Overview of Pharmaceutical Patents in China
(Author: Dr. Jian Xu, the China IP Blogger)
Now that China is the second biggest economy in the world, very few companies can resist its lure. With such a big market size as well as population, pharmaceutical companies, foreign or domestic, are developing their business rapidly in China. However, the Chinese landscape is difficult to navigate and poses a number of problems; none more so than intellectual property (IP) issues. As a first step, foreign pharmaceutical companies must pay special attention to the patent registration in China, and in particular, to understand more about the novelty requirements of Chinese patents in relation to the pharmaceutical industry. Failure to do so can be extremely damaging, especially since China is a rigid first-to-file country, and without formal IP registrations, enforcement is virtually impossible against infringers.
The Chinese Patent System
The Chinese patent system is also a “first to file” system and patent applications may be filed in the name of a corporation or an individual inventor. There are three types of patents:
- The invention patent;
- The utility model; and
- The design patent.
The design patent is similar to a registered design in Europe and the utility model is what is sometimes called a “mini-patent” – similar to its German equivalent and requiring a lower level of inventiveness.
The term, “invention patent”, is largely equivalent to the “patent” familiar to most foreign applicants. It protects both the product and method. Of the three types of patent, only the invention patent will undergo a substantive examination procedure by the State Intellectual Property Office (SIPO). Generally it takes between two and three years for an invention patent to be granted, while utility and design patents will take about one year. It is possible to file for both invention patents and utility model protection at the same time and then drop the utility model protection once the invention patent has been granted.
Patent applications can be originated at SIPO, as with any other national office. China is also a signatory to the Patent Cooperation Treaty (PCT) and consequently, PCT applications can be converted into Chinese patents by undergoing the “national phase” through SIPO in accordance with the usual PCT procedures.
Chinese law also provides grounds for invalidating a registered patent. China has raised the novelty standard for patents to the so-called “absolute novelty”, which means a patent can be invalidated by prior publications and/or prior use of the patent technology anywhere in the world. However, procedures can be costly and restrictions are set for evidence that is admitted by SIPO. As with any other intellectual property rights in China, the better option is to file as soon as possible to avoid unnecessary costs and delays.
Before 2009, China employed a “relevant novelty” system. Under this system, those unpublished technologies or products are not deemed to be prior art for the purpose of assessing novelty in China, even though they have been publicly used or on sale outside of China. As long as they are not publicly used or sold within China, anyone can apply for patents in China with regard to these technologies or products without worrying about novelty objections. Such patents are referred to as one type of “junk patents”, which lowers the quality of Chinese patents and frequently causes difficulties for foreign businesses in China.
After the amendment of patent law in 2008, China raises the standard to “absolute novelty”, meaning a Chinese patent cannot be granted if it is publicly available before the application date of such patent, with no differentiation between prior publications and prior use. This change is in line with the practice of most of the developed countries, and thus is beneficial to western companies which are accustomed to higher standards of patent quality.
Patents on Pharmaceutical Products
A substance, found in the nature and existing in its natural state, is merely an object of discovery in the sense of the “scientific discoveries” and thus not patentable. However, if a substance is isolated or extracted from the nature for the first time, of which the structure, the morphology or other physical/chemical parameters are unknown in the prior art and can be precisely characterized, the substance can be patentable in China.
Patents for chemical/pharmaceutical compounds are usually most desirable form of patents for pharmaceutical companies, as it offers the broadest coverage and strongest enforcement for the patent technology. To apply for the invention of a compound, the patent shall indicate the chemical name and the structural formula (including various function groups, molecule steric-configuration and so on) or the molecular formula of said compound. The explanation of the chemical structure must be clear and detailed enough to avoid objections of insufficient disclosure. In order to clearly identify the claimed compound, the patent should also describe the chemical/physical property parameters (such as the various qualitative or quantitative data and spectrum, etc.) relating to the compound.
If a compound has been mentioned in the prior art in sufficient detail, then the compound is presumed to lack novelty. For example, if the name and the molecular formula of a compound disclosed in the prior art are unclear, but the prior art discloses the same physical/chemical parameter, or the same method of preparation, then the compound is usually presumed to lack novelty.
Many pharmaceutical products exist in composition form so it is another popular category of patents for pharmaceutical companies. The patent for a composition should describe both the components and the contents thereof. There are two modes of claim of a composition: open-ended and close-ended. The open-ended mode means that the composition does not exclude those components that are not mentioned in the claim. The close-ended mode means that any of the other components that are not mentioned in the claim shall be excluded. Wording such as “comprising”, “including”, and “containing” usually indicates an open-ended claim, while wording such as “consisting of…”, “be composed of…” and “be balanced with …” shows a close-ended claim. Obviously, where possible, open-ended claims are more desirable as they have broader coverage.
