Patent Reform With Chinese Characteristics
The Third Amendment will enact a complex set of changes. Some are designed to encourage innovation in China and protect genuine inventiveness, such as increased protections for innovations created by cross-border research efforts. While not perfect, these changes seem generally positive. Adoption of an “absolute novelty” standard is another step in the right direction and should stop patent grants to Chinese applicants who were effectively “hijacking” inventions from abroad. Under this standard, an invention must be new to the world, not just to China, precluding patent grants to a Chinese filer for an invention already disclosed elsewhere. Closing that loophole is an important step.
In other ways, however, the Third Amendment takes a wrong turn. One of the worst offenses comes in provisions for compulsory licenses. These support expansive authority for the state to issue licenses, without the approval of the patent holder, to anyone who is able to produce the product once given access to the patented technology. The amendment allows compulsory licensing if, after three years from the grant of a patent or four from the filing of a patent application, the patent holder, “without proper justification,” is found not to have “exploited” the patent “sufficiently,” or if the patent use is found to restrict competition. Some of the problems in this are technical — like the fact that the timing in the provisions violates the Paris Convention for the Protection of Industrial Products, an international agreement to which China is a party. But the bigger issue is the casual attitude toward protecting investment in innovation that is at the heart of these provisions.