The China-US Trade Agreement and Its Impact on Patent Law

China signed Phase I of a multi-part trade agreement with the US on 15 January 2020 (The Economic and Trade Agreement between the USA and the PRC). The Intellectual Property aspects are covered in Chapter 1 of the Agreement. As a result, there will be developments in Chinese patent law to bring the enforcement of intellectual property matters closer to those seen in the US legal system. This will impact the ability of Australian companies to gain and protect IP in China, particularly in the area of pharmaceuticals.

Of particular interest in the patent law space, is Article 1.10 of the Agreement where China has agreed to the use of supplemental data, developed after the filing date, to address patentability objections, including objections based on the sufficiency of disclosure and inventive step. The supplemental data can be used during patent examination proceedings, patent review proceedings, and judicial proceedings. This will assist in the prosecution of patent applications, particularly those where significant developments in the invention were made after the filing date.

Article 1.12 of the Agreement introduces the implementation of a patent term extension framework for pharmaceutical patents, where delays in the marketing approval process impact the effective term. These adjustments give up to a five-year extension, with the final patent term limited to 14 years from the date of marketing approval in China. Such extension of term facilities are currently available in jurisdictions such as Australia, the US, Japan and Europe.

The process for resolving patent disputes has also been touched on in Article 1.11. The trade agreement requires China to create an “effective mechanism for early resolution of patent disputes”, but it remains to be seen how China develops and implements such a system. It is in China’s interests to expedite the patent dispute resolution process, as this could encourage more pharmaceutical investment in China.

China has also agreed to “effective and expeditious” enforcement actions related to counterfeit pharmaceuticals and to publish information related to the measurable results of its enforcement actions (Article 1.18).

The trade agreement is an active recognition by China that it must step up its enforcement of IP rights to become a trusted world player in the development of pharmaceutical products. Many IP users have expressed concerns over working in the Chinese pharmaceutical space; however, the amendments stemming from the trade agreement will go far to reassure investors that the necessary mechanisms are in place to gain and protect their IP.

Wrays Industry Insights, Insights