The term “microorganism” includes bacteria, actinomycetes, fungi, viruses, protozoa and algae, etc. A microorganism existing in the nature without the involvement of any artificially induced technical treatment is, however, a scientific discovery and thus unpatentable. Microorganism per se is eligible for patent protection when it is isolated into pure culture and has particular industrial use.
Genetic engineering products
Inventions of genetic engineering is usually related to a gene, a vector, a recombinant vector, a transformant, a polypeptide or a protein, a fused cell, a monoclonal antibody, etc. To clearly define the product, the patent shall indicate the structure of the product, such as base sequence of a gene, amino acid sequence of a polypeptide or protein, etc. When the structure of the product cannot be clearly described, the patent shall describe the physical/chemical parameters, biological property and/or preparation method of the product, etc.
There are a few notable novelty considerations relating to genetic engineering.
For genes, if a protein per se possesses novelty, the invention of the gene encoding the protein also possesses novelty.
For recombinant protein, if a protein as an isolated and purified single substance is known, an invention concerning a recombinant protein defined by a different preparation process and having an identical amino acid sequence does not possess novelty.
For monoclonal antibody, if antigen A is novel, a monoclonal antibody of antigen A is considered novel. However, if a monoclonal antibody of a known antigen A’ is known and that the antigen A involved in the invention has the same epitope as that of antigen A’, it is deduced that the monoclonal antibody of the known antigen A’ is capable of binding to antigen A. In such a case, the invention of the monoclonal antibody of antigen A usually does not possess novelty.
Components of Plants and Animals
China does not grant patent rights to plants or animals, including transgenic animals or plants. However, animal somatic cells, tissues and organs meeting novelty requirements are eligible for patent protection. Plant cells, tissues and organs are also eligible for patent protection provided that they don’t independently constitute a certain variety of plants.
Patents on Pharmaceutical Methods and Processes
Apart from pharmaceutical products per se, there are significant amount of inventions in the pharmaceutical sector which relates to various methods or processes, such as process for preparing substances, method of application, process method or treatment method of substances. They are defined by the features of the process relating to procedure, substance and apparatus.
The process features relating to procedure include process steps (it may also be reaction steps) and process conditions, such as temperature, pressure, time, catalysts or other auxiliaries used in process steps.
The process features relating to substance include the chemical component, chemical-structural formula, physical/chemical property parameters of the raw material used in the process and the product.
The process features relating to apparatus include the type of the apparatus specially adapted in said process and the property or function of the apparatus relating to said process invention.
Please note that, in practice, it is quite difficult to enforce a patent based on methods/processes, because the methods are usually internal production procedures and therefore difficult to find out, especially in China where there is basically no discovery or disclosure procedure during trials. The right holder may frequently rely on the court to carry out an evidence perseveration order to collecting and preserving evidence on the production site of the accused party.
Patents on the Use of Pharmaceutical Products
As it is not easy to invent totally new chemical compounds for pharmaceutical purpose, a lot of pharmaceutical products are developed by discovering a medical use or even second medical use of a known chemical compound. It is also possible to obtain patents directed to the pharmaceutical use of existing chemical compounds. The invention relating to the use of a chemical product is made on the basis of discovery of a new property of the product and the use of such property. Regardless of a new or known product, its property is inherent in the product per se. The essence of the use invention does not lie in the product per se, but in the application of its property.
Regarding medical use, it is important to note that China does not grant patents for “method for the diagnosis or for the treatment of diseases”. Therefore, an application relating to the medical use of a substance shall not be granted if its claim is drafted in the wording “use of substance X for the treatment of diseases”, “use of substance X for diagnosis of diseases” or “use of substance X as a medicament”. However, since pharmaceutical products and a method for the manufacture thereof are patentable, the application for the medical use of a substance is usually drafted in the form of method for preparing a pharmaceutical, such as “use of substance X for the manufacturing of a medicament”, “use of substance X for the manufacturing of a medicament for the treatment of a disease” and so on.
