Chinese patent linkage system – the Chinese Supreme Court issues Draft Judicial Interpretations

The Chinese Supreme Court (“SPC”) released on 29 October 2020 the “Provisions on Several Issues Concerning the Application of Law in the Trial of Patent Civil Cases Involving Drug Marketing Review and Approval (Draft for Public Opinions)” (“Draft Judicial Interpretations”) to provide guidance on the application of the new patent linkage provisions set out in the new Patent Law Amendments 2020 (“Amendments“), which will come into effect on 1 June 2021.

Legal Framework

Article 76 of the Amendments state that during the drug marketing authorization (“MA“) review period, if there is a patent dispute between the MA applicant and the patentee or interested party relating to the drug, which is the subject of a MA application, the relevant party may file court proceedings (“Patent Linkage Case”), to seek a judgment on whether the drug falls within the patent protection scope.

The National Medical Products Administration (“NMPA“) may, within a prescribed time limit, decide to stay the MA approval based on an effective court judgment. The current proposed “prescribed time limit” is 9 months (Draft Implementing Measures for Drug Patent Dispute Early Resolution Mechanism – September 2020).

The parties may also request an administrative ruling on the relevant patent dispute (i.e. if the drug falls within the patent scope) from the China National Intellectual Property Administration (“CNIPA“).

The Draft Judicial Interpretations

As patent linkage is new to China, the Draft Judicial Interpretations provide much needed detail on how the proposed system will operate. We set out below the key provisions:-

1. Definitions

The following definitions are contained in the Draft Judicial Interpretations:-

• “Court” is the Beijing IP Court (“BIPC”), which means the BIPC has jurisdiction for all Patent Linkage Cases. BIPC judgments will be appealed to the SPC;
• “Relevant patent” is a patent recorded on the Chinese Marketed Drug Patent Information Record Platform (the “Platform”) and related to the originator drug marketed in China;
• “Interested party” is a patent licensee and/or originator drug MA holder;
• “Relevant party” is a patentee, the interested party and/or drug MA applicant (i.e. patentee, originator MA holder, patent licensee and generic applicant may file court proceedings).

2. Required Documentation

The following documents must be filed when a Patent Linkage Case is commenced:-

• The relevant patent/s in suit, which have been recorded on the Platform;
• The generic drug MA application information published by the Centre for Drug Evaluation (“CDE”);
• The “non-infringement” statement of the MA applicant;
• Preliminary evidence (not currently defined) on whether the drug falls within the patent scope.

The MA applicant is also required to submit a copy of the technical materials filed with the CDE to assist with the determination of the patent case. If the MA applicant submit materials clearly inconsistent with those on file at the CDE, the MA applicant may be punished by a fine, detention or even subject to criminal liability (Article 111 of Civil Procedure Law).

The court will refuse to accept the case if the patent in suit has not been recorded on the Platform. According to the current draft Patent Linkage Measures, the following patent types can be recorded on the Platform:-

• Chemicals – compound patent, formulation patent, indication patent;
• Biologics – sequence structure patent;
• TCM – formulation patent, extract patent and indication patent.

3. Parallel Proceedings

As there can be a number of generic applicants (and patents) for one drug, there is the possibility of multiple civil and/or administrative proceedings. The SPC has set out a proposal on how the Patent Linkage Cases (and parallel civil and administrative proceedings) will be streamlined:-

• If more than one party initiates separate Patent Linkage Cases for the same patent and drug – the court will try the cases together;
• Administrative proceedings pending before the CNIPA (whether for patent invalidation or under Article 76), will not affect the ability of a party to commence a Patent Linkage Case;
• If the patentee/interested party or the MA applicant file patent infringement or declaration of non-infringement proceedings after commencing a Patent Linkage Case, such patent infringement/declaration of non-infringement proceedings will be transferred to the BIPC. However, patent infringement or declaration for non-infringement proceedings filed before the commencement of the Patent Linkage Case will not be transferred;
• Patent infringement or declaration of non-infringement proceedings filed after the drug’s MA approval will not be transferred to the BIPC.

4. Injunctions in relation to Patent Linkage

Importantly for many originator companies, if a Patent Linkage Case is filed, the patentee/interested party may apply for an injunction (with bond required) against the MA applicant to prevent it from manufacturing, using, offering to sell, selling or importing the drug for business purposes. However, the injunction will not stay the MA application and NMPA review. If granted, the injunction will normally be in force until the effective judgment is handed down (Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in Examining Cases Involving Act Preservation in Intellectual Property Disputes).

5. Trade secret protection

The obligation of confidentiality on a party’s trade secrets is expressly set out in the Draft Judicial Interpretations.

6. Outcome of Patent Linkage Cases

The SPC has also set out possible outcomes in the Draft Judicial Interpretations i.e. the court can dismiss the patentee/interested party’s “infringement” action or make an rule in favour of the MA applicant’s “non-infringement” action in the following scenarios:-

• The patent in dispute is invalidated by CNIPA or BIPC (on appeal);
• The MA applicant is successful in the prior art defence or non-infringement exemptions;
• The court opines that the patent in dispute should be invalidated (this will be an opinion only as the court does not have jurisdiction to invalidate a patent as validity is handled by the CNIPA).

7. Post Patent Linkage Case

The Draft Judicial Interpretations also outline several potential options available to the parties once a Patent Linkage Case has been determined:-

• If the court finds that the generic drug falls within the patent scope after the drug’s MA approval, the patentee/interested party may initiate new patent infringement proceedings;
• The outcome of a Patent Linkage Case may be used in subsequent patent infringement or declaration of non-infringement proceedings;
• If the patentee/interested party withdraws the case without good reason, or if all of their claims are dismissed, the MA applicant may file proceedings with the BIPC to seek damages resulting from the stay of the MA approval. The MA applicant may also seek to recover reasonable litigation costs.

8. Document Service

Court documents can be served on the contact person, mailing address and/or e-mail address that are listed on the Platform or on the information platform of CDE. These contact details may be used until the party submits a confirmation letter to the court with a different/updated service address.

Summary

As the patent linkage provisions are new for China, the Draft Judicial Interpretations provide some guidance on how the system will be implemented in practice. The Draft Judicial Interpretations are open for public consultation until 14 December 2020. Bird & Bird will continue to follow the status of the Draft Judicial Interpretations and other administrative measures related to the proposed patent linkage system in China.