Introduction to the China Patent Exploitation License Contract Record System

Recently, our lawyers are consulted for the necessity and attentive point of patent exploitation license record, and as a professional patent agency qualified by the administration, DeBund Law Offices provides the service of application of the license contract record for the global client in China. Today we will introduce the system of the paten exploitation license contract record in China.

I. The function of the administrative record

1. The information disclosure

For the data coming from the patent exploitation license record, the State Intellectual Property Organization (“SIPO”) has established a special data base, which is available for public check. And in addition, for the registered data, SIPO also makes the record on Patent Register and will also make a publication on the Patent Gazzete.

2. To challenge any third party in good faith

The second function of the record is to challenge the third party in good faith. Although the there has regulated no specific articles in the existing laws, it will refer to the Article 19 of Several Interpretations on the Law Application in the Hearing of Trademark concerned Civil Cases by the Supreme People’s Court in practices, which says that “Any trademark license unrecorded shall not influence the effect of the contract, unless otherwise agreed by the parties. The trademark licensing contract unregistered in the administration shall not challenge any third party in good faith”.

3. The effect of evidence

The record could also be adopted as the evidence in the application of prior suit injunction. By paragraph 2 of Article 4 of Several Regulations on the Law Application in the Application for Infringement Ceasing against Patent before the Lawsuit by the People’s Supreme Court, the patent licenser shall submit the material to the proof of the record in the administration in application of prior suit injunction.

4. The reference to the compensation amount

By the Article 21 of the Several Interpretations on the Law Application in the Hearing of Patent concerned Civil Cases by the Supreme People’s Court, when the losses of the infringed party or the gain of the infringer could not be determined, while the patent license fee is available for reference, the People’s Court may decide the compensation by the 1-3 times of the license fee. Therefore when it’s difficult to calculate the losses or gains in the infringement, the recorded license fee could be the standard in the compensation calculation by the court.

II. The license sort

There’re currently four sorts of licenses, exclusive license, sole license, ordinary license and sub-license. And the following is the definition of them:

1. The exclusive license

It refers to the licensed right to the patent (or the patent in application) granted by the licensor within a certain period and territory, and the licensed shall not sub-license such patent to any third party within the time period and territory agreed in the contract. Furthermore, the licensor shall not use such patent (or the patent in application) to the manufacture and sale of the product.

2. The sole license

It refers to the licensed right to the patent (or the patent in application) granted by the licensor within a certain period and territory, and the licensed shall not sub-license such patent (or the patent in application) to any third party, while the licensor itself may maintain the right to use such patent (or the patent in application) to the manufacture and sale of the product.

3. The ordinary license

It refers to the licensed right to the patent (or the patent in application) granted by the licensor within a certain period and territory, and the licensed could sub-license such patent (or the patent in application) to any third party in addition and may maintain the right to use such patent (or the patent in application) to the manufacture and sale of the product.

4. The sub-license

For the ordinary license is not exclusive, therefore the licensed may sub-license the patent right to any third party when granted the right. That’s the so-called “sub-license”

III. The requirements for the record

1. The requirement of the object

The patent exploitation licensor is usually all the patent owner, unless it’s agreed that the licensed may sub-license. It deserves the attention that Article 15 of the Patent Law provides a exceptional case, “It refers to the licensed right to the patent (or the patent in application) granted by the licensor within a certain period and territory, and the licensed shall not sub-license such patent (or the patent in application) to any third party, while the licensor itself may maintain the right to use such patent (or the patent in application) to the manufacture and sale of the product.”

2. The requirement on time limit and the agent

By the law provisions, the record of the patent exploitation license shall be applied within 3 months after the effect of the contract, and the record of the contract with foreign party involved shall be handled through local agencies. Moreover, the local intellectual property office shall not accept the application, and that means the only authority for the governance of record is the SIPO. As to the principal in the patent record, it shall be specific to the individual.

3. The requirement on document submission

The following material shall be submitted when the application of the record:

(1) The application form of the license contract record (the standard form), and the form shall be filled out in print with only the seal excluded;

(2) The original copy of the patent exploitation license contract, which shall contain the detailed information of the parties involved, patent, license sort, licensed period and territory, the license fee and the payment method;

(3) The proof to the identity of the licensor and the licensed;

(4) The original copy of the power of attorney and the copy of the ID card of the attorney;

(5) the proof to the effectiveness of the patent (or the patent in application);

When the above documents are in foreign language, it shall submit a copy of Chinese version which shall be prevail at the same time.

IV. The situation not for record

The Management Measures for Patent Exploitation License Contract Record and other laws & regulations also list the situation not grant for the record:

(1) The licenser is not the legal owner or the patent applicant or other right owners;

(2) The patent right is expired and the application is deemed as withdrew;

(3) The patent right is under the delayed payment of the fee;

(4) The licensed period is longer than the patent protective period;

(5) The re-record of the same patent exploitation license contract;

(6) The patent right (or the patent in application) is in the period of discontinuance, preservation or pledge;

(7) The patent has been exclusively or solely granted to others and recorded, and the license afterwards signs the license agreement with a third party;

(8) The patent has been licensed to others under the ordinary license, and the licensor afterwards signs the exclusive or sole license agreement with a third party.

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3.The Patent Prosecution Highway is Piloting in China.
4.How to apply for the pre-litigation injunction in China? (I)
5.The First Primary People’s Court with Jurisdiction over Patent Disputes in China

Author: Albert Chen
Attorney-at-law of DeBund Law Offices
Co-author: Mr. You Yunting
Founder & Editor-in-Chief of Bridge IP Law Commentary
Partner & Attorney-at-law of Shanghai DeBund Law Offices
Email: Bridge@chinaiplawyer.com, Tel: 8621-5213-4900,
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Bridge IP Law Commentary is a website focus on the introduction of commercial laws in China, especially the intellectual property laws. All the posts here are our original works. And all news or cases referred here are from public reports, and our comments or analysis are of due diligence, neutrality and impartiality, representing our own opinions only and are our original works. You may contact us shall you have any opinions or suggestions.

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