China Permits Duplication of Life-saving Drugs at Lower Price

By Albert Chen

According to the report of South China Morning Post, the latest revised Measures for the Compulsory Licensing for Patent Implementation (the “Measures”), which has come into effect from 1^st May of 2012, China government may sign the compulsory license to the manufacture of the cheap copy of the patent drugs when in the urgency or exceptional conditions of the state, or for the public interests.

Also in the report, it points out that the action by China government is an alert to the world pharmacy industry when China is a prominent part to the global medicine market; especially currently we see a decline in the western countries. Meanwhile, the news also says, for the past decades, many Chinese medicine makers have been manufacturing the important drug ingredient exported to foreign counterparts, who however would afterwards sell the patent medicine made with the aforesaid ingredients to China at a high price which is hardly affordable to Chinese patients. Now China has been focused on its wrestling with foreign drug makers, especially as known, the Global Fund to Fight AIDS, TB and Malaria will no longer grant donation of AIDs prevention to China from 2013.

We have made the introduction of the new compulsory licensing system in the post of Interpretation on New Compulsory Licensing for Patent Implementation Rule, and its details are as follows:

China State Intellectual Property Office (SIPO) issued its No. 64 order on 15^th March, 2012 to announce the promulgation of the newly revised Measures for the Compulsory Licensing for Patent Implementation (the “Measures”). The most attention catching point is the amendment of medicine patent compulsory licensing. Then, what are the specific provisions? And is there any amendment else deserve you focus? Today, we will make a brief introduction for you.

I. Medicine Compulsory Licensing

Although the adding of the compulsory licensing of medicine is most attractive, the legislation on the issue is not first made in China. In the China Patent Law revised in 2008, the articles provide:

Article 49 Where a national emergency or any extraordinary state of affairs occurs, or public interests so require, the patent administration department under the State Council may grant a compulsory license for exploitation of an invention patent or utility model patent.

Article 50 For the benefit of public health, the patent administration department under the State Council may grant a compulsory license for manufacture of the drug, for which a patent right has been obtained, and for its export to the countries or regions that conform to the provisions of the relevant international treaties to which the People’s Republic of China has acceded.

However, for the abstract provisions and no detailed implementation regulations issued latter, the application for medicine compulsory licensing is rare in China. Even the hot discussed application of Baiyunshan Pharmaceutical for the compulsory licensing of Tamiflu (note: the link is in Chinese) several years ago was finally refused by the administration, and no definite ending is known to us till now. However, the related detailed provisions are amended to the new Measures.

(1) The application made by units

As provided in the Article 7 of the Measures, for the benefit of public health, any units qualified in paten implementation may apply for the manufacture of the patented medicine and import it to the nations or regions as stated follows with the reference to the Article 50 of the Patent Law:

1) The least developed states or regions;

2) The developed or developing members of WTO as the import party and noticed to WTO by the relevant international treaties.

The above articles listed the 2 main situations for licensing application, and by our understanding, the second situation could be the main reference for domestic companies to apply for the medicine manufacture with compulsory licensing.

Surely, the articles on the unit application are also added, including:

1) the applicant shall provide the information of the importer, the demanded medicine and the compulsory licensing;

2) the licensed manufactured amount shall not be more than the actual needs of the importer and shall not be imported to any third parties;

3) the licensed manufactured medicine shall be specially marked or be labeled as “manufactured under compulsory licensing”, and also the special color, shape and package of the medicine, when no influence on the price shall hereby produce, shall also be adopted;

4) before the transportation and import of the medicine, the licensed unit shall release the information about the medicine amount and the features of the medicine provided in the Article 2 of the Measures on its website or the website of WTO.

(2) The suggestions of the administration

It’s restated in the Measures that the patent administration under the State Council may suggest for the compulsory licensing when “it’s in urgency or extraordinary conditions”. And also the detailed implementation of the “suggestions” by the State Council are also specified in the Measures, which include the reasons for compulsory licensing, patent name, patent number, patentee name, licensing period and licensed unit information.

II. The compulsory licensing with foreign elements involved

The regulations on the patent compulsory licensing with foreign elements involved are also amended in this revision, involving the using of proof documents in foreign language and the application of compulsory licensing in China by foreigners or units.

Despite the Paragraph 1 of Article 3 is as same as the past article and demands “any documents used in the application of compulsory licensing, compulsory licensing fee adjudication and the termination of compulsory licensing” shall all be in Chinese, the change could be found in its 2^nd paragraph.

According to the original regulation, “When the submitted certificate or proof documents are in foreign language, the parties related shall present the translated version at the same time. And once no such versions are presented in the legal period, it shall be deemed as presentation failure of the application”. While, such translated documents are only demanded when it’s necessary according to the judgment by the patent office according to the new Measures. Surely, the standard of the consideration of necessity needs observance in the future implementation of the laws.

Beside the proof documents in foreign languages, the new Measures also regulates that the foreigner, foreign enterprise or other foreign organization with no residence or business place shall entrust patent agency when make the application of compulsory licensing.

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