Introduction

Under China's "Open-Door" policy adopted in the early 1980s, the Patent Law of the People's Republic of China (the "Patent Law" was promulgated on March 12, 1984. Even though at that time the concept of patenting was new in China, the original Chinese Patent Law generally conformed to the Paris Convention for the Protection of Industrial Property. Subsequent to the enactment of the original Patent Law, the Chinese patent system had been gradually modernized to meet with international requirements and in response to the need to protect domestic patents. On the legislative front, China first amended its Patent Law in 1992, when China was an observer at the negotiations of the Uruguay Round of the GATT, which finally resulted in the Agreement on Trade Related Aspects of Intellectual Property Rights (or the "TRIPS Agreement" in 1994. On August 25, 2000, in anticipation of China's accession to the World Trade Organization, the Patent Law was amended for the second time by the National People's Congress, which became effective on July 1, 2001.

Over the past 16 years, China has made concrete progress in putting in place a modern, transparent, and effective patent system. With commitment and the coordinated efforts of all relevant government authorities, the Chinese patent system, which started almost from scratch, is now considered as one of the most advanced systems among the developing countries. The latest patent legislation has further enhanced patent rights protection in all aspects and has brought China's patent system fully in line with the levels of patent protection required by the TRIPS Agreement. In order to help readers understand the major developments in the Chinese patent system, we summarize below certain of the latest changes in the Chinese Patent Law and analyze them in light of the TRIPS Agreement.

Our discussions will be set out in the following sections: (1) Scope of Protection; (2) Rights Conferred; (3) Exceptions to the Rights Conferred; (4) Term of Protection; (5) Burden of Proof; (6) Rationalization of Procedures; (7) Preliminary Injunction; (8) Statutory Damages; (9) Innocent Infringement; (10) Administrative Measures; and (11) Judicial Review.

The Patent Law meets the requirements of the TRIPS Agreement regarding scope of protection. Article 27 of the TRIPS Agreement stipulates that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.

When the Patent Law was first enacted in 1984, due to the lack of experience in implementing the patent system and certain considerations for protecting China's domestic industries, China deliberately narrowed the scope of patent protection. For instance, under the original Chinese Patent Law, patent rights were only granted for processes used in producing chemical compounds but not for the compounds themselves. The scope of protection was expanded in a 1992 amendment to include "foods, beverages and condiments, pharmaceutical products and substance by means of a chemical process." This change brought the Patent Law closer to the requirement set out in the TRIPS Agreement.

By way of background, the protection of pharmaceuticals and farm chemicals had been an issue of serious debate during the negotiations of the Uruguay Round. During the negotiations, the majority of developing countries took a view against protection. Nonetheless, considering the needs of implementing the policy of opening up to the outside world and encouraging development of domestic chemical and pharmaceutical industries, China, through the 1992 amendment, made a determined choice to expand the scope of patent protection to include pharmaceuticals and farm chemicals. This approach received widespread favorable comments from both international and domestic pharmaceutical and chemical companies. As we all know, to invent a new chemical compound used in a pharmaceutical or farm-chemical field is a time-consuming, high-risk and high-cost process. The enormous expenditure involved in the invention of pharmaceuticals and farm chemicals could not be possibly and reasonably compensated if patent protection of the pharmaceuticals and farm chemicals themselves were not afforded. As such, granting patent protection for pharmaceuticals and farm chemicals became a common practice in most developed countries. The choice made by China in its 1992 amendment demonstrated a conscientious effort of China to not only meet the minimum levels of protection under the TRIPS Agreement but also to attempt to achieve a heightened level of protection similar to that available in developed economies.

Paragraphs 2 and 3 of Article 27 of the TRIPTS Agreement also provide certain conditions under which specified inventions can be excluded from patent protection. Consistent with the approach adopted in the TRIPS Agreement on exclusion from patentability, Article 25 of the current Patent Law provides that no patent rights shall be granted for "rules and methods for mental activities, methods for diagnoses and treatments of diseases, animal and plant varieties and substance obtained by means of nuclear transformation."

