upon receiving a written request for patent invalidation and accompanying documents, forwards these to the patent holder, prompting them to express their views within a stipulated timeframe. At the discretion of the involved party or as dictated by case requirements, the CNIPA may opt to conduct an oral hearing for the invalidation request. The final decision declaring the patent invalid is typically rendered approximately six to eight months within the filing of petition for invalidation.
The optimal time to initiate a primary infringement action is upon the granting of a patent, supported by preliminary evidence indicating the alleged infringer’s engagement in actions that violate the patent rights. This includes making, using, promising the sale of, selling or importing the patented product, or utilising the patented process. These activities should be conducted for production or business purposes.
In instances of patent infringement disputes related to utility model patents or design patents, the court or CNIPA may request the patentee or interested party to furnish a patent evaluation report generated by the patent administration. This report, derived from searching, analysing and evaluating the relevant utility model or design, serves as evidential support for the trial and resolution of the patent infringement dispute.
In light of the reversal of the burden of proof, in disputes involving a patent for the invention of a manufacturing process for a new product, the entity or individual manufacturing the identical product is obligated to furnish evidence demonstrating the distinctions in their manufacturing process from the patented one.
Pre-action discovery/disclosure is not available in China.
In a civil infringement lawsuit, a patent holder or concerned party has the option to petition the court for evidence preservation if there is a risk of evidence destruction or loss, or difficulty in obtaining it later. Once the petition for evidence preservation is granted, court judges, together with bailiffs, may search and seize infringing products or other related evidence at the defendant’s premises.
In cases involving suspected patent counterfeiting, when a patent holder initiates an administrative complaint for infringement, the administrative authority is empowered to decide on sealing or impounding products proven to bear a counterfeit patent based on evidence.
Only a declaratory judgment of non-infringement is available under Chinese law.
If a right-holder gives a warning of patent infringement to another person, and the person warned or an interested person reminds the right-holder in writing of exercising their right to sue and the right-holder neither withdraws the warning nor files a lawsuit within one month after receipt of the written reminder or within two months after the written reminder is sent, such person can then file a lawsuit to request a confirmation that their act does not infringe the patent.
In China, there is no legal concept equivalent to “Arrow Declaration”.
Equivalence infringement, or the doctrine of equivalents, was officially introduced into Chinese patent legislation in 2009, through the implementation of the Chinese Supreme Court’s judicial interpretation. The Chinese court has since developed a three-step method for determining equivalence infringement, which is conveniently referred to by the Chinese legal community as the “three (basically identical) plus one (obviousness)” approach.
The “three plus one” approach includes:
There is no obligation to “clear the way” ahead of a new product launch. However, when sued for patent infringement, FTO reports can be used to prove unintentional infringement to avoid punitive damages.
In China, it is not uncommon for experts to be involved in civil lawsuits, particularly in patent infringement cases, such as those involving life science patents. These experts fall into two categories: expert witnesses and expert assistants.
Expert witnesses are typically responsible for endorsing the appraisal report, attending court sessions and providing testimony.
Expert assistants actively contribute to the trial process, participating in entire court hearings, posing questions to the opposing party, and responding to queries from the judges.
Experiments are permissible for establishing or refuting infringement or validity in terms of life science patents. For instance, the court has the authority to carry out comparisons and experimentation directly within the court session for evidentiary purposes.
Discovery/disclosure is not available in China.
In patent infringement litigation, besides the non-infringement defence, common defences include:
The legitimate source defence does not assume liability for compensation.
Generally, patent infringement lawsuits will not be stayed due to patent invalidation procedures. However, the litigation period is generally longer than for administrative procedures. Therefore, administrative decisions can in fact also affect court rulings. For example, if an administrative decision declares a patent invalid, the court typically rejects the lawsuit.
Patents cannot be amended during litigation, though they can be amended during patent invalidation proceedings.
In pharmaceutical and life sciences cases, judges, rather than juries, preside over civil proceedings. Both preliminary injunctions and main actions in patent infringement disputes fall under the jurisdiction of the court in the location of infringement or the defendant’s domicile, allowing forum shopping. Differences between courts primarily arise from judges’ experience and case trial durations, though the legal foundation for court rulings remains consistent, resulting in no significant overall deviation.
According to Article 11 of the PRC’s Patent Law, unless otherwise specified, exploiting a patent without the patentee’s permission for production, business purposes, making, using, offering for sale, selling or importing patented products is prohibited. This applies to small-molecule pharmaceutical products as well.
In Chinese practices, a marketing authorisation application or grant is typically considered exempt from patent infringement as a pre-launch activity. However, actions such as reimbursement, pricing, listing applications or tender submissions may be deemed patent infringement.
