Good morning everyone.
My name is Elaine Woo and I'm
one of the principal councils or
directors of the China team of IP
experts here at the USPTO's Office
of Policy International Affairs.
I would like to welcome everyone to this
webinar on biopharma patents in China
litigation licensing and patent linkage.
According to industry sources,
China is the world's second largest
biopharmaceutical market and
continues to grow at a fast pace,
particularly as the country's growing
wealth and rapidly aging population
creates strong demand for health
care products in an increasing
number of diseases including cancers,
cardiovascular diseases and diabetes.
The increase of China's by Chinese
biopharma companies of reflects the
industry's growth and potential
and why company formation decline
in other major markets.
More than 140 new biotech companies
emerged in China from 2010.
To 2020, in recognizing this potential,
China's policymakers have embarked
on a mission to advance the industry
by enacting policies explicitly
to improve the industry.
This morning,
we'll be talking about the new IP
laws and regulations that China
has recently enacted as part of
this overall effort,
and also as part of its obligations
to implement the US China Economic
and Trade Agreement,
or the Phase one agreement that both
countries entered into two years ago.
Let me go ahead and introduce
the speakers to the program.
Our first speaker today is Larry
Lee and Pat Attorney with many
years experience and expertise,
the biopharma industry.
He is part of the USPTO's China
team of IP experts.
The Chinese team of China team
of IP experts here.
The PTO consists of a dedicated group of
China IP experts with 11 US based lawyers,
three IP attached shades that
are offices in Beijing,
Guangzhou and Shanghai and five
China base US Lloyd Excuse ME
5 China based lawyers.
All of our lawyers have a very good deal of
expertise in China IP law as well as U.S.
law.
One of our important missions is
to help improve the IP environment
in China and also in the US for
the benefit of our companies,
whether they are looking to export
to China or to partner in some way
with Chinese firms are dealing
with Chinese made counterfeits
entering the US or other markets.
Our next speaker is Jonathan Miao.
He is with NTD IP attorneys and
partners in in Beijing office.
Jonathan joined NTD in 2003 and has
extensive expertise and experience in
patent related contentious matters.
He is now leading a team of specialized
in providing legal services in the
fields of chemistry and biotech.
Jill Ge is with the Shanghai office at
Allen and Overy in his her next speaker.
She is this is a UK based
multinational law firm.
She has extensive experience in
patents and trade secret matters
and routinely advises clients
in the area of life sciences.
Lin Sun-Hoffman is a founding partner
in Leo Jung Chen and Hoffman.
Doctor Lynn Hoffman is a PAT
attorney with 20 years experience
focused on innovative life sciences.
She has deep knowledge of all
aspects of patent practice,
ranging from policy,
patent prosecution, due diligence,
opinion work and of course, licensing
and technology transfer negotiations.
Each speaker will speak about 10 minutes,
after which we will have
moderated panel discussion.
We will have Q&A period after discussion.
Please ask questions using the email box.
Ask China IP at USPTO Gov again,
ask China IP at uspto.gov.
Before we start,
I also wanted to give you an idea of the
audience that registered for the program.
We asked on a volunteer basis for
you to take a short survey with us.
I want to quickly go through some of
the results of the survey to give you a
flavor of those who are attending today.
While a small number of you took the survey,
this does offer a snapshot of the audience.
We first asked the size of the company
with which you are affiliated.
61% responded that the size of the
thousand employees are over 22% of
those who answered said they were
from companies between one and.
50 with the remainder from.
Companies a little larger than that,
but under 1000 employees.
The second question asks what your
primary lines of business in China were.
55% of those respondents said that
they manufactured outside China for
import and sale in China and 33% or
manufacturing in China for sale in China,
16% or manufacturing inside China
for export outside China.
The third question asked with the
primary IP concerns are that your company
faces the biggest challenges faced by
companies or patent related challenges,
followed by concerns
regarding IP enforcement.
Other prevalent problems include
Chinese government pressures to transfer
technology to Chinese entities,
Chinese government interferences
with IP licensing,
and concerns about protecting
and enforcing trade secrets.
We've asked companies to tell us whether,
over the course of last five years,
there was any change.
The IP situation in China.
53% of those respondents said there
was a noticeable improvement in the
enactment of laws that address concerns
of rights holders regarding enforcement,
25% said there was improvement,
but 75 cent percent said there was no change
with regard to obstacles to IP licensing,
12% said there was an improvement,
12% said the situation had gotten
worse and 75% said there was no
change regarding pressures from the
government to transfer technology.
89% said there was no change.
Finally.
With regard to unauthorized disclosure,
infringement stemming from regulatory
or other government processes,
11% said there was an improvement,
but 89% said there was no change.
With that,
let's go ahead and start the program.
One last thing.
There will be a post program survey.
Please click.
Click on to the link to take a survey.
We would very much appreciate if you
do it soon so we can continually
improve our webinars.
With that,
I'm going to turn it over to Larry
who will give a general overview of
some of the changes we have seen
recently in patent related law,
laws and regulations that deal
with biopharma, the biopharma area.
Over to you Larry. Thank you.
Alright. Thank you, Elaine.
So just to give you guys the
sense of the scale in the past,
I believe a year and three months.
There were, I don't remember
the exact number already,
I think 60 or 80.
Amended a loss or regulations
that came out from China,
so at least a lot has been happening on paper
and hopefully today through the speakers Jill
Jonathan Lynn, you can get a sense,
uh, the some of the early facts of
these legislations on the ground.
Of course,
we only have a very limited time today to
cover very cover just selected topics,
but let me try to broaden a bit to
cover a few just a few topics that
we don't have time to go through
in more detail before I do that,
I want to quickly mention something
about patent linkage you may have
heard the pen linkage being referred
to as early dispute resolution system.
I think that's the phrase actually
used in in phase one.
Agreement between the US and China
that may be a more precise name,
even though it's kind of a mouthful to say.
And just see it's more precise
because that's kind of a spelled out
what exactly the patented system is.
It provides a certainty with
the early dispute resolution,
you resolve the dispute before the
generic goes to the market that that early,
that certainty for lack of
a better way to describe it.
I always try to tell people who perhaps
don't know the linkage system very well.
It's a way of avoiding the *****.
And a generic or biosimilar applicant
applicant playing Russian roulette.
In that sense,
it's kind of a win win system is up course.
How exactly we implement
it is still important,
but fundamentally the concept in my
mind is always sort of a win win design.
So with that,
let me let me move on to a few topics
that I think our speakers probably don't
have a whole lot of time to cover.
The first one is pending extension.
Term extension.
You may hear that as sort of pan
term compensation or even sometimes
ten term adjustment.
But in the US law at least ten term
extension refers to the compensation
plan term due to marketing approval delay.
In other words,
you got your pattern but you cannot
commercialize your pen because you
gotta get approval whenever the product.
Is sort of a medicine or even medical
device that involves human health.
I just want to quickly point out,
uh, many of you may be aware,
actually the during the draft law process,
the pen term extension,
which is compensating the.
A regulatory approval delay or
marketing approval delay and also Patent
term adjustment which is compensating
for Patent Office delay in the
draft law process for both the.
patent law amendment.