The exclusive rights of a patent owner under the original Patent Law include the right to exploit the patent, that is, to "make, use, sell the patented product, or use the patented process, and use, sell the product directly obtained by the patented process, for production or business purposes." The 1992 amendment added "the right of import." The current amendment also makes reference to the right of "offer for sale" in respect of the exclusive rights conferred on a patentee both for product patents and process patents.

Granting the exclusive right of import enables a patentee to control importation of a patented product or product made by a patented process. This right is very important for multinational companies that frequently engage in cross-border licensing for the manufacture and sale of their patented products and products made by patented processes. The right of offering for sale means that, without the authorization of the patentee, a person may not offer the patented product for sale. In other words, advertising the product or displaying the product in a store or in a trade fair is prohibited. Prohibiting others from offering for sale is another important step, which allows a patentee to stop an act of infringement in its early stage before an actual sale has occured. The authors take the view that this addition represents a major change in the new Patent Law in respect of a fundamental principle for liability of damages under PRC law. As will be discussed in Section 9 below, the showing of actual damages has been one of the elements for establishing civil liability. In the absence of showing actual damages, the patentee was not able to hold a person engaging in activities involving unauthorized offering for sale civilly liable. Thanks to the change in Article 11 of the new Patent Law, the patentee is now able to stop such unauthorized activities without showing an actual injury. This remedy is further supported by another major change in the Patent Law relating to preliminary injunctive relief, which will be discussed in Section 7 below.

By adding the rights to "import" and "offer for sale" to the list of exclusive rights on patent through the 1992 and 2000 amendments, Article 11 of the new Patent Law has raised the patent protection in China to a new level, which fully comports with the TRIPS Agreement.

Based on the policy consideration of balancing the interests of both patent holders and the public, it is necessary to set some limits on the exclusive rights conferred to a patentee. With this in mind, Articles 30 and 31 of the TRIPS Agreement prescribes a number of circumstances regarding "exceptions to rights conferred" and "other use without authorization of the right holder." In other words, activities falling into the scope of those circumstances will not be considered infringement of patent rights.

China's original Patent Law had a chapter on compulsory licensing for exploitation of a patent, which set forth the conditions for the use of a patent without the authorization of the patent right holder. According to that chapter, there are essentially three types of scenarios under which an unauthorized use of a patent is permissible without infringement of the patent: (i) reasonable exploitation, (ii) dependent patent, and (iii) national interest. The new Patent Law has retained this chapter on compulsory license and has imposed a stricter standard for compulsory license. Before discussing the standard, it should be useful to look at the circumstances under which a compulsory license may be available.

(a) Reasonable Exploitation. Article 48 of the new Patent Law provides that where any entity, which is capable of exploiting an invention, has made requests for authorization from a patent right holder on reasonable terms and conditions, and such efforts to obtain authorization have not been successful within a reasonable period of time, the Patent Administrative Department under the State Council (i.e., the State Intellectual Property Office or SIPO) may, upon the request of that entity, grant a compulsory license to exploit the patent.

(b) Dependent Patent. If a patented invention involves an important technical advance of "considerable economic significance" in relation to a patent issued previously to another patentee, and if the exploitation of the later one is dependent on the exploitation of the prior granted patent, the Patent Administration Department under the State Council may, upon the application of the later right holder, grant a compulsory license to exploit the earlier patent.

(c) National Interest. The 1992 and 2000 amendments of China's patent law have added that where a national emergency or an extraordinary state of affairs occurs, or where the public interest so requires, the Patent Administration Department under the State Council may grant a compulsory license to exploit the patent.

There were indeed worries and doubts on possible abuse of these provisions, especially the power to grant a compulsory license on "national interest" ground. However, the authors would like to stress that compulsory licensing is not a step the authorities will take lightly. As a matter of fact, we note that no single case of compulsory use of a patent has ever occurred since the establishment of the patent regime in China.