Article 18 of the 2020 Amendment to Several Provisions of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Cases on Patent Disputes defines the offer to supply or sell as declaring the intention to sell through advertising, shop displays or exhibitions. Offering for sale without authorisation remains an independent act of patent infringement under the PRC’s Patent Law.
Further, an administrative punishment decision by the Shanghai Intellectual Property Office (Case No  2) illustrated that a disclaimer stating “Products under patent are not offered for sale until patent expiry in the relevant countries” could not justify an infringement of offering for sale under the PRC’s Patent Law.
Regarding infringement, current laws or regulations in China do not provide special consideration for second medical-use patents, skinny labelling, etc.
Regarding parallel imports, Article 75 (1) of the PRC’s Patent Law is usually interpreted as an exemption of patent infringement for parallel importation activities, regardless of country of origin.
Current Chinese laws lack specific provisions for data and market exclusivity related to orphan drugs, paediatric formulations, new indications or combinations. For generic chemical drugs, only the first applicant successfully challenging a listed patent and obtaining the first marketing approval receives a 12-month exclusivity period.
On 9 May 2022, the National Medical Products Administration of the PRC released a draft revision of the Implementation Regulations of the Drug Administration Law of the PRC for public comments. Notably, Article 28 proposes a 12-month market exclusivity for the first approved paediatric new variety, dosage form or specification, and for those with new indications, usage or dosage. Article 29 suggests a seven-year market exclusivity for new orphan drugs, contingent on the drug marketing authorisation holder’s commitment to ensuring drug supply. It is important to monitor the status of this draft for any formal approval updates.
Article 75(5) of the PRC’s Patent Law is often viewed as the country’s Bolar exemption, permitting the production, use or importation of patented drugs or medicinal equipment for the purpose of obtaining administrative approval or providing required information. It also excludes the production or importation of such items specifically for the applicant from patent infringement.
Similarly, Article 76 of the PRC’s Patent Law, after its fourth amendment, is considered the country’s Hatch-Waxman Act, as it establishes an early dispute resolution system for generic market entry.
The National Medical Products Administration (NMPA) and CNIPA jointly issued the Implementation Measures for the Early Settlement Mechanism of Drug Patent Disputes on 4 July 2021. According to Article 3, the China Patent Information Registration Platform for Marketed Drugs, akin to the Orange Book, is managed by the Centre for Drug Evaluation, NMPA.
On this platform, the drug marketing authorisation holder is obliged to disclose various information, including:
Generic drug applicants must notify the marketing authorisation holder via paper or email, with the declaration being publicly accessible on the platform (Article 6).
Given the absence of specific timing requirements in current regulations, regular monitoring of the Platform for Marketed Drugs is advised for drug marketing authorisation holders.
China’s Patent Linkage System
China’s patent linkage system for generic drugs is primarily governed by three legal frameworks:
As outlined in Article 5 of the Implementation Measures, pertinent patents for chemical drugs encompass:
Under Chinese law, a drug marketing authorisation holder must register essential information within 30 days of obtaining the drug registration certificate. This includes details such as:
The Platform for Marketed Drugs, managed by the Centre for Drug Evaluation, NMPA, makes this information publicly available.
Generic drug applicants must, upon submitting a marketing authorisation application, declare one of four options regarding listed patents. Within ten working days of application acceptance, the Centre for Drug Evaluation, NMPA publicly discloses the application details and corresponding declarations. Simultaneously, the generic drug applicant informs the marketing authorisation holder via paper and email.
In the case of objections to a Type (4) declaration, the patentee or interested party may file a lawsuit with the Beijing Intellectual Property Court or seek administrative adjudication with the CNIPA within 45 days of the Type (4) declaration being disclosed on the platform. If litigation or administrative adjudication is initiated, the Centre for Drug Evaluation, NMPA imposes a non-renewable nine-month stay period on the generic drug registration application (Article 8).
Marketing approval suspension for the generic drug occurs only if the court judgment or administrative adjudication decision determines that the application falls within the scope of protection of the listed patent. This suspension applies throughout the entire marketing approval process, whether within or beyond the nine-month stay period.
Lawsuits concerning biologics and biosimilar patents will follow the same procedural rules as indicated in 2.1 Infringing Acts.
The details discussed in 2.2 Regulatory Data and Market Exclusivity will not differ in relation to biologics and biosimilars, except that there will be no 12-month market exclusivity period for biosimilar applicants.
The details discussed in 2.3 Acceptable Pre-launch Preparations will not differ where the litigation concerns biologics or biosimilars.