The draft panel amendment rather,
actually said May compensate,
may compensate for regulatory delay,
may compensate for Patent office delay,
but the final panel law,
which came into effect,
I believe June 1st.
Last year for Patent Term Extension
and the Patent term adjustment,
both have the word shall,
so that's that's a very good
welcome change from the final
law compared with the draft law.
patent term adjustment for of
course plan for plan office delay
that that one is not limited to two
biopharma patterns that's all patterns
and pattern extension is limited
towards those patterns and requires.
A marketing approval.
In addition to our panel
amendment and various measures,
the there's a I think several SPC Ji
traditional interpretations also came out.
In addition,
Cipla also amended its examination guidelines
in that examination guideline amendment.
I want to highlight a rule that
is particularly critical to
the innovative biopharma.
Companies and that relates to order pants,
panties,
ability to file,
post filing,
supplemental data to prove inventive
step or sufficiency of enablement.
And I believe it's maybe
20 as late as 2013 or so.
China categorically categorically
design reject supplement data if the
data is not in your application.
Sorry auto block.
And that has changed quite a bit,
as seen Jonathan and Elaine will
have time to get into a little
bit more detail with regard
to the supplemental data rule.
I want to also quickly mention
something that is not limited
to the biopharma industry.
That is the so-called abnormal applications
and by CIPa announcement announcement.
I think the total number.
Mentioned.
The number of abnormal
applications is eighty 815,000.
That's quite a bit for year 2021.
Uh,
I think that by my calculation,
uh,
about uh,
that's about 15 to 20% of the total amount of
applications receives and that's quite a bit.
And the word abnormal.
Of course you might ask because it
doesn't exist in the US system.
What do you mean by abnormal?
And there's actually quite
extensive definitions,
but the gist of it is that the
application is not submitted for
the for the purpose of securing.
Protection of invention.
I think you may never see
this in CIP announcement,
but but I think it's fair to say
it's pretty much applications
submitted for the sole purpose of
getting subsidy and in that regard,
the
CIPA actually announced the subsidies.
They will eliminate all subsidies by
2025 and all the provincial and local IP
offices are men are required I believe,
to reduce their subsidy like by 25%.
Every year towards the total elimination
by 2025 and as recent as just last month,
January 27th, I believe Cipa also announced
a measure that included some more details
on how they will punish applicants who
violates the good faith in IP field,
for which abnormal application is a big part.
The bad Faith trademark application
is is another big part of that
violation of good faith.
And I actually see a welcome
welcome step of good step actually.
In that announcement, because the
announcement said uh with regard to.
Either abnormal application or
violation of good facing IP field
which is concealing important facts.
For a long time,
actually the rights holders uh
have been pushing have been.
Telling us that conceding priority is kind of
the ultimate cost of abnormal applications.
Uh, I think concealing
important facts is it's kind.
It's a welcome step forward.
Of course,
it's still not exactly conceding priority.
And with that I think sorry,
I aim to like take 7 or 8 minutes I
think are already overrun my time.
Let me just stop there and welcome
any questions through the email box.
Let me turn the floor to actually
who's going to go after me.
Jonathan, Jonathan.
Alright.
Yeah,
go ahead,
Jonathan.
OK. Thank you, Larry. Yeah.
So this is not my slides.
Uh, since he can you change to my
slides my slides is bio former patent
prosecution litigation not this one.
Thank you. Yeah. Yeah. OK. Thank you.
I mean, it's like sometimes. Point. Uh.
Firstly I want to show you some recent
data about the patent filings in China.
As Larry mentioned,
in recent years, every year,
China has a huge amount of patent
filings in the year of 2020,
China again ranked number one in
the in the major major economies.
And as to the field of bio former,
we can also see that China still
has the largest number of patent
filings and since the year of two.
2013 China is supporting US at accelerated
speed and as of October last year,
China has more than half of the
patterns in the field of bio farmer.
In spite of the increase,
the amount of patent filing every year,
as Larry mentioned that in recent years
seen IPA is taking initiatives to improve
their examination efficiency and also to
improve the quality of China patterns.
Last year, in October last year,
the director of CMLP announced that
they are now able to reduce the every
time needed for invention patent
examination to about 19 months.
Yeah, that's pretty fast.
Uh, and in the meanwhile,
we can see that there is a steady
decrease of the grant rate of
inversion pattern in China,
which I think indicates the
improvement of the patent quality in
China and and and decrease of the so
called garbage patent applications
or abnormal pattern application.
So having said that with the huge
number of patent applications in Bell
former field and with the increase.
Improvement of examination efficiency and
improvement of patent quality in China.
I think China for those who are players
and innovators in bio former field,
China is becoming more and more important
and attractive not only because China
is awarding a so-called aiding society,
but also because China is now becoming
more and more friendly to innovators.
Yeah, especially in the bell,
former field.
Uh, so haven't talked about this?
Uh, this uh this data.
Firstly, I want to keep the audience
a brief introduction to the patent
prosecution and patent litigation
patent infringement litigation
in China with a focus on the
difference between China and the US.
Uh, so as to patent prosecution,
I think there are many.
The difference lies in 3/3 aspects.
The first aspect is in China and the US,
although we both have the
grace period requirements,
but in China we have only six months
grace period and also the grace period
exemptions are strictly limited to
4 scenarios and the first scenario,
the disclosure for the first time
for the purpose of the public.
Interest was introduced with the amendment,
the 4th Amendment to the Chinese patent law.
Uh, and to my knowledge in US you can
have a novelty grace period of up to
one year and almost no restriction
to the manner of disclosure.
So as grace period,
I think in US you have more limited
grace period requirement and secondly.
As to the post filing data
regarding the formality and content
requirements for the post filing data,
I think the US has also a more lenient
and open attitude toward classifying
data compared with practice in China.
After the phase one, China US agreement,
now we have already have some very
extensive isn't and observable improvement
in the attitude toward post filing data.
And the third aspect regarding
the difference between China,
USA is is what can be what can be protected,
what can be claimed regarding
the Biopharm field?
I think we have substances including
antibodies, vaccines and compositions.
All these substances can also
be pattern patented in China.
I think the same in US.
Uh, so in general, uh,
the the method for diagnosis.
Or or master or the treatment of disease
are not patentable in China for human need,
terrorism or considerations.
Uh, for similar reasons.
Drug Administration methods,
including the dosage interval between
dosing and the roads of the administration.
Those are not patentable in China,
but there is something that deserves
a deserves further mention.
That is, for the second use,
the second use of a known drug
for second use of new drug.
If you claim it as a method for four.
Treatment of these years,
of course, that is not possible,
but you can drop it in the
manner of so-called Swiss style.
And with that you can obtain
a patent protection in China.
Before I, uh, we move to the
patent infringement litigation,
I want to talk about the pattern related
cost system in China and in China for
the pattern infringement litigation
and the patent validity litigation we
have the so-called bifurcated systems.
That means the patent infringement
case and the patent validity case.
They go through different court systems.
For patent infringement litigation,
we have the so-called 1 + 4 + N system.
So at the Supreme Court level
or the appellate court level,
we have an IP tribunal inside
the Supreme Court,
which is specialized in hearing IP cases,
especially cases involving technical
issues including the patent disputes.
