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Any company considering an expansion into China should be aware of the specific challenges of Chinese intellectual property law. As the country takes its place in the global economy many aspects of IP law are evolving quickly. Often, the company with the best IP strategy gains a critical advantage over its competitors. China’s focus on IP laws has closely paralleled its increasing participation in the global economy. Patent law was introduced in China in 1984, and the law has been amended twice, in 1992 and in 2000. The last amendment took effect in July 2001, just months before China became a member of the World Trade Organization in December 2001. This most recent amendment aligned Chinese law with the Trade-Related Aspects of Intellectual Property Rights agreement (TRIPS). Before filing a patent application in China, companies should consider the following issues. Translations:The Chinese Patent Office, a part of the State Intellectual Property Office, only examines patent applications written in Chinese. If an application is filed through the Patent Cooperation Treaty, it can be filed in English as long as the Chinese translation is filed within two months. Otherwise, a translation is required at the time of filing. Translation from one language to another may cause deviations from the original meaning, which can affect the scope of the patent protection. It is important for U.S. filers to submit applications in both the original English version and a translated Chinese version, so if a question arises over the meaning of a word or phrase in the translated version, the original version provides support and clarification. Relative Novelty:Chinese patent law requires “relative novelty,” refusing patent protection for any invention that has been publicly disclosed in China or published anywhere in the world. An invention used outside of China, but not published, is eligible for patent protection. Filers should be aware that patent examination can be deferred by the applicant for up to three years from the date of filing. Patent applications are published 18 months after the date of filing. Compulsory Licensing:Patent licensing has become a common practice in China in recent years, although there is continuing concern about the compulsory license provision in Chinese patent law. In fact, no compulsory license of a patent has yet been granted, and given the sensitivity to this issue, it is unlikely that any patent holders would be compelled to license their inventions, except in cases related to Chinese national security or prevention of a natural or world disaster. For example, China is a proponent of compulsory licensing of patents for treating AIDS. To date, however, the Patent Office has not granted any compulsory licenses of patents related to the treatment of AIDS. Enforcement:Patent infringement has been a major problem in China in the past due to a lack of effective laws as well as lax enforcement. China has begun to address these issues and has made significant progress toward effective enforcement. For example, treble damages are available to plaintiffs, but there is still no provision for punitive damages. Judges today are given more power to compel discovery than ever before, while an even stronger evidence law is currently being drafted. One of the most encouraging signs of progress is the increasing number of successfully litigated patent infringement cases. Patent litigation can take two paths. A common technique begins with a complaint to a local patent administrative authority authorized by the Patent Office to resolve disputes regarding inventorship, ownership and patent infringement. The alternative method is for the plaintiff to go directly to provincial or municipal court, generally at an intermediate court level if one party is foreign or includes a foreign partner. The patent authority process tends to be inexpensive and quick — sometimes a few weeks. However, a patent authority can only issue injunctive relief. And the jurisdiction of each patent authority is limited, so the process may have to be repeated. Either party can skip the patent authority process and initiate litigation in the court system where damages are available, but parties can take discovery only at the discretion of the court. So gathering evidence may be difficult. One technique for seeking and proving damages is to persuade a patent authority to grant an injunction and to then use the evidence gathered in discovery by the patent authority in a court proceeding. The ruling of the intermediate court, subject to appeal by a high court, is binding in all of China. Alternate Resolutions:A Chinese arbitration law was enacted in 1995, and commissions were organized at about the same time to oversee the arbitration proceedings. If the infringement constitutes serious counterfeiting, another alternative may be criminal court. And, of course, the best possible resolution is a successful business negotiation that avoids court and satisfies both parties. As the global economy continues to play an increasing role in China’s growth, there will be additional progress in its IP laws. U.S. companies that do business in China should keep close tabs on the increasing sophistication of IP laws in this changing country. Jon F. Tuttle, a partner, and Min (Amy) Xu, an associate and native of China, are in the patent group at Minneapolis’ Dorsey & Whitney ( www.dorseywhitney.com). If you are interested in submitting an article to law.com, please click herefor our submission guidelines.

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