The details discussed in 2.4 Publicly Available Drug and Patent Information will not differ where the litigation concerns biologics or biosimilars.
The details discussed in 2.5 Reimbursement and Pricing/Linkage Markets will not differ where the litigation concerns biologics or biosimilars, except that there will be no nine-month stay period for marketing approval in the scenario of litigation or administrative adjudication for applications of biosimilars.
In China, the availability of a patent term extension for pharmaceutical products is specifically governed by Article 42.3 of the Patent Law. This provision allows the patent administrative department of the State Council to grant an extension, not exceeding five years, upon the request of the patentee. The purpose is to compensate for the time required for the assessment and approval of a new drug’s marketing. The total effective term of the patent, after approval for marketing, must not exceed 14 years.
Invention patents related to new drugs include new drug product patents, preparation method patents and pharmaceutical use patents that meet specific requirements found in the Patent Examination Guidelines (2023). The application for the extension should be filed by the patentee; and if the patentee is inconsistent with the holder of the drug marketing authorisation, the written consent of the holder of the drug marketing authorisation should be obtained. For a patent to be granted the extension, it is also a prerequisite that it has not been granted an extension previously. According to the newly amended Detailed Rules for the Implementation of the Patent Law (2023) and the Patent Examination Guidelines (2023), for different products but the same patent, the applicant can only apply for extension for one drug product. For one product protected by a number of patents, the patentee can only apply for extension for one patent. Where the patent(s) belong(s) to multiple patentees, and no patent agency has been engaged, the application shall be handled by their representative.
Additionally, there is another patent term extension scheme provided in Article 42.2 of the Patent Law, which is available for all invention patents and mainly applies to circumstances where there is unreasonable delay in the patent grant procedure. According to this provision, patents eligible for extension include invention patents granted four years from the application filing date and three years from the date of filing the request for substantial examination. In such circumstance, the patent administrative department of the State Council shall, at the request of the patentee, provide patent term extension for unreasonable delay in the patenting process for the invention, except for unreasonable delay caused by the applicant.
There have been no special rules for paediatric extensions, though this can be included in the patent term extension scheme.
Firstly, the PRC’s Civil Procedure Law mandates that a plaintiff is required to post a bond when applying for a preliminary injunction. The bond serves the purpose of compensating the adversely affected party if the preliminary injunction is erroneously granted and enforced. In practice, plaintiffs often secure an insurance policy instead of the bond, with assistance from an insurance company.
Preliminary injunctions become enforceable upon issuance of decisions. The courts follow the same procedural steps for serving preliminary injunction orders as they do for civil complaints.
Enforcing preliminary injunctions mirrors the process of enforcing judgments in China. Non-compliance by the affected party prompts the court to enforce it compulsorily.
The primary procedures for preliminary injunctions encompass:
Generally, a court should render a decision within 48 hours of the application. Enforcement follows immediately, and if the applicant does not initiate litigation or arbitration within 30 days, the court may terminate the injunction.
As previously noted, the patentee must furnish a bond for a preliminary injunction, with the court determining the amount at its discretion. The patentee is obligated to file litigation or arbitration within 30 days of enforcement, and no further actions are required to enforce or sustain the injunction. However, the injunction typically remains in force only until the judgment or awarding of the litigation or arbitration takes effect.
Lastly, there is no provision for staying a preliminary injunction pending appeal in China.
In China, a prevailing plaintiff receives a final judgment that includes a final injunction directing the defendant to cease and desist from any infringement. Final judgments are served using the same procedural steps as civil complaints, typically through mail to representative lawyers.
If the infringer fails to comply with the judgment’s obligations, the enforcement procedure involves initiating enforcement, either by the patentee or the court, within six months of receiving the application. The completion of enforcement does not have a specific time limit. The application for enforcement can be made within two years from the last day of the designated period for performing the obligation in the judgment.
Unlike preliminary injunctions, the patentee is not required to provide a bond or prepay enforcement fees before initiating enforcement proceedings for a final judgment in China.
In very rare circumstances, such as when the underlying judgment is under retrial, the enforcement proceeding may be stayed.
A Chinese court does have the discretion to award damages instead of an injunction. According to the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law to the Review of Intellectual Property Dispute Preservation Cases, the court considers factors such as proportionality and/or public interest when deciding on an injunction. This principle holds true in life sciences and pharmaceutical patent litigation cases.
Additionally, the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Disputes stipulates that, considering national and public interests, the court may order the defendant not to cease the alleged infringement but rather to pay appropriate, reasonable fees.
In China, methods of calculating damages include:
The methods are electable by the plaintiff.
The right-holder’s actual loss is typically calculated by the decreased sales profit due to the infringement, and the infringer’s benefits are typically calculated by the sales profit of the infringing products (such as the sales volume multiplying the profit per product).
