China Municipal People’s Congress proposes to impose fines of up to RMB 150,000 on applicants for irregular patent applications



On September 30, 2021, the Shanghai Municipal People’s Congress released the draft of several provisions on the establishment of a high-level intellectual property protection system in the Pudong New Area, Shanghai (上市市 浦东 新区海建立 高水平 知识产权 保护 制度 若干 规定 (草案). Article 6 of the provisions proposes to increase the penalties for irregular (or abnormal) patent applications and malicious trademark applications up to 150,000 RMB (23,280 USD) and 50,000 RMB respectively. The provisions also provide intellectual property 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 applying for abnormal patents should be given a warning and may be fined up to 150,000 RMB.

Units and individuals who maliciously request marks should be given a warning. If they have illegal earnings, they can also be fined five times the illegal earnings up to RMB 50,000; if there are no illegal earnings, they may be fined not more than RMB 30,000.

The National Intellectual Property Administration of China (CNIPA) previously defined irregular (abnormal) patent applications in the Measures Concerning the Regulation of Patent Applications (关于 规范 申请 利) as:

(1) To submit simultaneously or successively several patent applications which clearly have the same content of creation of invention, or are essentially formed by simple combinations of different characteristics or elements of creation of invention;

(2) The patent application submitted contains fabricated, falsified or modified inventions and creations, experimental data or technical effects, or plagiarism, simple replacement, a patchwork of existing technologies or existing designs, etc. ;

(3) The invention-creation of the submitted patent application is manifestly incompatible with the actual research and development capabilities and the resource conditions of the applicant and the inventor;

(4) The invention creation content of multiple filed patent applications is mostly randomly generated by computer programs or other technologies;

(5) The invention-creation of the patent application submitted is an invention deliberately formed for the purpose of circumventing the patentability examination, which is manifestly incompatible with technical improvement or common sense of design, or not has no real protection value, is inferior, accumulates, or unnecessarily limits the extent of protection Creation, or content of no search and examination significance;

(6) In order to evade surveillance measures against irregular patent applications, several patent applications which are substantially related to a specific entity, individual or address are scattered, submitted sequentially or in different places;

(7) Not to buy or resell patent application rights or patent rights for the implementation of patented technologies, designs or other legitimate purposes, or falsely tamper with inventors or designers;

(8) Patent agencies, patent agents or other institutions or individuals, acting as agents, inducing, inducing, aiding or conspiring with others to implement various types of irregular patent applications;

(9) Other irregular patent applications and related behavior which violate the principle of good faith and disturb the normal order of patent work.

Article 9 of the provisions provides intellectual property protection in Pudong Exhibition Centers, which covers the huge Shanghai New International Exhibition Center and exhibitions such as the massive Bauma Exhibition for Construction Machinery. Section 9 can function as the equivalent of a temporary injunction as can sometimes be obtained in Las Vegas against exhibitors at trade shows.

The organizers of congress and exhibition activities will not allow exhibitors who have not submitted their intellectual property compliance commitments (or relevant intellectual property certificates) to participate in the exhibition.

If an exhibition object is accused of counterfeiting by a right holder, the exhibition organizer immediately asks the exhibitor to provide a certificate of non-infringement. If the exhibitor is not able to provide it within a limited time, the trade fair organizer will immediately take measures such as the concealment or removal of the exhibits, or the cancellation of the authorization to participate.

If the organizer of exhibition activities violates the provisions of paragraphs 1 and 2 of this article, he will be ordered to make corrections and to a fine of at least 30,000 RMB but not more than 100,000 RMB.

Section 10 increases statutory damages up to RMB 10 million, which is double the RMB 5 million listed in Section 71 of the Patent Law:

In the event of infringement of intellectual property rights, the actual loss of the right holder, the infringer’s illegal income and the license fee are difficult to calculate, the People’s Court grants, based on the circumstances of the infringement, a compensation of less than 10 million yuan.

Likewise, section 10 doubles the punitive damages for serious cases of intentional infringement to ten times against five times the damages in patent law. Repeated infringement of the same patent may result in a fine of up to 5 times the illegal business income or 250.00 RMB if it is difficult to determine the income.

The full text is available here (only in Chinese). Comments are due October 15, 2021.

© 2021 Schwegman, Lundberg & Woessner, PA All rights reserved.National Law Review, Volume XI, Number 283


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