Then at the trial stage we have we
have 4 specialist IP IP cards which
respectively located in Beijing,
Shanghai,
Guangzhou and Highland and we also have
a 24 IP tribunals in different provinces
and which can which can hear cases
across their traditional jurisdiction.
So with such a such a design
called system for patent.
In the cases we are now having a
kind of concentrated prediction
which can help to uniform the
criteria for for case judgment
and also can to some extent avoid
the so-called local protectionism.
And then as to the patent invalidation cases,
they go through a different a different
approach or different root cause system.
So for patent invalidation cases,
they always start from the scene IPA,
the Chinese Patent Office.
Starting from the CNIPE
validation proceeding,
which is administrative proceeding,
so if one party is not satisfied
with the decision made by CNIPA
regarding the validity of the pattern,
that party can come bring a judicial
review case before Beijing IP cards.
So for this kind of case,
after Beijing EBT card is a is
a trial state is a trial stage.
Although it is the second stage.
And then after the Beijing IP court,
we still have, uh,
the the party still have
opportunity for for a pallet,
for apparent stage which is at
this as the IP tribunal of the
Supreme Court where the party can
get the final the final judgment,
the final judgment and now you can
see for both the patent invalidation
case and the pattern infringement
case at the appellate stage.
They converge to the same
IP tribunal that is,
the IP tribunal in the Supreme Court.
Uh, so this on this slide I showed
some of the major difference between
AS2 patent infringement litigation
between China and the US in USA,
you have the very powerful and
efficient discovery process for
evidence collection in China.
We don't have that in less
you have the jury in China.
We have something that maybe maybe
maybe similar but quite different
which is the peoples juror.
But the people draw these
sit together with the judge.
They form a form of a panel
together with the judge to hear
the case and make the decision.
And also US,
you have the magma hearing in China.
We don't have that.
And also for the for the process in
China generally for infernal dedication
it takes relatively shorter time.
You can get a judgement relatively quicker.
Uh, and also as to the possibility
of getting injunction in China almost
in each and every infant case,
so long as the pattern infringement
is established and approved,
you can almost always get
an injunction order.
Uh, but as to the damage compensation,
as you may have seen from previous
reports that the partner monetary
compensation awarded in China
is relatively low compared that
the penalty get in the USA.
But in recent years we have
seen a steady increase of the
monetary compensation in China.
Uh,
another thing is about the
evidence used in the pattern.
Infant litigation in USI think
the affidavits and depositions are
widely used and witness or also
widely used in the court proceeding.
But internal,
although we also have this kind of
evidence also acceptable in court proceeding,
but generally we tend to think that
this kind of evidence has relatively
lower probative value compared with the.
Documentary evidence.
Or in other words,
in a legal proceeding,
internal documentary evidence always
appears a higher probability value.
So having briefly talked about
the Chinese practice in patent
prosecution patent litigation,
I want to introduce a recent case that
handled by myself and with this case we
can see how how they proceeding works
and how we can share some detailed
take away points with our audience.
In this case, our client,
the right holder, uh.
the IT is not a penalty.
It is a licensee of Chinese
patent which protect a novel,
Cellulitis which is as M4
for Cellulitis treatment.
It can help it can be used for
washing use or for fabric processing.
It can reduce the force on our
clothes especially sweaters.
Uh, so there is one event infringer
who's producing the same product
with exactly the same file sequence,
and the infringer,
or was actively selling the product,
but at a much,
much lower price and the with with
that the infant grabbed almost
all the market share of our our
client read holder or the licensee.
So other other picture,
these are the product we we see
that we we we purchased from this
infringer and you can see the
label on the other bot on the
barrels and these labels are.
All covered up by by notary public in China.
So in China,
as I mentioned,
we have a relatively stricter
requirement on formality of evidence.
So so to purchase the products and
get the purchased product notarized
is always the most important step
in the evidence fixation over
invalidation litigation case.
So uh, always before so
before initiating the lawsuit,
there is a long way.
We spent a long time to prepare the
case from identifying the infringement
and align with the client team.
About the goals of the enforcement
actions and to assess the possibility of
infringement related with passionate,
but the patterns and more importantly,
we spend a long time to collect evidence
to conduct the purchase and to collect
evidence about the production scale,
collect their environment impact
assessment and a lot of evidence.
So once we have all the evidence ready.
We we started talking about the the
infringer to see whether there is a
possibility to settle this case so
that both parties can resolve these.
This dispute in a more efficient way.
So in this case the infringer
they are quite disturbing.
They didn't even acknowledge
their infant activity.
So then we decide to initiate
the lawsuit and so generally
once you initiate the lawsuits.
And the post priorities,
we fail over evidence to show the
infringement and the evidence
to support our damage claim.
The other party will fail Conrad,
and then the court will organize
the evidence exchange and the
Post party will see the evidence
submitted by the early part other
party and to check the authenticity,
credibility and order, order requirements.
Other requirement on the on the evidence.
Another will have the three trail
conference on such conference.
The judge will will review evidence
submitted by both parties and hear
opinions from both parties and
to figure out what is the focus
of dispute between parties.
In our case,
since both parties has sent
efficient apparent dispute on the
infringement assessment and we assert
there is informed the other party,
they said their product is different
from what is claimed in our claims.
So the judge decided to use independent
judicial appraisal institution
and arrange a separate test,
a separate test and the.
The the the the conclusion of
the test showed that their bio
sequence is exactly the same as
clean as claimed in our claim.
Then after that other receiving
the judicial appraisal report
that judged I think
two additional court hearings,
firstly to review the judicial report here,
opinions of both parties on the
judicial report and the informal
assessment and also here.
Review the evidence about
monetary compensation.
Then last year we received the judgment.
Yeah.
So in this judgment,
uh,
they we we received the injunction
order and the judge issued an
injunction against the other products
or the infringing products and also
we our client was awarded monetary
compensation of 10 million RMB.
That was the highest record in
the field of at least the end
them or anything and then yeah.
Uh, uh, and also in this case, uh,
in this amount of monetary compensation,
part of the awarded for as a punitive
compensation file photo punitive
compensation because during the
proceeding of our court hearing,
the 4th amendment of Chinese patent law
came into force.
And so for some part of the compensation
we we we satisfy the conditions.
Full for punitive compensation.
Yeah. And what makes us very happy?
So in this case,
the judge also award award compensation
for attorney fee of 1,000,000 RMB.
That's that's a pretty high amount
compared with the previous cases.
So as a take away points
from from from this case.
So firstly I want to send a
message to our audience now in
China for willful infringement.
We have a punitive compensation
which can be as high as five
times of the damage to the
patentee or to the right holder.
Uh, the second one is,
I think this is something unique in
the patent infringement case in China,
which is a judicial appraisal
when both parties have a dispute
on the infant assessment,
the judge will elect a judicial
independence judicial appraisal
institution to determine to run test,
to determine whether there
is a patent infringement.
The third one is about the shift
of burden of proof in China.
I think we may talk about this later if we
have time in the Q&A session in this case.
Since we have already proved there
is a clear infringement then as
to the monetary compensation,
since we as the parenting,
we don't have evidence to show how
much is the exact profit of the of
the infringer and then we request
for shift part of the burden of
proof to the other party also
them to produce their financial
book and their sales contract,
the judge gives so and and also made
the judgment on monitor compensation.