Reasonable royalty is typically calculated by precedent licence contracts between the right-holder and third parties. Discretionary damages are calculated based on the type of the patent and the nature and circumstances of the infringement.
As for transfer pricing, there are no specific rules on its impact on assessment of damages, but it may be considered as a factor for lifting/reducing the damages.
It is hard to say what a typical award of damages is in the pharma/biopharma/medical device industry, as each case involves its own facts. That said, the PRC’s Patent Law provides punitive damages in cases where the infringement is wilful and serious. In such circumstances, the damages may be determined at not less than one and not more than five times the amount calculated by the right-holder’s actual loss, the infringer’s benefits or the reasonable royalty.
Generally, damages accrue when the infringement starts. However, if the right-holder brings a suit after three years from the infringement and the infringer is known, and if the infringement continues and the patent is still valid at the time of filing the litigation, the damages shall be calculated three years in advance from the date of filing the litigation. The law does not specifically provide for whether interest is payable, though there are rare cases where interest is awarded, especially when the court adopted a discretionary amount of damages.
Usually, damages are awarded together with technical trials in the final judgment. However, it is possible for a quantum hearing to be held separately if the court deems necessary. Interim awards are also possible, though not very common.
As indicated in 5.1 Preliminary Injunctive Relief, in cases where the preliminary injunction is wrongfully granted and enforced, the applicant should pay damages to the respondent. Specific considerations include:
Such claims are relatively rare and not frequently raised. It is hard to say whether such claims are easily settled.
Only a plaintiff to a lawsuit may claim for damages. Third parties are not entitled to claim for damages in a civil lawsuit.
According to Article 71 of the PRC’s Patent Law, the prevailing plaintiff in a patent infringement litigation is entitled to recover reasonable legal expenses, covering:
It is essential to note that these legal costs are not automatically granted – the plaintiff must formally request recovery, specifying the amount and providing supporting documents such as invoices.
In the case of a favourable judgment for the plaintiff, where the defendant is held responsible for patent infringement, the court will order compensation for the plaintiff’s justifiable legal costs. Interim payment orders are rarely issued in Chinese litigation, making this practice uncommon.
The court has discretionary authority to award legal costs either in full or in part, considering the reasonableness of the amount claimed and the adequacy of supporting evidence. Distinct from legal costs, court fees in Chinese litigation are the plaintiff’s responsibility and must be paid upfront. These fees are later apportioned between the parties based on the level of support for the plaintiff’s claims, as determined in the court judgment (refer to Chapter V on the Bearing of Litigation Costs in the Measures on the Payment of Litigation Costs).
Like many other jurisdictions, there is prescription of action in Chinese civil litigation. For patent infringement cases, generally speaking, the prescriptive period is three years commencing from the date when the claimant/plaintiff knows or should have known of the infringement and the infringer (refer to Article 74 of the PRC’s Patent Law). Therefore, the claimant’s/plaintiff’s delay in bringing proceedings may induce reduction or even withholding of monetary relief.
However, as Chinese laws do not require that the claimant/plaintiff engage in pre-action correspondence before initiating actions, the court will not withhold or reduce relief if the claimant/plaintiff directly files civil actions with the court. Also, since there is no mandatory requirement for the registration or recording of a licensee to bring legal action, there is no penalisation on relief to exclusive licensee claimants not named on the Patent Register.
Quite a few trade mark disputes occur in the life sciences and pharma sector in China, whether between local practices or between local and foreign entities.
The main source of law concerning trade mark disputes in the life sciences and pharma sector is the PRC’s Trade Mark Law, while the PRC’s Unfair Competition Law also regulates passing off or free-riding activities relating to unregistered marks.
Given the above, restrictions on naming, issues around confusion and anti-counterfeiting for pharma/medical device marks will follow the general rules under the PRC’s Trade Mark Law and the PRC’s Unfair Competition Law.
For restrictions on naming, based on the general principle that a generic name may not be registered as a trade mark, Article 29 of the PRC’s Medicinal Product Administration Law further clarifies that the names of medicinal products listed in the national medicinal product standards shall be the generic names of medicinal products and should not be used as trade marks.
Copyright disputes do occur in the life sciences and pharma sector in China.
Product labels, instructions for use, research articles or reports, software programs and other objects in the life sciences and pharma sector originally created may be protected as works under the PRC’s Copyright Law, while the protection scope is limited to the expressions and will not extend to any idea, procedure, function, process, method of operation, concept or discovery.
The main sources of law include:
Trade secrets disputes are common in the life sciences and pharma sector in China.
