Practice of Record of Patent License Contract in China

Borsam IP
BORSAM IP———————————————

In order to solve the problem of information asymmetry between the supply and demand sides of patented technology, enable any company or individual to easily obtain patent licenses, reduce patent transaction costs, and increase the rate of patent conversion, the revised patent law adds an open licensing system, which will be implemented on June 1, 2021. The licensee needs to note that if a patent license is obtained, it is best to complete the record procedures before China National Intellectual Property Administration (i.e., the “CNIPA”) in time. This article will give a comprehensive introduction to matters related to the record of patent exploitation license contract in China.

1. What is the record of patent exploitation license contract?

The record of patent exploitation license contract refers to the act of the patent administration department or the department entrusted by it to keep the patent exploitation license contract that the parties have concluded and become effective, and publicize it.

Points to note:

1) The "patent administrative department" is the China National Intellectual Property Administration;
2) The effective date of the contract is not necessarily the signing date of the contract, and the effective date clearly agreed in the contract shall prevail;
3) The means of public disclosure is a publication on the Patent Gazette, which is also recorded in the patent register.

2. Why record the patent exploitation license contract?

2.1 Disclosure of patent using information

Disclosure methods such as patent announcements and records in the register have a positive effect on regulating patent licensing transactions and protecting the legitimate rights and interests of parties involved in patent licensing.

2.2 Effect of evidence

The licensee shall submit the patent license contract record certificate issued by CNIPA to prove his qualifications when going through customs intellectual property record filing, applying for pre-litigation injunctions, and other related procedures.

2.3 Reference standard for infringement compensation

The nature, scope, time, amount of license fees, etc., of the recorded patent contract can be used as a reference when the people's court or the patent administration department conducts mediation or determines the amount of compensation for infringement disputes. If it is difficult to determine the loss of the infringer or the profit of the infringer, if there is a patent license fee for reference, the people's court may refer to 1-5 times the license fee to determine the amount of compensation.

2.4 To challenge any third party in good faith

If the license contract has not been recorded, the validity of the contract will not be affected unless otherwise agreed by the parties. If the exploitation license contract has not been put on record, it shall not challenge any third party in good faith.

3. How to handle the record procedures of a patent license contract?

3.1 Subject of record

The licensor or licensee can go through the record procedures, and the licensor should be one of the following:

1) All legal pat patentees;
2) Part of legal patentees (must comply with Article 15 of the Patent Law);
3) Authorized right holders (providing proof of the legal source of the patent, and the proof should be the original or notarized copy).

3.2 Timing of record

After the signing of the patent license contract, the parties (licensor or licensee) shall go through the record procedures with the department designated by the CNIPA within 3 months from the date of the contract's entry into force.

If the record of the contract exceeds 3 months from the effective date of the contract, the record department will not handle it. If the parties wish to record, they can re-sign the license contract within the specified time or submit a declaration of validity of the original patent license contract signed by both parties.

3.3 Acceptance department for record

If both parties to the patent license contract involve foreigners, foreign enterprises, or other foreign organizations (including Hong Kong, Macao, and Taiwan regions of China), the parties concerned shall go to the Patent Office of the CNIPA for the record.

3.4 Fees for record

Currently, there is no official fee for the record of patent license contracts in China.

3.5 Materials required for record

When recording a patent license contract, the following documents shall be submitted in one copy:

1) An application form for the record of a patent license contract signed or stamped by the licensor or its authorized patent agency;
2) The original patent license contract, or a notarized copy signed by both parties;
3) The legal identity certificate of the licensor and licensee;

a. Individuals shall submit a copy of their ID card, and foreigners can submit a copy of their passport;
b. The legal persons shall submit a copy of the organization code certificate with the official seal (the enterprise) or the legal person certificate of the public institution (the institution);
c. The foreign entity should submit the local legal person registration certificate with a Chinese translation or a notarized copy with an entity’s seal;

4) The original copy of a power of attorney signed by the licensor, the licensee and the attorney, and a copy of the attorney's ID card;
5) the proof of the effectiveness of the patent (or the patent in application);

a. If the patent has been granted, a copy of the patent certificate or a copy of the patent register signed by the licensor shall be submitted;
b. If the patent application has not been granted, a copy of the filing receipt notice shall be submitted;

6) Other materials that need to be provided.

Please note: if the above documents are in foreign languages, a Chinese translation should be attached, and the Chinese translation shall prevail.

3.6 Time limit for review and approval of record applications

The record department will issue a record certificate within 7 working days from the date of receipt of the required compliant record materials.

When more than 50 patents are involved in the contract to record, the record approval time may exceed 7 working days.

3.7 The common situations not for record

◆The licenser is not the legal owner or the patent applicant, or other right owners;
◆The joint patentee violates the law or agrees to conclude a patent license contract;
◆The re-record of the same patent exploitation license contract;
◆Conflict with the recorded patent license contract;
◆The patent right is pledged, except with the consent of the pledgee;
◆The period of the implementation license is longer than the validity period of the patent right;
◆The patent right has been terminated or declared invalid;
◆The patent right is within the penalty period for the annual fee;
◆Due to a dispute over the ownership of the patent right or the people's court ruling to take preservative measures against the patent right, the relevant procedures of the patent right are terminated;
◆The patent has been exclusively or solely granted to others and recorded, and the license afterward signs the license agreement with a third party;
◆The patent has been licensed to others under the ordinary license, and the licensor afterward signs the exclusive or sole license agreement with a third party.


3.8 Other related issues

1) Whether the foreign patent license contract can be recorded?

If a patent license contract includes both Chinese patents and foreign patents, the contract can be recorded, but the record department can only issue a certificate and announcement for the Chinese patents.

2) Is it necessary to entrust a patent agency to record the contract?

If the licensor and licensee involve foreigners, foreign legal persons, or other foreign organizations, they must entrust a patent attorney of a patent agency to record the contract.

3) Can multiple patents be involved in a license contract?

A license contract can involve multiple patents, and there is no need to record separately. You could just fill in the multiple patent information involved in the contract in the same record application form.

Patent licensing is an important means of patent transformation. The current relevant policy and platform make patent commercialization easier and more effective. But don't forget to record the patent license contract after obtaining the patent license. This is also a critical step!