According to the evidence collected.
The first point is about the
licensees right to sue the infringer.
In this case, however,
our client is a common or normal
ordinary licensee is not a sole licensee.
So for for ordinary licensee,
in order to have the right to
sue the infringer,
I need to firstly have authorization
from the from the patentee.
Besides that,
the licensee also need to have a
declaration from the patentee.
Declaring that the pattern KEY abandoned
its own right to sue the infringer.
So that's all I want to share with you.
Thank you everybody.
Thank you.
Thank you. Jonathan will go ahead and
to our next speaker who will be talking
about patent linkage. Jill, thank you.
Thanks for letting us.
Larry alluded to earlier,
one of the most significant
developments in China regarding
patents would be patent linkage.
And before we dive into that,
it may be worthwhile
explaining what is linkage.
Linkage means that the regulatory
approval of a generic drug is linked
to the resolution of patent disputes
between an innovator and generic.
You may have already sought out.
This is very much likely you are
system the Hatch Waxman system.
They are right or China borrowed
that from the US and to make it work
first we need to have the partner
listings submitted by innovators.
There will also need to be generic
certifications filed by generic when they
submitted their gerneric drug applications.
Most importantly,
there needs to be a mechanism for
the parties to resolve disputes.
With the regulatory approval for the
general being stayed for a certain period.
So in principle.
We have this all in place.
But it's not the system
and it is up and running.
But to reach to this point,
it took quite some years and
you may have heard that US made
theirs in the phase one deal and
China committed to establish this
resolution system for patent disputes
between innovators and generics.
But within China,
this took several years in the making
and understanding that will help you
better understand the system in China.
So importantly part linkage system
touches onto policy imperatives,
which underscores the ongoing
health care reform in China.
On one hand,
the government really wanted to
speed up access to innovative drugs.
And at the same time, and even more,
or grant grant drive here will be to
push down the sky high drug prices in China.
And that means the generic entry in China.
So patent linkage system
touches on both prongs.
The 4th amendment of the patent
law brought to life the present
linkage system in China.
A default false management or
patent law was enacted large here.
So Fast forward to today where
things stand now.
First of all,
a new course of action for patent
linkage has been created and
Article 76 or the PRC patent law.
And discipline court in China.
Has issued judicial interpretation
concerning the litigation for patent linkage.
And both the patents and drug
authorities in China Sea and IPA
and AMP have also weighed in,
issuing their implementing rules
regarding the working of the system.
So for example you have.
Paragraphs for certifications
in the US and in China.
We call it type for certification and this
means that a generic states that it's.
Specific specific solutions does not
fall within the scope or patterns.
Or the innovator's patent is
otherwise invalid.
And the system has been up and
running for quite some time.
For more than six months.
And if you go onto NPS website
over 1000 conduct certifications
are being filed and published.
So next, now look,
let's look at Article 76,
because that is the heart and
center of the patent linkage system.
In China, the concept of artificial
infant infringement is not adopted.
Instead, a new course of action has
been created, and that is called
the scope confirmation action.
This is essentially to determine whether
a generic technical solution falls within
the scope of an innovator's patent.
And under the law, interestingly,
both an innovator and generic may request
that their category determination.
And who has tradiction?
This is even making things
more interesting and trickier.
Both the Beijing IP court as the
judiciary and see an IPA as the
administrative agency now are
having concurrent jurisdiction
to hear Article 76 cases.
This really adds to the complications which
I hope our time to explain a bit more here.
And according to Article 76,
the filing of patent linked placed by the
innovator will stay the generic approval.
As that state period has been
stipulated to be a nine month period.
So.
What are the highlights of the
patent linkage system?
As you were imagine there
will be obligations,
affirmative obligations and it
to be undertaken by both the
innovators and generic companies
for them to avail the benefits and
incentives under the new system.
But very importantly, yeah.
Although the state period is short,
that's only a nine month period
compared to the US 30 month period.
And innovator must pull the trigger.
Otherwise,
always the nine month regulatory stay
in order to slow the generic entry.
The most challenging thing I think
innovative companies now face in
China is to determine where with
which forum they wanted to file.
Their case should be filed with
the IPA demonstrated agency,
or with Beijing IP court.
Or is there a solution in terms of
preserving flexibility by filing 2 cases?
And the fundamental issue,
I think also ties to what
Jonathan explained to you earlier,
because in China,
patent litigation is bifurcate,
ihd validity is dealt with separately.
So validity is very important here
and now a big controversy and ongoing
debate is whether a decision handed
down by CN IPA that can still be
appealed can terminate the regulatory state.
In other words.
Where patent validity is not finally
settled through further appeals
cannot drag authority and derogatory
stay and go ahead and approve drug.
Now an emerging consensus has
been that the answer will be yes.
But at the same time,
for the generics,
they are being given the first to
market exclusivity and that has been
stipulated to be a 12 month period.
So that's quite significant
incentives given to generics.
Before end of a test,
there is the so-called patent damages
claim based on bad faith assertion
and that is a claim that can be
exploited by a generic company
and could be potentially used as
further leverage buy generic.
So now we can draw the conclusion.
There are structurally and fundamental
difference between the US system
and China system.
That's certainly true that China
to some extent has modeled
off the Hatch Waxman system,
but there are certain features from the
Korean at Canadian patent linkage system,
garbing borrowed and incorporated
in the system we're having now.
At the broadest level,
I would say that in the United States,
there 30 years of Hutch Waxman litigation and
they are detailed and very nuanced rules.
But in China, the rules are intentionally
to be loved at a very high level and
there are ambiguities and uncertainties.
So indeed, the patent linkage
rules issued by the sea and IPA,
an MPA have been said to be
rules for a trial period.
So the authorities in China are
taking the approach of crossing
the river by feeling the stone.
This maybe and Chinese
idiom you've heard before.
So for sure that challenges ahead.
Trust and foremost.
Given the uncertainties and ambiguities,
it's almost very difficult to forecast and
also to plan for generic entry in China.
So this is very,
very little predictability.
And then I must say,
period,
would that be even sufficient for either the
IP or speeding IP court to issue a decision?
And how about the interplay between
patent invalidation proceedings
and scope confirmation proceeding?
Which is the big debate I mentioned earlier?
Notwithstanding the challenges,
I think will be worthwhile for
innovative companies from the
space and other parts world to now
better understand the generic entry
patterns we've seen and observed
on the ground in China,
because that probably will help you
better grasp the system in China,
there are actually two types
of generic entries.
Why is a type of conventional entry which
you're probably very familiar with that is?
Generic will only speak to enter into the
market around the time of patent expiration,
less the most cost effective
strategy for them,
right?
But now in China,
because of the cost of a party
in validation is not as high.
In recent years we've seen early
and aggressive entry by generics.
This means that a generic company may
seek to invalidate and innovators
patent including their compound patent.
Two off the years after innovators
received marketing authorization.
Any extreme case we had here in point
is for Novartis and trust or drug.
You probably wouldn't believe yet the
patent was subject to invalidation
challenge even before the grant or
the marketing authorization by the MPA.
Salt 2.