Common issues with respect to trade secrets disputes include, without limitation:
Moreover, as the infringer’s disclosure activities may cause the trade secret to become open to the public and to no longer be protectable, it is not uncommon for the plaintiff to seek interim injunction from the court.
The main sources of law include:
Appeal Regarding Preliminary Injunction
In China, the party affected by the preliminary injunction can apply to the same court that issued the injunction for reconsideration. The court is obligated to render a reconsideration decision within ten days of receiving a petition for reconsideration. Throughout the reconsideration, the preliminary injunction order maintains its full force and effect.
Appeals Regarding Patent Infringement Cases
According to the PRC’s Civil Procedure Law, a party can appeal a first-instance judgment within 15 days of receiving the written judgment. If a party resides outside the PRC, it can file an appeal against a judgment or ruling of a first-instance court within 30 days of receiving the written judgment or ruling.
During the appeal process, the second-instance court typically conducts a hearing session to hear the case. If, after reviewing the case files, conducting investigations and questioning the involved parties, no new facts, evidence or reasons are presented, the court may deem holding a hearing session unnecessary. The second-instance court is required to complete the trial of an appeal case within three months after it is docketed. Any extension of this period due to special circumstances requires approval from the court president. In the second instance, the court primarily assesses whether there were errors in factual determination or legal application during the first-instance court’s trial. Practically, the second instance of a patent infringement lawsuit usually takes between nine months and one year.
Appeals Regarding Patent Validity Cases
If any party disagrees with the CNIPA’s decision on patent invalidation or maintenance, they have a three-month window from the date of receiving the notification to file a lawsuit in court requesting a judicial review. During the legal proceedings, the court notifies the opposing party from the invalidation request procedures to participate in the litigation as a third party. The judicial review is a two-instance administrative lawsuit, which may take between one year and one-and-a-half years in total.
Release of the Preliminary Injunction
In China, a preliminary injunction is tied to a specific lawsuit. Therefore, once a patent is declared invalid, as per PRC laws and regulations, the patentee is required to withdraw the lawsuit. If not, the court will dismiss the lawsuit, rendering the underlying lawsuit non-existent. In such cases, the preliminary injunction becomes invalid, and the court issues an order to lift the previous preliminary injunction. Simultaneously, the defendant retains the right to apply for the release of the preliminary injunction. The court will assess the application and make a ruling accordingly.
The Panel of Judges for Patent Litigation Appeals
In China, the Supreme Court hears the vast majority of second-instance patent infringement cases. That said, according to the latest regulations, appellate cases for utility model patents and design patents shall be heard by the provincial Higher People’s Court rather than the Supreme Court.
A collegial panel encompassing entirely judges shall be formed to adjudicate a second-instance infringement lawsuit. The members of a collegial bench must be in an odd number. In some patent cases, as in first-instance proceedings, a “technical judge” will be present during the hearing besides the collegial panel.
In patent litigation, the general provisions of the PRC’s Civil Procedure Law are applicable. Additionally, there are certain specific provisions in IP litigation, such as:
In the context of life sciences and pharma IP litigation, additional forums or avenues for dispute resolution involve:
When dealing with life sciences and pharma IP infringement on internet platforms, the right-owner has the option to file complaints or reports with the platforms selling the infringing or counterfeit products. They may also choose to submit administrative complaints to competent IP administrations in lieu of pursuing civil litigation. In China, customs detention serves as an administrative measure for combating infringement and counterfeiting during the importation and exportation processes. The PRC’s Regulation on the Customs Protection of Intellectual Property Rights is specifically designed to facilitate customs protection of IP rights.
Alternative dispute resolution (ADR) options for life sciences disputes in China encompass arbitration, administrative determination and mediation.
Arbitration is chosen pre-emptively for its advantages in confidentiality, procedural flexibility and the selection of arbitrators with relevant expertise. Although traditionally a common ADR option, its adoption in life sciences disputes, particularly in infringement cases, is less frequent compared to litigation.
Administrative determination, outlined in the PRC’s Patent Law, serves as an alternative for patent disputes related to drug registration and is known as the “early resolution mechanism”. Recognised for its efficiency, it is increasingly utilised in life sciences disputes, nearly as frequently as litigation. In 2021, the NMPA and the CNIPA released the Implementation Measures for the Mechanism for Early Resolution of Drug Patent Disputes, for better implementation of administrative determination in drug application disputes.
Mediation can be employed concurrently with litigation, arbitration and administrative determination to achieve amicable resolution. As it can be integrated into other ADR options when parties intend to settle cases amicably, mediation is widely utilised.
