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China’s new patent law – important changes for the pharmaceutical sector


30th Oct 2020

In January this year we reported on the signing of the first phase of the US-China trade deal. The agreement outlined China’s commitment to enhancing protection and enforcement of pharmaceutical related patent rights in China via proposals for patent term extensions, a patent linkage system and the consideration of supplemental data during patent prosecution. At the time little information was provided on how these commitments would be implemented into the Chinese legal system and then enforced in practice.

On 17th October 2020, China approved the fourth amendment to the China Patent Law, which will come into effect on 1st June 2021. This amendment introduces a number of changes to Chinese patent law, with the introduction of patent term extensions (PTEs), patent term adjustments (PTAs) and a patent linkage system being of particular interest to both originator and generic pharmaceutical companies operating in China.

These new provisions have been discussed below. They are certainly good news for pharmaceutical patent holders, illustrating China’s willingness to honour the IP commitments it made with the US earlier this year. However, important questions still remain as to how these legislative provisions will work in practice.

Patent term extension

Amended Article 42 of the legalisation outlines that the term of a patent may be extended in order to compensate a patent proprietor for the time taken to review and approve a “new drug” for marketing in China. The law now allows for the term of a patent directed to the new drug which has received marketing approval in China to be extended for up to five years, with the overall patent term not exceeding fourteen years from the date of marketing authorisation. The patent proprietor will have to actively request this extension; it will not be granted automatically.

It is unclear from the legislation how the length of the extension will be calculated. Further, it is unclear what constitutes a “new drug” for the purposes of this PTE. A broad interpretation of the term could include, for example, new forms e.g. new formulations or new salts, of a known drug. Further still, there is no indication from the legislation as to whether it will be possible for the patent proprietor to apply for a retrospective term extension for a drug that has previously experienced delays in marketing approval and is still covered by an in-force patent. These are crucial questions that need to be answered, not only for the patent holders but also for generic drug companies planning on launching generic versions of new drugs in China. We know from bitter experience in Europe that any ambiguity on these points will be hotly contested. It will be interesting to see whether further clarity will be provided in the coming months or whether it will be left to the courts to decide these issues.

Patent term adjustment

Article 42 also outlines that for a patent that granted four years after its filing date and three years after the date of requesting substantive examination, the Chinese patent office will compensate the patent applicant for “unreasonable delays” in examination by adjusting the term of the patent (as long as the delays have not been caused by the applicant). Again, the patent applicant must actively request this adjustment to the patent term; it will not be granted automatically. The legislation does not define what constitutes an “unreasonable delay”, and so it is currently unclear how the length of term adjustment will be calculated.

We note that the PTA legislation is not specific to pharmaceutical related patents, and so this term adjustment will be available to all patent applicants in China.

PTAs have been a long standing part of US patent practice and, following similar changes to the patent legislation in Mexico, this continues the trend of trade deals with the US coming hand in hand with the adoption of a PTA system.

The implementation regulations and guidelines for examination relating to this fourth amendment to the China Patent Law are yet to be released. These should provide crucial information on how PTEs and PTAs will work in practice, so watch this space for further developments.

Patent linkage system

New Article 76 of the legislation introduces into Chinese patent law a system whereby pharmaceutical patent holders can delay a generic drug from entering the Chinese market. The provision outlines that before marketing authorisation for a generic drug is granted, the patentee, or an interested party, may bring a patent infringement action before the Chinese courts or request that the Chinese patent office make an administrative ruling as to the determination of infringement by the generic drug. China’s regulatory body (the NMPA) can then make a decision on whether to suspend regulatory approval based on the judgement from the court or patent office.

The wording of Article 76 is fairly general and as with the provisions discussed previously, it is unclear from the legislation how this patent linkage system will work in practice but in general terms it will be similar to the US “Orange book” and South Korean “Green list” systems. Article 76 outlines that the NMPA and the Chinese patent office will work together to formulate specific rules to explain how the patent linkage system will work, and these should provide pharmaceutical patent holders and generics with important information that can be used to tailor their regulatory and patent litigation strategies in China.

Supplemental experimental data during prosecution

We note there is no amendment to the legislation relating to the consideration of supplemental data by the Chinese patent office. This perhaps unsurprising, and we envisage that China will implement its commitment to allowing the use of post-filed data through procedural changes at the Chinese patent office.

Conclusions

China is reportedly now the second largest pharmaceutical market globally so these changes will be carefully monitored by both originator and generic pharmaceutical companies. Pharmaceutical patent holders will welcome both longer terms of patent protection for their marketed drugs and the potential to delay entry of generic drugs onto the Chinese market. For generics, the prolongation of patent terms is likely to impact the suitability of China as both an API supplier and manufacturing country. In addition, the linkage system will inevitably impact the business cases of launches in China as the higher likelihood of pre-launch litigation must now be taken into account.

All pharmaceutical companies with an interest in China should closely monitor the situation as further clarity is provided, and we will ensure to provide updates as and when they happen.

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.

 

Author
Adam Rimmer
Assistant
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