Better prepare for patent linkage
litigation in China will be critically
important for you to gorge the
intelligence from the Chinese market
and also to assess the likelihood of
early and aggressive generic entry.
For that you of course we need to
closely monitor generic filings
and certifications and you will
also need to prepare actions early,
get your PLA and notarized and
legalized documents ready.
Because in China we have very stringent.
Formality requirements to follow and action.
But at the same time,
you will need to fully assess your case.
Be cognizant of the potential damages,
claim against innovators by face assertion.
Once you are facing a patent challenge
by a generic company were all you
need to do is to fight ruthlessly to
different validity of your patent.
But I think at board level we need to be
done, I think for the broader pattern,
community is to lobby for clarity,
consistency and predictability of
this new patent linkage system
because CNIP officials have also
recognized in informal meeting,
this has been perceived
as a working progress.
So we'll be continuing to monitor
developments in China and things will be
getting passed more and more interesting.
I'm conscious of the time so our just
stop here and to discuss a few further
slides hopefully in our Q&A session.
Thanks, Elaine.
Thank you very much, Jill.
And we will have our last
speaker last but not least,
linson often. Thank you.
Oh, hi. Thank you, Elaine,
for the invitation to talk and
different from previous two speakers,
Joe and Jonathan, I'm a US patent lawyer,
licensed patent lawyer.
So I'm going to talk more on the US
perspectives on the licensing side, so.
As as everyone though,
you have all these pattern right,
what's the path forward and path
and you need to commercialize
or to make the monitor eyes
with this whatever you invent.
So when I was practicing for many
years as a patent lawyer and later
on my team and us we our firm we
started getting into a lot of license
agreement review and drafting we
found out it's actually these two
are very important linked linked
together when you do a pattern.
You know you need to know what's
the value there and and through the
licensing we understand you know
where different pattern has different
value and it's very important.
So as we we know you get exclusive
rights in in the in the license what
does license mean here we we we can
say you know you you licensed you
give other people the right to use
your patent exclusive rights or not
exclusive rights so this is just a.
brief introduction of whether a license.
Is just a contract.
And usually in the license agreement
in the IP license agreement you have,
you know the clause,
where would you grant you grant exclusive
now exclusive where you use in the.
So when I doing that when I when we work
on the cross borders with China and the US,
we realize I mean the comparison is.
A lot of Chinese companies doing
the exclusive license from US,
they want the drug compound type of license,
then the fuel restrictions.
So we we've seen all different kind of
field people try to get some all fields
or majority also gather cancer related
field in from China to from US to China.
The ratio of the grant of courses you
patent term is very important in this one,
so previous speaker also has at a different
degree talk about the patent terms.
When you have the duration of
the grant of your license.
And another thing is geographic
restriction was a territory you have
and of course many of my clients.
To try to license from US,
they want the China or Greater China,
right versus US,
our US client who licensed from China,
they would get mostly right
except for Greater China.
So it's,
I've seen this kind of
trend these days these days.
And the again the the other one is a
financial really important you know
these the financial terms usually
discussed very early in the term sheet.
You know you talk about how much
money 'cause they try to save time
if you couldn't agree with the
financial terms then you know it's
not worthwhile to spend a lot of
money to do the agreement 'cause.
It's a long agreement,
it takes a lot of time and we've seen.
The trend on the on the fee is
like if you go to the UN,
a lot of Chinese clients are
these days trying to license their
trying to get a license from the
US universities and those upfront
fee as kind of relative low.
So they go,
they take this.
Asset and they want to use apply for
grant or apply for funds from the investor.
So that's a trend we've seen quite often.
When they try to license in the US company,
they rather to pay and try to find
the asset more like in the later
stage and then this case they
pay a lot higher upfront fee.
And we did during the negotiation,
a lot of time that people talk
about sublicensing in China.
You in US when you license you say,
hey, sublicense,
that's pretty easy to disclose to
control the sub licensees in China sub
licensees are very difficult control.
So in the negotiation they will talk a lot,
they will negotiate with you how less how
much they can control the sub licensee.
So we've seen this.
During the negotiation that the.
The licensee, they say we cannot give
you sub licensees information because
in China they those last sub licensees,
they wouldn't give us information and
also we can have less control over them.
So these kind of terms for the US side,
we have to understand that to
to be aware of that.
Uhm.
And the other important thing
you know in the license is a
due diligence I found out in.
In the Chinese company,
when they come to US to license a technology,
they look at the people they
look at the company's name,
they tend do less about due diligence
of the IP and then later on when
there's a problem, there's oh,
there's all the problem in there.
So for AUS entity,
it's better to talk to earlier to
them say here is our IP and disclose
more instead of later on when the
other party comes to you say hey,
I didn't see this.
That happens quite quite often,
so that's that's company had to
be aware and for the universities
it's pretty easy for a Chinese
entity to look at it because it's
it's most in the publication
and it's pretty open in and you
know if it's in the pattern.
But the company Wise there's a lot
of know how stuff need to you guys
to have to talk about huge sites.
So what we need to be aware
when your license your.
Stuff out to a Chinese entity.
You really have to consider
the export control issue,
although it's you know since the CFIUS that.
That there's a big drop of
Chinese investor in U.S.
companies. However,
there's increased a lot increase of
license from US to China because the
Chinese company Chinese investor will
invest more in the technology in,
in the location in China the so they
they they there's no serious review for
the per say for the license issue yet.
But you have to consider export
control especially for the genetic.
Information. Same issue for China too.
If you want to license
Chinese technology to US,
you have to really watch about this
genetic information because China has
very strict it's even the criminal
punishment if they improperly
transferred the genetic information into
foreign countries and also again very
common in the agreement you review,
what's the.
Our governing know the Chinese contract.
If you work with China to Chinese
contract is very simple yugiri
versus US contract is a very long
and what law to use and so many
times the compromises are used.
Hong Kong law or used Singapore
law that's that's kind of like a
mutually agreed but you have to
be aware of the change in here.
And one really important part in the license,
in my experience is that definitions,
you have to make earlier,
although you say that in the term sheet,
people more focused on the,
they're more focusing on the financial term.
It's the early you define those
those licensed product IP where you
know how the better for you 'cause.
In addition to a patent,
no heart comprised a lot of the IP in there.
Many times we found out that the
US company wants more information.
The Chinese company so only give you
this this little they didn't talk
about in the term sheet time they
they found out in the licensing I
mean the agreement time then it's
more extensive negotiations.
And the other thing on the
IP improvement part.
Many times people license their technology,
they improve and they they
try to ditch your name.
Just put their own IP and they use
this as their own patent filing.
So that part you have to understand,
you have to be aware and some university
they have like a reach out clause saying
we want anything in but enabled by
what pattern it's all also our pattern.
So this way you kind of control
how far you can get to your plan.
It's another negotiation process and the.
That the term has a lot of
like how much data you can use,
how much technology transfer you
can get and the more you detail,
the more detailed the better it is.
But I've seen the discrepancy
between two sides,
and especially the Chinese sides.
Usually they expect more,
but they didn't understand
in the early negotiation,
didn't put more in agreement later on,
did require require more.
So that's something you have to be aware.
And again in the license agreement,
as you know the due diligence part,
you have to look at the ownership or
you also have to discuss about not
joint ownership and for the joint
invention when you need to be aware
what you need to get the license
and who pays for the patent cost.