In Chinese civil litigation, as in many other jurisdictions, a prescription of action exists. For patent infringement cases, the prescriptive period is generally three years from the date when the claimant/plaintiff becomes aware or should have known about the infringement and the infringer (see Article 74 of the PRC’s Patent Law). Consequently, any delay by the claimant/plaintiff in initiating proceedings may lead to a reduction or even withholding of monetary relief.
Notably, Chinese laws do not mandate that the claimant/plaintiff engage in pre-action correspondence before initiating legal actions. Therefore, the court will not withhold or reduce relief if the claimant/plaintiff opts to directly file civil actions. Furthermore, since there is no requirement for the registration or recording of a licensee to bring legal action, there is no penalisation on relief for an exclusive licensee claimant not named on the Patent Register.
Intellectual Property Litigation Development and Trends in China’s Life Sciences and Pharmaceuticals Industry
China’s dynamic life sciences and pharmaceuticals sector is undergoing a profound transformation, particularly in pharmaceuticals and medical devices, driven by societal progress and economic growth. Within this innovation-driven industry, there is a noticeable surge in intellectual property (IP) litigation, particularly in patents and trade secrets, mirroring the escalating competitiveness and intricacies of the market.
This article aims to provide a brief overview and analysis of the IP litigation landscape and trends within China’s life sciences and pharmaceuticals industry, exploring legislative changes, regulatory amendments, judicial system advancements and landmark cases. These factors play a pivotal role in shaping the development of IP protection in this vibrant industry. Each section below will explore critical aspects that relate to or impact on IP litigation in this industry, and will offer insights on key issues that bring wide attention and concern in this sector in China.
A Glance at the Development of the Life Sciences and Pharmaceuticals Industry
China’s life sciences and pharmaceuticals industry is on an upward trajectory, propelled by strong research and development capabilities and a fast-growing patient population. Some recent statistics underscore this growth:
As the industry thrives following technology development and societal needs, competition intensifies, prompting a proportional rise in IP litigation. In particular, in light of the improving IP protection environment, IP litigation will rise in amount and complexity. This escalation reflects the intricate nature of the industry and the competitive forces at play.
IP Litigation Statistics in China
A close examination of IP litigation statistics in China reveals a compelling narrative. The White Paper on China’s IP Protection (the “White Paper”) reported a compound annual growth rate of 23.25% for first-instance patent infringement civil cases, reaching a staggering 38,970 cases in 2022. Furthermore, the Annual Report of the IP Tribunal of the Supreme People’s Court in 2022 disclosed that a significant 70.86% of cases involving strategic emerging industries pertained to the pharmaceuticals sector.
Trade secret misappropriation, notably caused by employee departures, takes centre stage, constituting over 80% of all trade secret disputes. This severe issue demands more attention from healthcare companies operating in China than ever before.
The White Paper indicates that the volume of trade mark-related first-instance cases demonstrates a surprising 9.82% decline in 2022 compared to 2021. This might echo the recent trade mark law amendments on trade mark protection that significantly benefits brand owners. However, the authors would like to point out that trade mark-related first-instance cases still account for 58.31% of all IP cases received in 2022, which reflects this remaining a significant IP litigation field.
Legislation and Regulatory Developments
The IP landscape in the life sciences and pharmaceuticals sector is evolving, influenced by legislative and regulatory changes. Several noteworthy developments include the following.
Revisions to the Implementing Regulations of the Chinese Patent Law
Patent linkage and patent term extension, among other amendments to the Chinese Patent Law, have significant impact on the life sciences and pharmaceuticals industry. The amendments to the Implementing Regulations of the Chinese Patent Law consolidate learning from the practice of patent litigation and provide detailed guidelines regarding patent term extension, which are effective from 20 January 2024.
Patent linkage promotes the resolution of patent disputes between brand and generic drug owners at the drug registration stage (the highlights and issues of this practice are addressed in a later section).
Patent term extension provides up to five years’ extension to compensate for the time taken to evaluate and obtain marketing approval of novel drugs. Considering the notable time gap between the Patent Law Amendment and the later-issued Implementing Regulations, disputes around the patent term extension might arise, particularly for patents meant to have expired during the gap period.
Changes to jurisdiction of IP litigation
Following the initial establishment of a centralised IP judicial system in China, with 27 IP tribunals and four IP courts located across the country and with one appellate court (ie, the IP Tribunal of the Supreme People’s Court of China (the “SPC IP Tribunal”)) for technology-related cases, the SPC recently released a judicial interpretation effective from 1 November 2023 to adjust the jurisdiction within the judicial branch over technology-related disputes. Some key adjustments from the IP enforcement perspective are highlighted below.
