16. Current: Article 59
Where any person passes any non-patented product off as patented product or passes any non-patented process off as patented process, he shall be ordered by the administrative authority for patent affairs to amend his act, and the order shall be announced, and he may be imposed a fine of no more than RMB 50,000 yuan.

New: Article 65
Where any person passes any non-patented product off as patented product or passes any non-patented process off as patented process, he shall be ordered by the administrative authority for patent affairs to amend his act, and the order shall be announced. His illegal earnings shall be confiscated and, in addition, he may be imposed a fine of no more than RMB 200,000 yuan.

Comments: Considering passing off a non-patented product as a patented one is of considerable harm to the interests of the public, compared with current Article 59, it is proposed in new Article 65 to add the punishment of confiscating the illegal earnings and, in addition, to raise a fine of not more than RMB 50,000 yuan to RMB 200,000 yuan.

17. Current: Article 60
The amount of compensation for the damage caused by the infringement of the patent right shall be assessed on the basis of the losses suffered by the patentee or the profits which the infringer has earned through the infringement. If it is difficult to determine the losses which the patentee has suffered or the profits which the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of the exploitation fee of that patent under contractual license.

New: Article 66
The amount of compensation for the damage caused by the infringement of the patent right shall be determined through consultation by the parties. Where the consultation fails, the amount shall be assessed on the basis of the losses suffered by the patentee or the profits which the infringer has earned through the infringement. If it is difficult to determine the losses which the patentee has suffered or the profits which the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of the exploitation fee of that patent under contractual license. Where it is difficult to determine the losses suffered by the patentee, the profits which the infringer has earned and the patent exploitation fee under contractual license, the people’s court may set an amount of compensation of not less than RMB 10,000 yuan and not more than RMB 1,000,000 yuan in light of factors such as the type of the patent right, the nature of the infringing act and the circumstances.

The amount of compensation for the damage caused by the infringement of the patent right shall further include a reasonable expense the patentee has incurred in order to stop the infringing act.

Comments: Compared with current Article 60, new Article 66 provides sequentially operable and reasonable provisions for determining the amount of compensations for infringement. Firstly, the addition of determining the amount of compensation through consultation by the parties is attributed to the fact that the patent right is a civil property right and the amount of compensation for the damage caused by the infringement of the patent right can be determined through consultation by the parties, which can reduce the cost the patentee incurs for gaining protection of the patent right. Further, in order to facilitate the judicial operability, it is proposed in the new Article 66 to add the statutory compensation that “where it is difficult to determine the losses suffered by the patentee, the profits which the infringer has earned and the patent exploitation fee under contractual license, the people’s court may set an amount of compensation of not less than RMB 10,000 yuan and not more than RMB 1,000,000 yuan in light of factors such as the type of the patent right, the nature of the infringing act and the circumstances”. Besides, it is proposed to include into the compensation the reasonable expense the patentee has incurred in order to stop the infringement.

18. Current: Article 61
Where a patent owner or an interested party possesses evidence showing that another party is acting or is going to act to infringe his patent rights, and his legitimate interest would suffer irreparable harm if the infringing act is not timely stopped, the patent owner of the interested party may, prior to a lawsuit, request the people’s court to grant an order to stop the infringing act and for property preservation.

For the people’s court to handle a request defined in the above paragraph, the regulations of Articles 93 to 96 and Article 99 of the Civil Procedure Law of the PRC apply.

New: Article 67
Where a patent owner or an interested party possesses evidence showing that another party is acting or is going to act to infringe his patent rights, and his legitimate interest would suffer irreparable harm if the infringing act is not timely stopped, the patent owner of the interested party may, prior to or during a lawsuit, request the people’s court to grant an order to stop the infringing act.

For the people’s court to handle a request defined in the above paragraph, the regulations on property preservation provided in the Civil Procedure Law of the PRC apply.

Comments: Current Article 61 provides for only pre-suit injunctive relief for the patent owner or interested party. Here, new Article 67 is proposed to make the injunctive relief available during a lawsuit for the purpose of enhancing the effectiveness of patent enforcement. Such expansion is based on judicial interpretations earlier issued by the Supreme People’s Court. [It is not clear, however, that the phrase “for property preservation” in the first paragraph Article 61 is removed whereas in the second paragraph the description regarding the applicability of “the regulations on property preservation” remains.]

19. New: Article 68 (added)
For the purpose of stopping an infringing act and in the event that the evidence might be destroyed or would be difficult to obtain subsequently, a patent owner or an interested party may, prior to a lawsuit, request a people’s court to preserve the evidence.

The people’s court should decide within 48 hours from receipt of the request; once a decision to adopt preservation measures is made, the decision shall be enforced immediately.

When adopting preservation measures, the people’s court may order the requesting party to provide a bond; if the requesting party fails to do so, the request shall be rejected.

If the requesting party fails to bring a lawsuit within 15 days from the adoption of preservation measures, the people’s court should cancel the preservation measures.

Comments: A provision on pre-suit evidence preservation is added as Article 68 for exigent cases where evidence might be destroyed or would be difficult to obtain. It is often very important for patent owners or interested party to have such measures to preserve evidence for patent litigation purposes. For social and judicial efficiency, Article 68 also describes more detailed requirements regarding bonds, the timing of the court’s decision, and the duty of the requesting party to subsequently bring an intended lawsuit in a timely manner.

20. Current Article 63.1
None of the following shall be deemed an infringement of the patent right:
(l) Where, after the sale of a patented product that was made or imported by the patentee or with the authorization of the patentee, or of a product that was directly obtained by using the patented process, any other person uses, offers to sell or sells that product;
(2) Where, before the date of filing of the application for patent, any person who has already made the identical product, used the identical process, or made necessary preparations for its making or using, continues to make or use it within the original scope only;
(3) Where any foreign means of transport which temporarily passes through the territory, territorial waters or territorial airspace of China uses the patent concerned, in accordance with any agreement concluded between the country to which the foreign means of transport belongs and China, or in accordance with any international treaty to which both countries are party, or on the basis of the principle of reciprocity, for its own needs, in its devices and installations;
(4) Where any person uses the patent concerned solely for the purposes of scientific research and experimentation.

New: Article 70
None of the following shall be deemed an infringement of the patent right:
(l) Where, after the sale of a patented product that was made by the patentee or any entity or individual with the authorization of the patentee, or of a product that was directly obtained by using the patented process, any other person uses, offers to sell, sells or imports that product;
(2) Where, before the date of filing of the application for patent, any person who has already made the identical product, used the identical process, or made necessary preparations for its making or using, continues to make or use it within the original scope only;
(3) Where any foreign means of transport which temporarily passes through the territory, territorial waters or territorial airspace of China uses the patent concerned, in accordance with any agreement concluded between the country to which the foreign means of transport belongs and China, or in accordance with any international treaty to which both countries are party, or on the basis of the principle of reciprocity, for its own needs, in its devices and installations;
(4) Where any person uses the patent concerned solely for the purposes of scientific research and experimentation.
(5) Where any person who intends to manufacture a patented drug or a patented medical apparatus, manufactures the patented drug or the patented medical apparatus solely for the purposes of providing the information needed for the administrative approval of the drug or the medical apparatus.

Comments: The current patent law is silent on whether parallel importation of a patented product constitutes patent infringement. This Bill makes it clear that parallel importation is not infringement. Besides, this Bill proposes to incorporate “Bolar exception” into the patent law, as many foreign countries do. That is, manufacturing a patented drug or a patented medical apparatus merely for the purposes of obtaining approval from the government does not constitute patent infringement.