To further alleviate concerns about possible abuse of a compulsory license, the new Patent Law provides a stricter standard for compulsory licensing than that found in its predecessor. As regards the application for compulsory license based on the "dependent patent" ground, the new Patent Law now requires the applicant-patentee to show that the invention or utility model involves an important technical advance of "considerable economic significance" compared to the prior granted patent, and the exploitation of the later invention or utility model depends on the exploitation of the earlier patent. The Patent Administration Department under the State Council shall notify that the holder of the prior granted patent of its decision to grant a compulsory license and shall register and announce the decision. The decision to grant the compulsory license shall specify the scope and duration of the license corresponding to the reason(s) upon which the decision is based. The new Patent Law further provides that when these reason(s) cease to exist, the prior patent holder may petition the Patent Administration Department under the State Council to terminate the decision granting the compulsory license. In addition, provisions on the mechanism for either the patent holder or the grantee to appeal the decision granting a compulsory license or the adjudication regarding the level of royalty payable for exploitation have been set out in the new Patent Law.

The TRIPS Agreement has similar principles on limitations for the use of compulsory licenses, as developed countries were concerned that developing countries could harm the interest of the companies from the developed countries by granting too many compulsory licenses. We note that the provisions on terms, scope, duration, remuneration, and judicial review of a compulsory license as contained in the new Patent Law are essentially the same as those in the TRIPS Agreement.

The Patent Law in 1984 prescribed the term of a patent for inventions to be 15 years, as calculated from the filing date of application. In the 1992 amendment, the term of protection for an invention patent was extended from 15 to 20 years. Similarly, the TRIPS Agreement in 1994 provides that the term of protection of an invention patent shall not be less than a period of twenty years counted from the filing date. This requirement does not apply to patents for utility models and industrial designs. Under PRC law, the term of protection for a patent involving utility model or industrial design was extended from 8 years to 10 years.

It was recognized that the average life span of a patent is 11-12 years due to the acceleration of innovation and invention processes. But some patented products, such as pharmaceuticals, farm chemicals that require a trial period of 3-5 years before approval by relevant administrative authorities, may need longer terms of patent protection to compensate the expenditure on research and development. Based on the principle to balance the interests of patent right holders and the public, the parties of the TRIPS negotiations finally came to the conclusion that the term of protection should not be less than 20 years from the filing date. The Chinese Patent Law conforms to this requirement under the TRIPS Agreement.

According to the original Patent Law (Article 60), where an infringement dispute arises, if the patented invention involves a manufacturing process for a product, the defendant unit or individual manufacturing the similar product shall furnish proof showing details (to the extent required by the court) of its manufacturing process for the product in question. The original Patent Law has already conformed to the principle of reverse burden of proof, which is a prevalent practice in many countries.

In most infringement cases, the burden of proof is invariably on the plaintiff-patentee to demonstrate infringement. In case of infringement of a patented process, it is very difficult (if not impossible) for the plaintiff to provide proof of an infringement, as the defendant won’t allow the plaintiff to review its manufacturing process. To maintain the traditional position found in PRC civil law rules that "whoever asserts a claim shall satisfy its burden of proof" is not appropriate. Therefore, the principle of a reverse burden of proof has been adopted since the original Patent Law was put in place. This means that the law implicitly creates a presumption in favor of plaintiff-patentee that the allegedly infringing patent process is not different from the patented process and thus the burden of proof is then shifted to the defendant to prove that the process used in the manufacture of its product is different from the patent process.

Under Article 34 of the TRIPS Agreement, the mechanism for the reverse burden of proof should be limited by two conditions: (a) the product obtained by a patented process is new; or (b) there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable to determine the process actually used through reasonable efforts.

The 1992 and 2000 amendments of the Patent Law have adopted the condition in item (a) above (i.e., the product obtained by a patented process is new) since it appears to be a standard easier to be implemented as compared to that laid down in item (b). The concept of "new product" is not tested under the standard of "novelty" pertaining to granting of a patent. Rather, a product can be regarded as new in China's market even if the same has been sold in markets in the rest of the world. It should also be noted that the new Patent Law has slightly modified its predecessor in 1992 to conform to the requirements of the TRIPS Agreement. Under Article 57 of the new Patent Law, the entity or individual manufacturing the products need not necessarily provide details of their own manufacturing process, but is only required to demonstrate that they did not use the claimed patented process.