The SPC IP Tribunal releases its jurisdiction over appellate cases relating to utility model patents, technical trade secrets and software copyrights to the Provincial High People’s Courts (PHCs), unless the first instance of such cases are tried by the PHCs. Following the adjustment, the SPC IP Tribunal has released manpower to address other complicated cases, including invention patent-infringement cases, which comprise the major portion of IP disputes in the life sciences and pharmaceuticals sector. Meanwhile, the rights-owners of utility model patents, technical trade secrets and software copyrights may need to pay additional attention to forum selection by taking the potential appellate court into their consideration. Further, as medical and diagnosis devices may be protected by both invention and utility model patents, the separation of appellate courts may pose challenges for enforcement regarding the same product.
New requirements on formality documents for foreign parties
China’s accession to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents streamlines the recognition of documents from other signatories, enhancing procedural efficiency in IP litigation and easing the burden of foreign parties in disputes. Starting from 7 November 2023, public documents issued by other signatories of the Convention will be recognised for use in China after being apostilled in the country where the documents are issued, without the need for legalisation by that country and the related Chinese embassy or consulate there.
Human genetic resources-related regulations
The Implementation Rules for China’s Regulation of Human Genetic Resources Administration, effective since 1 July 2023, provide clarity on the ownership of patents and data generated from R&D collaboration utilising human genetic resources in China. This may serve as the legal grounds for relevant patent or data ownership disputes.
Drug procurement-related regulations
On 5 December 2022, the China National Intellectual Property Administration (CNIPA) and the National Healthcare Security Administration (NHSA) issued a Joint Opinion on Strengthening IP Protection in Drug Procurement Activities (the “Joint Opinion”) to address patent infringement issues arising from drug procurement. In line with the Joint Opinion, among other positive improvements, upon the receipt of an administrative decision or an effective court judgment confirming infringement, drug procurement offices/agents are required to dismiss related drug-listing applications or de-list the related drug from the distribution network.
In light of this high-level policy, it is expected that more corresponding public or internal regulations with detailed mechanisms will be introduced in the future. For instance, the Shanghai IP Office and Shanghai Healthcare Security Administration have already issued their local implementing regulation, effective since 21 October 2023.
The Trademark Law to be amended
Only four years after the last revision in 2019, the CNIPA published the draft Amendments of the Chinese Trademark Law (the “Amendments”) in January 2023 for public consultation. Although the Amendments have not been finalised, certain issues in the draft have triggered heated discussions from all sectors. Some notable changes that might impact on the life sciences and pharmaceuticals industry’s trade mark practice include:
The Amendments also set forth an anti-dilution remedy for well-known trade marks, which is not specified in the current Trademark Law.
Judicial and Administrative Practice Developments
Patent linkage litigation
The newly established patent linkage mechanism provides civil and administrative channels for patent disputes at the drug registration stage, for:
Ever since, patent disputes in the pharmaceuticals industry have become a hot battlefield, leading also to a surge in invalidation actions against patents for brand drugs.
From July 2021 to July 2023, the CNIPA processed 140 patent linkage administrative cases, closing 112 cases with an average closure period of 166 days. The SPC IP Tribunal closed seven patent linkage appellate cases, with an average closure period of 63 days.
Operational challenges and legal issues have surfaced, with cases addressing listability, burden of proof and the relationship with patent invalidation. Notably, in the Chugai v Haihe case, the authors represented Chugai to obtain the courts’ confirmation that the patent linkage case may not be dismissed upon both parties’ agreement, even if the patent at issue is invalidated, and the generic drug owner has the obligation to make a proper patent linkage statement and to provide its supporting documents in good faith.
Other cases such as Novartis v Teray focus on claim construction, while AstraZeneca v Guowei concerns the scope of listability and Shionogi v Ouyi concerns the standing for enforcement. As the pharmaceuticals industry evolves, complex issues are expected to continue to arise, compounded by differences between the SPC’s and CNIPA’s regulations and practices.
Further, anti-trust judicial review on settlements between brand and generic drug owners is another critical issue to be watched.
Conventional patent infringement litigation
Beyond patent linkage, conventional patent infringement litigation remains crucial for resolving disputes, covering various areas such as:
With China’s healthcare companies playing a significant global role, an increase in patent infringement disputes is anticipated.
Centralised drug procurement, a major distribution channel in China, has led to patent infringement cases as well. In the authors’ recent benchmark case Sandoz v Hansoh, the courts confirmed that filing an application for drug procurement constitutes infringement of offering for sale, thereby ending conflicts on such issue in previous similar case (eg, Eisai v Qilu). From the administrative enforcement perspective, the CNIPA ruled that a successful listing in the network via centralised drug procurement (ie, Boehringer Ingelheim v HEC) constitutes infringement of offering for sale under the Patent Law. Along with these benchmark cases, the Joint Opinion and other corresponding mechanisms, an effective patent protection mechanism regarding drug procurement activities is expected to be in place for future enforcement.
