New Added Patent Open Licensing System in the Chinese Patent Law

Borsam IP
BORSAM IP———————————————
In recent years, with the rapid development of the Chinese economy and technology, the number of patent applications and authorizations in China has continued to grow and come out among the top in the world. In 2019, China continued to rank first in the world in terms of patent applications, but the implementation rate of the patent was low. According to statistics, the conversion rate of our country's patent is only about 10%, which is far lower than the level of 40% in developed countries. Therefore, to solve the low patent conversion rate and difficulty in application and implementation, a patent open licensing system has been added to the Chinese Patent Law in the 2020 Amendment to solve patent "employment" difficulties.
1. A brief introduction to the patent open licensing system

The patent open licensing system is an important legal system to promote the implementation of the patent. It refers to the patentee who voluntarily submits an open license statement to the patent administration department after obtaining the patent right, which is announced by the national patent administration department. During the patent open license period, any entity or individual can get the patent's use following its licensing conditions.

2. The content of newly added patent open licensing system

The newly amended Patent Law contains three Articles about the patent open licensing system.

2.1 Statement of permission and withdrawal

Article 50 stipulates for the statement and withdrawal of an open license. Where the patentee voluntarily declares in writing to the patent administration department of the State Council that he is willing to license any entity or individual to exploit his patent, and clearly defined the method and standard for payment of open license fees, the patent administration department of the State Council shall make an announcement and implement a free license. And the patentee withdraws the statement of open license, and it also should be filed in writing and be announced by the Patent Administration Department of the State Council.

2.2 The provision of licensing method and annual fee

Article 51 provides for the acquisition of a patent open license, annual fee reduction and exemption, and licensing fees. During the implementation period of the open license, the annual patent fee paid by the patentee shall be reduced or exempted accordingly.

2.3 Dispute resolution mechanism

Article 52 provides for the settlement of open license disputes. Where the parties have disagreements over the implementation of an open license, the parties shall negotiate and resolve them; if they are unwilling to negotiate or fail to reach a negotiation, they may request mediation from the Patent Administration Department of the State Council, or they may file a lawsuit in a people’s court of law.

3. The meaning of the patent open licensing system

Firstly, the patent open licensing system builds a platform for patentee and the public, which is conducive to the docking between supply and demand and reduces the legal risks of patent licensing transactions.

Secondly, the patent open licensing system helps potential licensee and patentee to have a clear understanding of each other’s conditions and information, and it helps the signing of open licensing contracts to be made openly and transparently, thereby protecting the interests of both parties.

Thirdly, the open licensing system will make it easier and cheaper to obtain a patent license, thereby reducing the possibility of patent infringement. Besides, it can reduce patent litigation and save social resources. Due to the patentee in the open licensing system waives the right to decide whether to license others to implement and choose the licensee. Therefore, if the infringer pays the patent royalties after being discovered, the interests of the patentee are also compensated.

4. Summarize

In summary, the patent open licensing system has the features of voluntariness, fairness, openness, and sharing. Through establishing an incentive mechanism, patentee and licensee are provided with more options for patent implementation at lower legislative and administrative costs. Besides, it provides a fair and convenient licensing channel for potential users. Although there may have some shortcomings in the patent open licensing system, the licensing system can be gradually improved in later practice.
Therefore, in general, the new patent licensing system promotes the transformation of scientific and technological innovation achievements and provides guarantees for creating a legal and convenient patent application environment.