The new Patent Law has rationalized the enforcement procedures as well as streamlined the application procedures. Also, the new Patent Law has provided for judicial review for administrative decisions on the validity of all three types of patents and clarified the powers of administrative authorities. We highlight below steps taken to address the enforcement and application procedures, while the changes pertaining to judicial review and clarification of administrative powers will be discussed in Sections 10 and 11, respectively.

(a) Cancellation of Revocation Procedures. In the 1992 amendment, the mechanism of pre-grant opposition was abolished and replaced by procedures for post-grant opposition or revocation. This change shortened the period required to grant a patent by 6-10 months depending on the type of patent in question. But there still existed some overlap between revocation and invalidation procedures since the function of these two procedures are essentially the same but utilized at different stages of patent application and enforcement. Past experience also showed that the revocation procedures had added to the burden of the examination of SIPO. To address this problem and to avoid overlap and possible conflict, the new Patent Law removes the revocation procedures. Under the 2000 amendment, the invalidation procedures are the single mechanism to be utilized at any time after a patent grant. This approach is consistent with the requirements of the TRIPS Agreement.

(b) Provision of Information on Prior Foreign Search. Paragraph 2, Article 29 of the TRIPS Agreement provides that its members may require an applicant for a patent to provide information concerning the patent's corresponding foreign applications and grants. China's original Patent Law in 1984 had a similar provision, but explicitly imposed it as one of the applicant's obligations. Without a justified reason, failure by an applicant to fulfill this obligation is deemed as a withdrawal of its application. This approach was reasonable since China Patent Office (the predecessor of SIPO) lacked adequate resources in terms of experienced examiners, patent documentation and search instruments in the initial period of the establishment of China's patent examination system. After more than a decade's construction of the patent system, especially the availability of adequate searching capacity, China has been able to change this provision from a mandatory into an optional one. It makes it much easier for foreign applicants to file patents in China, using priority of primary patent application in other countries.

(c) Effective Date. Where the Patent Administration Department under the State Council, after relevant examination procedures, makes a decision to grant the patent right, issue a certificate, register and announce it, there existed several different dates: i.e., date of making a decision, date of issuing a certificate and date of registration and public announcement. According to the first two amendments of the Patent Law, the date of issuing a certificate was taken as the date of the patent coming into effect. In the interests of the public, the new Patent Law now provides that the date of public announcement of a patent shall be the effective date of the patent.

Over the past 15 plus years, The People's courts in China have been handling cases of patent infringement in accordance with both the Patent Law and the Civil Procedure Law (the "CPL". Under the CPL, if circumstances exist that make it impossible or difficult to execute a judgement because of the acts of one of the parties or for other reasons, the People's Court may, at the request of the other party or on its own initiative, order provisional measures to secure proof and preserve property. Both the original Patent Law as amended in 1992 and the CPL, however, have no provisions dealing with the right to apply for a preliminary injunction.

As discussed in Section 2 above, the exclusive right of a patentee to stop possible infringement before injury is sustained has become an effective remedy sought by the patentee in many other jurisdictions. Since this remedy is often sought at a pre-litigation stage, it is usually described as a preliminary injunction. This preliminary injunction was not previously available under the Patent Law and the CPL. Under Article 61 of the new Patent Law, it is now possible for a patentee to request the People's Court to issue an injunction as well as a property preservation order before litigation is brought. Article 61 of the new Patent Law provides as follows:

"Where any patentee or an interested party can prove that another party is engaging or will engage in activities infringing the patent rights of the patentee and if such infringement activities are not ceased or prevented from occurring on a timely basis, irreparable harm to the legal rights will be caused, they may, before any legal proceeding is instituted, request the People's Court to order the suspension of relevant acts and the preservation of property."

To implement the above provision, the Supreme People's Court issued Several Regulations on the Specific Applicable Laws for Stopping Infringement on Patent Rights before Action on June 7, 2001. These regulations have filled the gap of the CPL in respect of procedural requirements applicable to a preliminary injunction. All these provisions are completely in conformity with Articles 41 and 50 of the TRIPS Agreement, which set out the "expeditious remedy" to deal with patent infringement cases.