A known product is not rendered novel merely because a new application has been put forward. For example, if product X is known as a detergent, then the product X used as a plasticizer does not possess novelty. However, a known product does not destroy the novelty of its new use if the new use per se is an invention. This is because such use invention is an invention of method of application, and the substance of the invention lies in how to apply the product rather than the product per se. For example, said product X is originally used as a detergent. Then, someone discovers from research that it can be used as a plasticizer after adding certain additives. Then its preparation, the kind of additives selected and the proportion etc., are the technical features of the method of application. Such new use is therefore potentially patentable.
As for a medical-use invention relating to a chemical product, the following aspects are usually taken into consideration when the examination of novelty is carried out.
(1) Whether or not the new use is different in substance from the known use. The use invention does not possess novelty when the difference between the new use and the known use lies merely in the form of expression, but the substance of them is the same.
(2) Whether or not the new use is revealed directly by the mechanism of action or pharmacological action of the known use. The use does not possess novelty if it is directly equivalent to the mechanism of action or pharmacological action of the known use.
(3) Whether or not the new use belongs to generic (upper level) term of the known use. The known use defined by specific (lower level) term may destroy the novelty of the use defined by generic (upper level) term.
(4) Whether or not the features relating to use, such as the object, mode, route, usage amount, interval of administration can define the procedure of manufacture of a pharmaceutical. The distinguishing features merely present in the course of administration do not enable the use to possess novelty.
A Few Special Issues for Chinese Patents
In addition to the above pharmaceutical specific topics, there might be a few special provisions in Chinese patent law which may be interesting to multinational companies including pharmaceutical ones.
More and more foreign companies are setting up their R&D facilitates in China, taking advantage of the huge talent pool of science/engineering graduates in China. As those Chinese R&D centres continue to develop, there will be increasing number of inventions “made-in-China”. Then there comes the question of whether the patents should be firstly filed in China.
The current law does not in principle require that inventions made-in-China should be firstly filed in China, but introduced a so-called “foreign filing clearance” procedure.
The law states “Where an entity or individual intends to file an application in a foreign country for patenting an invention or utility model accomplished in China, it or he shall report in advance to the patent administrative department of the State Council for confidentiality review.” Failure to comply is a ground for invalidation. So the lack of penalty in the second version of Chinese patent law is addressed.
Under the current law, the companies have three options for foreign filing of patents for inventions made-in-China.
(1) The applicant can choose to file first outside China. Then it must request a “foreign filing clearance” from SIPO before filing the patent abroad. In practice, as most technology is clearly not restricted/sensitive national security related technology, the clearance will be done in one or two months.
(2) The applicant can choose to file a Chinese patent first. Then it can request a “foreign filing clearance” from SIPO at the time of filing the Chinese patent or after filing the Chinese patent, before filing the patent abroad.
(3) The applicant can choose to file a PCT application via SIPO. Then it does not need to request a “foreign filing clearance” from SIPO as it is deemed that such request has been made if this option is chosen.
The third option may be most convenient for multinational companies as they normally use the PCT system to file patents in many jurisdictions. In addition, the PCT patent can be filed in English too, which is clearly convenient for multinational companies.
Employee inventor compensation
It is of utmost importance for companies to agree the level of reward with its R&D staff for patents arising out of their invention, and to specify this agreement clearly in the employment contract or employee handbooks. If there is no specific contractual agreement on the reward for inventors, then the statutory reward will apply, which can become surprisingly high in some situations.
What is the statutory reward for inventors in China?
Firstly, within three months from patent grant, the inventor should be rewarded with at least RMB 3,000 for an invention patent, and at least RMB 1,000 for a utility model or design patent.
This may not sound much, but the reward will be much higher if the patent is practiced or exploited to generate revenue.
Secondly, the company should be prepared to pay no less than 2% of profit due to exploitation of the patent for invention or utility model, or 0.2% for design, as remuneration for the inventor, or an equivalent lump sum of that amount of money as remuneration for the inventor. If the patent is licensed, the company should pay no less than 10% of the license fee as remuneration for the inventor.
Therefore, if multinational companies want to have more control on how they reward the inventors, then it is very important to specify the mechanism of the reward in the contract with the R&D staff, as contractual arrangement will take preference, so companies do not leave this issue to the above statutory clauses.
In conclusion, with a big market size and population base as well rapid economic development, China provides exciting opportunities for foreign companies looking to invest, manufacture or distribute in the Far East. Nonetheless, since China operates a “first to file” system for patents, it is important that foreign companies take adequate steps to maximise IP protection in China. Most importantly, foreign companies should apply to register their IP before entering the Chinese market and, if the need arises, be prepared to enforce these rights.