The last slides it's very simple
is what you need to as a license.
Or are you Jerry from the US side,
you make sure your your license is not
going to compete with you and and also
you have to make sure what you reserve
your rights and sometimes people don't.
It's it's a lot of vague thing
in the in the early stages.
So the more you talk about in
the term sheet the better it is
what you want to reserve and.
Make sure there's no challenge
to the pattern so this other,
just like a general review of
the license issue for your IP.
So we can I I'll talk more during the
discussion in terms of concerns over time.
Thank you here.
It's mine.
Thank you very much.
I want to thank all our excellent speakers
for the very comprehensive presentations.
They were excellent and I want to
remind everybody again that if you
do have questions for the speakers,
please email them to ask China
IP at USPTO dot giovi.
Again, ask China IP at USPTO dot giovi.
We'll have a Q&A period after our discussion.
So I wanted to go ahead and have a
discussion to kind of pull out some of the.
The things that each of the speakers
talked about and and perhaps
generate kind of discussion maybe
have maybe that will also generate
some questions from the audience.
So I want to go ahead and start
with Jill who gave an excellent
presentation on patent linkage.
Jill, you know,
you do have in your presentation.
A slider on the main differences
between the two panelists,
liquor systems in China and the US,
and you mentioned some of
the various aspects.
I wanted to ask you about the
administrative and judicial routes of the
patent linkage linkage system in China.
Understand that the patentee
must pick one route.
I hope my understanding is correct.
What are the advantages and disadvantages
of the administrative and the judicial
routes and how would you advise
clients as to which route to choose?
Thanks, yelling,
I think this is an excellent question.
First of all, there are pros and cons.
I need to be weighed in each
specific case to optimize your
position litigation position.
Visa V the other side,
so past we can take a look at
the administrative action.
Apparently that the single biggest
advantage I would think is that a
favorable ruling from the CN IPA as to
scope confirmation we talked about earlier.
Well, I thought the regulatory approval and.
The average time for CN IPA to adjudicate
and dispose the case is around six months,
so this means that within the
9-9 months or regulatory state,
it is doable.
If you can achieve a favorable result.
As to the second option,
which is the traditional action,
the Beijing IP quality is very established
and probably the most experienced IP
court in China with vast and wealth
of experience with and with experts
in every aspect of IP and patent law.
Are the Supreme Court perfectly
included provision and?
On polymer injunction, which is not
available before they see an IPA,
if one only uses the administrative route.
And the current preliminary
injunction practice.
As Jonathan mentioned earlier
is that when Validities?
In doubt, it will be impossible to
obtain a preliminary injunction,
but theoretically,
procedural flexibility before
Beijing IP Court,
I think is a potential consideration
that will need to be taken into account.
And naturally,
the question is from an optionality
point of view.
What will be worthwhile?
Initiating action.
At both forum to preserve flex
procedural flexibility and this is
possible if you go to the EPA 1st
and then go to the Beijing IP Court,
it is not under rule possible to do
that but other way round is not possible.
You cannot go to Beijing article
1st and then trying to do the
case again before they see an IPA.
So that's where things stand now.
And according to the statistics.
Currently the majority users or
the patented system have opted for
the Ministry of Roads to see an
IP have reported that they have
taken on more than 20 cases.
And there's only one reported case that
has been filed with Beijing IP court.
So you know it's a long answer
to respond to your question.
Great. Thank you, Jill.
That's very interesting.
Only one case file with
the the Beijing IP court.
I'm kind of curious if this is
a foreign or domestic case.
But anyway, thank you.
Yes, the following case is a foreign case.
OK, interesting.
Alright, thanks for that Jill.
I want to turn over to Jonathan next.
Jonathan, many foreign companies are
now aware that the judicial process in
China has limited means of discovery,
and you mentioned that as well.
That's one of the big differences
between the US and Chinese system.
What are some strategies you suggest
to foreign companies to help overcome
this obstacle, particularly U.S.
companies that are, you know,
very accustomed to much more discovery
than is available in the Chinese system?
Yeah.
So as I mentioned, in China,
we don't have the discovery process,
the basic principle,
the basic rule of evidence is
the one who assert here the
burden of proof to show evidence.
So that's the basic principle.
So since there is such a difference
between the US practice and China practice.
So for US clients,
my suggestion is firstly you need to
fix your evidence in a timely manner.
For example,
if you see the infringers offering
your product on our website,
then usually instruct your lawyer
to fix that evidence by inviting a
notary public to fix that evidence
and use notarization or like
time step to fix your evidence.
And that's the first suggestion.
The second one is to proactively
use the mirrors they assisting
measures provided by by the courts.
Like evidence, investigation,
order,
or evidence production order as
solution in my example cases.
In that case we we request the judge
to issue evidence production order.
So if the infant refuse to produce
the evidence production order,
the judge may rely on or evidence to
give a much higher compensation award.
So in that case.
The the the the infringer will be
forced to produce their financial
books and the sales contract. Yeah.
So that's my answer is thank you.
Right, OK. Uhm. That.
That's that's useful.
Thank you. Lynn, over to you.
I know that you had mentioned that
you have handled number biopharma
licensing transactions including
Chinese companies licensing
technologies from US from U.S.
companies and the other way around.
I wanted to know from you what are
some of the more unique aspects of
such licensing agreements that you
think are particularly important
for foreign companies to know and
addition to that particular would
be interesting to know some of the
more common pitfalls from AUS?
Country perspective and how to you know,
how would you suggest avoiding
those pitfalls? OK.
Thank you for me,
I think from the audience excitement,
IP due diligence is very important.
When they I found out that
in during the transactions.
The Chinese company,
they usually just say OK,
because Harvard's famous I'm just going
to go through this famous professor,
get it.
And when they look at the pattern stuff,
they didn't really look at the
word claim in campus and not
carefully reviewing what they need.
That's a that's a skip.
I thought I kept telling them,
don't skip this step.
It's important to know what you get.
And for the US company,
I also notice that when they license,
they thought their license something more.
But in Chinese side,
the only CEO only give them
a piece of sequence.
We don't give them all the data,
but death has to be really negotiated,
talked earlier.
See know how it's important?
I want more know how than I need
and the communication I see there
was lacking that in their past but
it's it's like a growing thing and
what you get when you're not getting
it even though there's agreement
sometime the mind is not neat so it's
a it's a contract issue they need to.
Talk more.
Do you like my eyes jumping their
best from a dispute point of view?
And I think for this type of licensing deals,
we've seen foreign companies
typically wanting to use a Delaware
court or court in California,
but you know for this type
of cross border transactions,
enforcing a foreign judgment from
US now still be near impossible.
There are presidents, presidents,
but there's no president in
the context of licensing deals.
So opting for arbitration.
And given that China is a member
of the New York Convention,
I think will be much desired option
in terms of dispute resolution 'cause.
We think that a lot so quickly
to jumping on that.
Yeah, thank you for that.
That is something that I think we we need
to remind ourselves about arbitration,
not something that we discussed so
much here in the US but I think
that's a really important point.
Thank you for bringing that up.
Jill 'cause,
I know that that's an important
Ave in China as well.