Apart from remedies of an injunctive nature such as cessation of infringement act, compensation of monetary damages resulting from a patent infringement is an important civil liability for an infringing party under the Patent Law. The original Patent Law and 1992 amendment did not provide standards for determining infringement damages. In practice, the courts usually have to resort to China's general civil law principles. To fill this gap, the new Patent Law has provided specific guidance in this regard.

Under Article 60 of the new Patent Law, patent infringement damages shall be determined according to the loss suffered by the patent holder, or the profit made by the infringing party as a result of the infringement. When the loss or profit is difficult to determine, the damages can be accessed by the People's Court based on a "reasonable multiple" of the patent royalties determined by the court. Under regulations separately issued by the Supreme People's Court, the damages can be assessed at one to three times as much as the patent royalties otherwise would have been obtained by the patentee concerned under a hypothetical contractual arrangement. Further, if the level of patent royalties is not available, the judge has the discretion to decide to impose statutory damages ranging from RMB5,000 to RMB500,000 depending on the seriousness of the case. On the other hand, if the consequence of an infringement is not occurred, as long as evidence can be shown that an irreparable harm is likely to be caused, a preliminary injunctive relief discussed earlier can be sought at a pre-litigation stage, which can be affirmed in the final judgment upon establishment of liability.

According to the traditional theory on liability for infringement under civil law, an infringement activity should comprise four constituting elements: (a) act of infringement; (b) consequence of infringement; (c) causal link between the act and the consequence of infringement, and (d) the presence of fault (in the form of either intention or negligence). These four elements are the prerequisites for establishing an infringement act for which the perpetrator shall be liable. This theory is usually referred to as "fault liability." Some commentators have pointed out that this theory might not be applicable in reality because certain infringement acts do not necessarily possess all four elements at the same time (for example, no actual damages will be sustained if the consequence of an infringement is yet to occur.) This problem is further exacerbated by the fact that the element of fault on the part of the defendant is always hard to prove. Instead, they proposed to impose strict liability without regard to proof of fault or some other elements. The authors take the view that imposition of strict liability appears to be too overreaching and may tend to tilt the balance intended to be stricken by the Patent Law between patent holders and the public. We are pleased to find that the fault liability is still a doctrine preserved by the amended Patent Law. It should be noted that this doctrine is relevant only in the context of determining damages and is irrelevant for determining whether an infringement has occurred.

The amendment of the new Patent Law has effectively illustrated the above position that the four elements are only relevant in determining the amount of damages. Before the 2000 amendment, many commentators criticized Article 62(2) as contained in the original Patent Law to be misleading. Under that provision, an entity that uses or sells a patented product or a product obtained from a patented process without knowledge of its having been manufactured and sold without authorization of the patentee, should not be deemed as an infringement of the patent rights of the patentee. It should be noted that acts of this nature constitute an infringement under the black letter of the law but the violator may not be held civilly liable for monetary damages if the four elements discussed above cannot be shown. Article 63 (formerly Article 62(2) of the original Patent Law) of the new Patent Law has clarified this position as follows:

"Any person who, for production and business purposes, uses or sells a patented product or a product obtained directly from the use of a patented process, without knowing that it was made and sold without authorization of the patentee shall not be liable to compensate the damages of the patentee if the person can prove that the product comes from a legitimate source."

The above provision clarified that mere ignorance is not sufficient to exempt a user or seller from liability for infringement if the underlying act is infringing per se under the statute. In fact, such exemption from liability under the previous Article 62(2) has severely crippled the enforcement of patent rights. In realizing this problem, the new Patent Law now puts the onus on the user or seller of an infringing product to show that the product is not infringing before the user or seller is entitled to enjoy the exemption. The assumption is that, after knowing that the product is infringing, one must obtain a license from the patentee before using and selling that product or face prosecution for the infringement act.

The TRIPS Agreement authorizes its member states to provide administrative procedures under which certain specified civil remedies can be ordered by administrative authorities on the merits of a case; and such administrative procedures shall, equivalent in substance, conform to the principles laid out in section 2, part III.

