Shanghai, China’s Municipal People’s Congress Proposes Fining Irregular Patent Application Applicants Up To 150,000 RMB
On September 30, 2021, the Shanghai Municipal People’s Congress issued the draft Several Provisions on the Establishment of a High-level Intellectual Property Protection System in Pudong New Area, Shanghai (上海市浦东新区建立高水平知识产权保护制度若干规定（草案征求意见稿）). Article 6 of the Provisions proposes to increase punishment for irregular (or abnormal) patent applications and malicious trademark applications to up 150,000 RMB ($23,280 USD) and 50,000 RMB respectively. The Provisions also provide for IP protections at exhibitions, specify increased punitive damages for intentional infringement as well as fines for repeated patent infringement.
Some of the highlights of the Provisions include:
Units and individuals who apply for abnormal patents shall be given a warning and may be fined up to 150,000 RMB.
Units and individuals who maliciously apply for trademarks shall be given a warning. If they have illegal gains, they may also be fined five times the illegal gains up to 50,000 RMB; if there are no illegal gains, they may be fined not more than 30,000 RMB.
The China National Intellectual Property Administration (CNIPA) has previously defined irregular (abnormal) patent applications in the Measures Regarding the Regulation of Patent Applications (关于规范申请专利行为的办法) as:
(1) Simultaneously or successively submitting multiple patent applications that are obviously the same in invention-creation content, or are essentially formed by simple combinations of different invention-creation features or elements;
(2) The submitted patent application contains fabricated, forged or altered inventions and creations, experimental data or technical effects, or plagiarism, simple replacement, patchwork of existing technology or existing designs, etc.;
(3) The invention-creation of the submitted patent application is obviously inconsistent with the actual research and development capabilities and resource conditions of the applicant and inventor;
(4) The invention-creation content of multiple patent applications submitted is mainly generated randomly by computer programs or other technologies;
(5) The invention-creation of the submitted patent application is an invention deliberately formed for the purpose of circumventing patentability examination, which is obviously inconsistent with technical improvement or design common sense, or has no actual protection value, is inferior, piles up, or unnecessarily limits the scope of protection Creation, or content without any search and review significance;
(6) In order to evade the supervision measures against irregular patent applications, multiple patent applications that are substantially related to a specific entity, individual or address are scattered, submitted sequentially or in different places;
(7) Not buying or reselling patent application rights or patent rights for the implementation of patented technologies, designs or other legitimate purposes, or falsely altering inventors or designers;
(8) Patent agencies, patent agents, or other institutions or individuals, acting as agents, inducing, instigating, helping others, or conspiring with them to implement various types of irregular patent applications;
(9) Other irregular patent applications and related behaviors that violate the principle of good faith and disrupt the normal order of patent work.
Article 9 of the Provisions offers intellectual property protection at exhibition centers in Pudong, which covers the massive Shanghai New International Expo Center and exhibitions such as the humongous bauma trade fair for construction machinery. Article 9 may work as the equivalent of a temporary restraining order as can sometimes be obtained in Las Vegas against exhibitors at trade shows.
Organizers of convention and exhibition activities shall not allow exhibitors who have not submitted their intellectual property compliance commitments (or relevant intellectual property ownership certificates) to participate in the exhibition.
If an exhibition item is accused of infringement by a right holder, the organizer of the exhibition shall immediately request the exhibitor to provide a non-infringement certificate. If the exhibitor is unable to provide it within a limited time, the organizer of the exhibition shall immediately take measures such as covering up or removing the exhibits, or canceling the participation authorization.
If the organizer of exhibition activities violates the provisions of paragraphs 1 and 2 of this article, it shall be ordered to make corrections and be fined not less than 30,000 RMB but not more than 100,000 RMB.
Article 10 increases statutory damages to up to 10 million RMB, which is double the 5 million RMB listed in Article 71 the Patent Law:
In case of infringement of intellectual property rights, the actual loss of the right holder, the illegal income of the infringer, and the license fee are difficult to calculate, the people’s court shall, based on the circumstances of the infringement, award a compensation of less than 10 million yuan.
Similarly, Article 10 doubles punitive damages for serious cases of willful infringement to ten times from five times damages in the Patent Law. Repeated infringement of the same patent can lead to a fine of up to 5 times the illegal business income or 250,00 RMB if difficult to determine the income.
The full text is available here (Chinese only). Comments are due October 15, 2021.