With the growing needs and technology development in the medical device industry, the heat over patent infringement disputes has begun to rise (eg, a series of Mindray v Comen cases). Medical device manufacturers have started to review and consider their IP strategies and to prepare for competition in the trembling economic environment.
Meanwhile, an increasing volume of patent invalidation cases is expected as major counter-defence actions in patent infringement disputes.
Trade secret enforcement
Trade secret protection is also vital in the life sciences and pharmaceuticals industry, given intensified competition and talent flow. The substantial flow of talent, both domestically and internationally, accentuates this issue. Notably, approximately 80% of trade secret misappropriations are attributed to employee departures, drawing increased attention from trade secret-holders.
China has established a relatively comprehensive framework of laws, regulations and judicial interpretations for trade secret protection. The SPC and its lower courts have issued typical cases and guidelines, exemplifying judicial practices. For instance, on 30 November 2023, the Beijing IP Court released Answers to Questions in Civil Cases of Trade Secrets Misappropriation (2023) and Ten Typical Cases of Trade Secrets Misappropriation, offering clarity and guidance for trade secret enforcement.
Encouraged by favourable outcomes in recent trade secret misappropriation cases, companies in the life sciences and pharmaceuticals sector are gaining confidence in enforcing their rights in China. Given that patents and trade secrets constitute crucial components of IP assets for these companies, trade secret misappropriation cases often intertwine with patent ownership or patent infringement disputes, adding complexity to disputes within this sector.
Anti-trust review in IP litigation
As the life sciences and pharmaceuticals industry closely relates to public health and interest, the settlement arrangement of IP litigations between the parties may be subject to anti-trust judicial review, which the SPC ruled on in AstraZeneca v Ask-Pharma.
With the growing volume of patent linkage and patent infringement cases in China, it is expected that anti-trust review in such disputes will be a key factor to consider.
Trade mark protection
The authors have seen very little trade mark-related litigation in the life sciences and pharmaceuticals industry in recent years. With the ongoing enhancement of trade mark protection in China, alongside the advancements in e-commerce, digitalisation and the emergence of new economic models, the authors anticipate that brand owners will encounter both opportunities and challenges in enforcing their rights in China.
Specifically, more trade mark cases will surpass evaluation based solely on similarity or likelihood of confusion. Instead, they will show a complexity mirroring the rapid growth of society and technology. This complexity includes conflicts among different types of rights and a surge in internet-related and cross-border cases, which have broad impact but pose difficulties in collecting and fixing evidence.
In this regard, brand owners in the life sciences and pharmaceuticals industry should plan ahead regarding their trade mark protection strategy in China, and not only register trade marks for their brands and product names but also seek trade mark registration for non-traditional products and services, such as software and apps, SaaS, e-commerce, the internet, data and social media-related services.
Copyright and data
As the whole of society undergoes informatisation and digitalisation, as well as networking and an open ecosystem, there have been some renowned cases relating to open source (eg, a class action against GitHub, Microsoft and OpenAI, and the case of Luohe v Wanyou) and a growing volume of software-related disputes. The life sciences and pharmaceuticals industry will be no exception to such a trend, and should prepare to cope with potential disputes.
Although it might be too early to predict cases on data ownership and infringement in the pharmaceuticals industry, given the fast-growing pace in this field and China’s trial recognition of data ownership, it is not entirely impossible to foresee such cases occurring in the near future.
Abuse of IP rights
With the substantial expansion of IP enforcement, concerns surrounding the abuse of IP rights have become prominent in China. Notable cases (eg, Runde Hongtu v Zhongliang Li, in which the SPC dismissed the plaintiff’s malicious patent enforcement action and ordered the plaintiff to compensate the defendant for its reasonable costs) have sparked widespread discussion in society, underscoring the need for regulations in this domain. The SPC has addressed this issue by incorporating a clause in its judicial interpretation, empowering courts to compel parties to disclose information regarding ownership, infringement and prosecution disputes related to the asserted IP rights. Refusal or making false statements in this regard may be deemed as an abuse of IP rights. More cases, initiated by accused infringers based on these grounds, are expected.
As the life sciences and pharmaceuticals industry in China continues to evolve, stakeholders must navigate the complex terrain of IP litigation. Legislative vigilance, regulatory compliance and strategic enforcement strategies will be pivotal in safeguarding IP in this dynamic and promising sector.