China moves to deliver patent law reform

Hongjiang Li, Staff Writer

July 11, 2020 12:51 AM UTC

More than 18 months after the National People’s Congress discussed an initial set of reforms to China’s Patent Law, a new draft amendment to the law has been released that includes pharmaceutical provisions and adds a patent linkage system -- a long-awaited protection for pharmaceutical innovators in China.

If adopted, the draft “would serve as the legal framework for a Hatch-Waxman system with Chinese characteristics and will have far-reaching implications for all drug developers,” said Hogan Lovells Senior Associate Xin Tao.

China’s Patent Law was last revised in 2008. A revised draft was published in January 2019, and government officials and patent law experts anticipated approval of the amendments last year. However, the Standing Committee of China’s National People’s Congress, which generally meets bimonthly, did not consider the draft until last month’s session (see “China's Patent Reform Waiting Game”).

Legal experts have been dismayed by the lack of progress in pharmaceutical IP reform in China. In a guest commentary published in BioCentury last October, Jones Day Partner Tony Chen and Rader Group founder Randall Rader noted that the 2019 draft regulations had weakened IP protections in some cases, for example, with the removal of provisions requiring the National Medical Products Administration (NMPA) to wait for patent expiration before generic approval (see “Time to Fulfill China’s Promise of IP Reform”).

Hope for reform came in January, with specific commitments from China as part of its “Phase One” trade deal with the U.S., including linking marketing of generics to the resolution of patent infringement disputes and extending patent terms to make up for regulatory delays (see “Trade Deal Elicits Chinese Promises”).

In a blog post, Mark Cohen, head of the Asia IP project at Berkeley Law and formerly senior counsel at the U.S. Patent and Trademark Office (USPTO) said that the new draft’s pharmaceutical provisions were drafted to implement trade agreements.

Pharmaceutical provisions
To compensate for patent term loss due to regulatory review and approval, the first draft of the amendments proposed to grant China’s State Council authority to extend the patent term by up to five years for innovative drugs when sponsors apply simultaneously for market approval in China and abroad. However, the total patent term after market approval of an innovative drug would be limited to 14 years. Under current law, the total term for invention patents is 20 years from the filing date (see “Patent Reform Back on Agenda”).

The second draft updates the patent term extension articles to remove the requirement for simultaneous marketing applications in China and abroad, and it adds that patentees can request extensions for delays in the patent application process if their patent is granted four years after filing an application and three years after requesting substantive review.

The draft also adds a provision outlining a patent linkage system. “The new provision allows patent litigation to be initiated while the new drug application is pending review at the NMPA,” Tao told BioCentury.

Patent holders would be able to initiate a legal challenge within 30 days of NMPA announcing an application by a competitor. Before the NMPA reaches a decision, “there is a nine-month timeline for the dispute to be resolved with a court or the patent office,” said Tao. Patent holders have 15 days to appeal the initial judgment.

According to law firm Ropes & Gray, it is unclear whether NMPA has discretion to approve the generic application if the patent challenge has been pending for more than nine months.

If no lawsuit is filed, the generic drug applicant may apply to the courts or China’s National Intellectual Property Administration (CNIPA) for a determination that the application does not infringe on patents of the innovator drug.

“This draft lacks an incentive provision for a generic to successfully challenge an innovator,” wrote Cohen.

In 2017, the NMPA proposed a patent linkage system that would require applicants to declare within 20 days of product submission that their applications do not infringe active patents (see “CFDA Proposes Major Modernizations”).

In April, CNIPA released its 2020-21 plan to strengthen IP protections. The plan, which does not provide a timeline for implementation, calls for establishment of an “early resolution mechanism” for pharmaceutical patent disputes by October. It also calls for promoting the revision and review of China’s patent law to strengthen pharmaceutical patents including punitive compensation for infringement and patent term extensions (see “Delayed Expectations”).

The NPC is accepting public comments on the draft amendments through Aug. 16.