Other thing is I I forgot to mention
is they also need to understand
the political environment,
especially the USUS laws,
the CPS law and and export control.
They keep adding different lists.
Now we see farmers on one of the list.
So all these things they have
to be aware what's going on.
Right, exactly. Thank you. Uhm.
Let's move over to Jonathan.
Jonathan,
you,
you touched this briefly in your presentation
about the issue of supplemental data.
Certainly a longstanding issue for US
and foreign biopharma companies in China.
Can you explain the issue a little bit more?
And you had mentioned that it seems
that the issue perhaps has been
addressed and wanted to know a
little bit more about how exactly
it's been addressed and in your experience.
Experience of others hasn't
been addressed in a in a.
Hopefully satisfactory manner
for foreign companies.
Yeah.
So yes,
this is indeed a long standing
issue and also a hot issue for four
players in the biopharma field.
Uh and I,
I would like to say after the first one.
A treaty between China and the US,
we have seen a steady improvement
to warding the the direction
prescribed in the phase one agreement,
not only in the substantive examination
stage but also in the invalidation
procedure and in the court procedure.
We all see more lenient attitude toward more
friendly attitude toward post filing data.
Indeed, the truth.
But as to the criteria for the
acceptance of a post filing data,
I mean the substantive examination
I would like to say there is not so,
so, so huge difference.
There is still some difference between China,
US practice.
So I think the Chinese Examiner they
still hold that the basis of four.
For the for the patent system
is disclosure are for protection
and based on that they they have
a still strict requirement that
the post filing data or the fact
to be approved by the post filing
data should be clearly
and specifically disclosed in the
written description and based on
that criteria if the client wants to
file some post filing data to prove.
The some technical effect which is not
actually recorded in the red description
for for that kind of situation it
is still not acceptable in China.
So in short, I mean in general we
are having more limited and friendly
at you to post variant data,
but the the we need to see the
progress step by step yeah.
OK, good. Thank you. Uh, let's see.
Let's let's go back to Jill.
UM, another question about
the pan linkage system.
This is 1 about biologics.
Are the are the list of what
pants for biologists only limited
to sequential structure? So.
What if I have a patent for say
cellular extract or something that
is not a sequential structure?
Am I out of luck to utilize the
new patent linkage system? Can you?
Tell me. Explain that to me.
Thanks. So thanks for lying.
So why now the patent linked system
I mean the patent linkage litigation
system is only limited to chemicals drugs.
So biologics are large,
wouldn't be able to avail of
the patent linkage system,
although Article 76 or patent law in
itself is not limited to chemical drugs.
And what is happening right now will
be that about logic companies will
be able to submit part listings
and they can list sequential
structure but can only do that.
And as I mentioned in my presentation,
China with right now only inclining
for this system to be an experiment.
So in future there will be new rules
and hopefully biologics will be
covered and one now be only limited
to sequential structure only.
But we will need to.
Time to see how things unfold.
OK. Thank you. So let's wait and see.
OK. Yep. Yep. Alright, uhm.
Going back to Lynn about licensing trends,
just just looking into the next few years.
What licensing trends do you see
that may be important for a U.S.
company to know?
From your experience,
what you've seen so far?
Yeah, as I had mentioned earlier that
the investment trend is dropping their
licensing trends is increasing from
China to in license US technology
to improve their own portfolio.
And there are like I have many,
many friends, they move back to China,
they start a company.
So I will see more and more in
license what do we call that from
from US that especially from early
early technology for the startup.
Company like University Technology,
more and more like that.
Also from China, there will be more.
They some company want the late stage asset.
The company was which had
equipped with a lot of funding.
They were in license more late stage
assets from US for the China rights.
However because most the company you
know a lot of IPO company in China
their their value is cut into half
those company needs more money and.
There are.
There will be some good assets from
China to our license to the US company
and they were all licensed more like
a worldwide acceptor except for X,
Greater China,
right.
So you will get probably more
good yield for the US company to
look for in Chinese asset to that.
So I think that's the trend.
OK. Interesting. Uhm. OK.
OK, good. Jill, over to you,
this is a question about tantrum
extension and I understand that PAN
trim extension in the draft LB law
implementing regulations is only limited.
Certain classes of improved drugs.
Uh uhm, it particularly the draft patent
examination guidelines issued last year.
Does it mean that improved drugs
outside those listed are not
getting hand term extension?
Is this something you can address?
Right.
So we are all still waiting and
trying to see what will be coming
out of the final part is amination
guidelines to be issued by CN IPA.
Hopefully this will be out
within the next few months.
Until that I I don't have a
clear answer to the question,
but you are right according to
the draft examination guidelines,
only certain improvements will be
eligible for patent term extension.
But I think we should take a step back and.
There are also a few things I
think company should bear in mind.
According to the drug examination guidelines,
only new drug that has not been
marketed anywhere in the world
will be eligible for patent term
extension and that concept new
drug on actually is not consistent
with the new drug definition and
the PRC Drug Administration law.
So this is also something partitioners
within apartment community.
Public debating a lot and trying to
grapple with the hopefully given
the perspective from the industry,
I think not only from foreign companies
but also from domestic companies are
China has increasingly become the
world's innovation hub for life sciences.
Hopefully there will be better certainty
and clarity from CN IPA when they
issue the final examination guidelines.
OK. Thanks, Joe.
So this is another wait and see.
Yeah, yeah.
OK.
So I wanted to see if there are
any questions from the audience.
We have some more questions
to ask of the speakers,
but I wanted to give the opportunity to the
audience to see if there's any questions.
Larry,
I know you've been looking at the questions.
Are there any things that from the
audience that we actually have quite a
few that came in through the ask China IP?
Uh, email address, let me just.
Uh.
I kind of sorted them a little bit.
The first question I think go
to probably all three speakers.
Can you ask the panel the need to have
a Chinese company as a partner if U.S.
company plans to commercialize
a product in China?
In the past,
the best practice has also has indicated
there was a need to have a Chinese
based company to address local policy,
local politics and practice also to infer
ensure fair treatment before the courts.
And what what is the I
guess for all three panels,
what's your take on the question?
Just from a I can't start from
licensing part and that's what
happened to a lot of companies.
They license their good asset to
Chinese company like Zylab by Gene.
They also licensed in license
that big Chinese farmer actually
the original life in license.
A lot of fact and they helped to
promote their own drugs in in China.
I think that's uh.
Good model at this time.
That's Mike.
Yeah, I think what we were served on
equality and that's because of the
huge patient population in China,
a lot of multinationals are also trying to
take advantage of clinical trials in China.
But as link mentioned in China,
we have this human genetic data region,
meaning that if you're trying to
get clinical data out of China,
you need to go through certain
mistreated full process.
And because of that regime place
and because of the ongoing.
Political tensions are would tend to
believe that it would still be best
practice to work with a PRC partner,
but how you can diligence their partner
and ensure you have safeguards in place
to ensure a smooth collaboration and
to get clinical data out of China I
think will be something that require not
contractual provisions to protect you,
but as well as ongoing operational
vigilance throughout the collaboration.
Yes. Uh. So from time to time I'm also
confronted with this kind of question
from our foreign clients about the
political impact on the outcome of
a patent infringement litigation.
So from my personal experience,
I think that's not so significant
because especially in the patent
infringement litigation. So in our
case is we are we are asserting over.
Assertions by using evidence.
So, so long as we have evidence to show
we have fixed in the infringing products,
we have our test report and the
result shows there is infringement.
At least you can get injunction order
as to the monetary compensation.
Uh, at least in my case I didn't
see such political influence.
Yeah.
OK. Thank you everybody.
Another question is kind of may be
related with the first question,
the question asked,
can you elaborate on the licensee trying
to improve pattern then ditch the?
Ditching the pen owner,
are there any case studies,
either domestic or foreign,
and what would you advise the pen
owner to preempt such an attempt by
a licensee to ditch the pen owner?
I've probably can't.
I can take this question.
It happens quite a bit.
A lot happens quite in peoples minds.
They, you know,
as a licensee they want take this license
over then they improve a little bit.
They ditched license or so they can't,
they avoid by paying by avoid paying
maintenance fee and royalty whatever
downstream and then they become their own.
IP become their own IP and then.
As a license or it's really important
to put some language saying anything
related and you have to be more space.
You know just like.
The university,
the Big University,
anything enabled by our technology,
that's our IP.
You insist on that and that's very important.
2.
Avoid them to get you or and also
you need to make sure the language if
they have anything you you need to
get a free license to for you to use.
It.
Yeah, it's being negotiated back and forth.
I've been representing both sides,
but the side,
if you you have upper hand,
you insist on anything enabled
by my technology,
you need to that I need to have a
share or I need to be the owner.
Maybe that's too much,
but you can at least get some
share out of there.
I also wanted to add a few points here.
Fully agree with link as I think I
had a case where permitted licensee
using our clients know how and
filed more than 100 patents in China
Latin extreme case but it's peaceful.
The importance of protecting our know
how and how you can include as much
as contract protection as you can think of.
So restrictive covenants in agreement
will be critically important.
And I think it's also important
to have an audit class so that
you can invoke the rather causes
some situation is not going right.
But again there requires certain
level vigilance oil can properly
monitor potential filings made
by a licensee or having any local
intelligence from employees in China.
I think this is something a lot
of companies are facing but but
contractual protection is the first line.
Of defense for you have a proper
contract in place.
OK. Thank you.
The next question is with regard to
Article 14 of the of China's patent law.
I actually quickly looked at Article 14.
I think it may the.
Audience are didn't catch the name here.
I may have misread Article 14,
but let me just read your question to you.
I think there may be 2 sort of two
aspects that we can separately address.
So the audience Questions Article 14
of China's time law allows Chinese
central government to permit designated
units to exploit important invention.
Uh, important invention,
so long as the exploitation
fee is paid to the pen holder.
Essentially,
Article 14 allows an open licensing system.
What are possible paths for a pen holder?
That that a pen holder can take to
avoid unwanted companies obtaining
a license to the patentees IP in
situations such as Article 14,
and let me explain why.
I think the Article 14 actually
maybe may not be about open license.
I quickly looked at Article 14.
Actually it's about invention, patent.
Uh, by a state owned enterprise,
if that's of great significance,
the government can.
It's kind of like the US,
Martin writes.
So,
but I think the audience questions
still valid sort of two aspects.
Number one is the state owned enterprise
produced patterns the government can
kind of March in if it's important
and the open licensing system,
I forgot which article is sort of a
separate article in the patent law.
And let me maybe take a
first stab at the question.
I think the open licensing system
is totally voluntary, right?
So if you don't want your pattern
to be to be listed as open as listed
as available to open license.
You don't have to.
But once you list your patent
in that open licensing system.
And this is a question for all three of you.
I don't think you can then say,
oh, I want, I can.
Uh,
I don't think you can say two
potential licensee or I want to
license to you but not the other
licensee open licensing system
mean anybody can license right.
And you actually list out the
terms and the fees right.
Am I right?
Yes, I think you're right, Larry.
So the open lessons reading is it's newly
introduced into the Chinese patent law in
the 4th Amendment to the Chinese patent
law and it's voluntary voluntarily.
It's not something you're forced to to
allow open lessons of your patterns,
but you have also once you the cmap,
even after the scene IPA announced
that this is an open license pattern,
you can withdraw.
You can withdraw your application
application for for for open lessons
so so once you announce your pattern
is open lessons the patterns you you
need to follow a rule similar to
the to the friend friend agreement.
Yeah yeah. That patterns type of rules.
OK. No discrimination. Yeah. Yeah.
Oh, OK. Thank you.
I'm just kind of a what's the best term
to describe just playing devil's advocate?
I actually a question just occur to
me related to the audience question.
If you really don't want to license
your patent to a company,
let's say you put it in the open
license system,
then all of a sudden this
company approached you.
Can you then say, oh, I want to withdraw?
Uh, no, at that time, you cannot withdraw.
Yeah.
No.
Yeah, because the other party
has already approached trust.
Yeah. Already approached you.
Yeah.
So the actually in the open license
reading the CMP is the play the
role of a kind of platform,
actually see an IPA.
They have a great concern that they
may have kind of responsibility
in publishing and announcing
the relevant information.
They don't want to take any
liability in this region.
They are only working at a platform
they providing organizes the
information for for the users,
the users, they,
these they they looking for those
information on the platform, yeah.
OK, thank you.
And going back to the first part of
the audience question regarding Article
14 invention made by state owned company.
The government has a right to license,
I guess, to forcefully licensed at Penn as
long as they're reasonable compensation.
I read it as very similar to the sort
of March in rights in the United States.
Do three of you have any experience,
experience or actually are you
aware of any marching orders,
marching rights exercised by the government,
yet no,
I don't think there is a precedent case.
Yeah, OK.
No, no Case No president case.
And also this is an article,
uh specifically for state owned company.
It has nothing to do with a foreign company.
Yeah.
OK.
I think this is another way to see.
Well, see Holly roots will be deployed
at some point. OK. Thank you.
So we we are actually at a little over time.
So we this goes to this web
and R goes to 11:00 o'clock.
So we are over time.
So I want to thank again all our speakers
for excellent presentations for I think
hopefully a useful Q&A period for everyone.
I think this is a very interesting.
I've learned a couple of new things.
So again appreciate this very
much and thank you all.
And a reminder to the audience,
please go ahead and take the post.
When our survey so that we can continually
help to improve these webinars and
get you the best information we can.
Thank you again very much.
Sorry, sorry Lynn actually forgot to
answer an important question several
people asked about the slides.
I want to quickly mention.
This event is actually recorded
I think two to three weeks once
we go through some steps,
it will be available on PTO website
and also the slides pending.
A speaker permission will be all
posted as well and and we just one
last thing actually two or three or
even four questions came in that we
are not going to have time to address.
It all relates to the CFIUS and
the newer version of CFIUS.
I think it's called Firrma.
Yeah,
maybe.
I'm not sure how much experience
Lynn has with regard to both,
but maybe we can address those questions
through email by Lynn or something
we kind of run out of time this time.
Yes, thank you.
I can't wait.
We can talk about this later.
Yeah,
that's a that's a long story,
but.
Yeah. OK. Alright.
Thank you all very much.
OK. Thank you, everybody.