By way of background, the Chinese patent regime has established two levels of patent enforcement: (1) administrative procedures; and (2) legal proceedings, to be implemented in a coordinated way. We will discuss the role of People's Courts in Section 11 below. The functions of the administrative procedures are illustrated as follows:

(a) Infringement. Where an infringement case occurs and parties are not willing to consult with each other or the consultation fails, the patentee or any interested party may institute a legal proceeding with a competent People's Court or request the relevant administrative authority for patent affairs to handle the matter. If the case is referred to an administrative authority and such authority establishes infringement, it has the power to order the infringing party to stop the infringing act immediately. If any party is not satisfied with the administrative order, it may, within 15 days as of receipt of the administrative order, institute a legal proceeding with a competent People's Court.

Considering that the patent for utility model is granted on the basis of preliminary examination without an examination as to its substance, the People's Courts or the local patent administrative authorities may, under the new Patent Law, request an applicant to furnish a search report made by the state patent administrative authority. The purpose of doing so is to provide legal proof for the said patent for utility model in order to make a decision on infringement. As far as damages are concerned, the administrative authority can only conduct mediation as to the amount of compensation for damages. If the mediation fails, again, the parties may institute a legal proceeding. The administrative procedures are simple, efficient and inexpensive, but are limited in their functions compared with those of legal proceedings.

(b) Passing Off and Marking. In accordance with the new Patent Law, where any person passes off the patent or process of another patentee as its own, the administrative authority has the right to order that person to stop the passing off, and rectify the act. Under the new Patent Law (Article 58), the administrative authority may confiscate illegal income and impose a fine of no more than three times the value of illegal income or, if there is no income, a fine of no more than RMB50,000. It should be noted that passing a product or process off as the patented product or process of others is a criminal offence and its perpetrator shall be prosecuted for criminal liability.

Where any person proclaims its non-patented product and non-patented process as patented one, for instance the activities involve false application of a fictitious patent number, this activity is not permitted and violation will be dealt with by the administrative authorities, who may order the person to stop the act, announce a public criticism and/or impose a fine of up to RMB50,000. Under the new Patent Law (Article 59), this activity involving false application of a fictitious patent number is not a criminal offence.

During the legislative process of the new Patent Law, it was suggested that the role of the administrative authorities should be limited or even abolished. The new Patent Law has retained the administrative procedures and specified clear powers exercisable by the administrative authorities. Given the mechanism to appeal all the administrative decisions to the People's Courts through a judicial review process, this approach is recommendable because, in practice, administrative protection proves to be an effective remedy for combating patent infringement and passing off cases.

Paragraph 4 of Article 41 of the TRIPS Agreement provides that parties to a proceeding shall be afforded an opportunity for review by a judicial authority of administrative decisions. Paragraphs 5 and 6 of Article 62 of the same Agreement expressly provide that administrative decisions in any procedures for the acquisition and maintenance of intellectual property rights shall be subject to review by a judicial or quasi-judicial authority.

Under the new Patent Law, both infringement and passing-off cases, handled by local patent administrative authorities, are subject to review by the People's Courts. In other words, any party who is not satisfied with the decision made by a local patent administrative authority can go to a competent People's Court to initiate legal proceedings under rules applicable to administrative lawsuits.

Regarding invalidation procedures, the new Patent Law has been revised and the provisions on the decision made by Patent Re-examination Board (the "PRB" on a request to re-examine the decision of rejection for the granting of a patent or to invalidate the patent for utility model or industrial design have been removed. Under the current law, any party who is not satisfied with the decision made by the PRB on re-examination or invalidation may, within 3 moths after the receipt of the PRB decision, appeal to a competent People's Court. The People's Court shall notify the counter party in the invalidation proceeding to appear as a third party in the legal proceeding.

It is quite common for the defendant in a patent litigation proceeding to challenge the validity of the underlying patent rights held by the plaintiff as part of the defense. Unlike a court in, for example, a common law jurisdiction such as the US or the UK, where issues of validity and infringement are normally heard in the same proceeding by the same court, the situation in China appears to be complicated in that different courts could decide the two questions in two separate proceedings. Since every decision regarding invalidation of a patent must be made by the PRB under SIPO in Beijing as a preliminary step, the People's Court that has the jurisdiction over invalidation cases is invariably the Beijing People's Intermediate Court. As such, it becomes a critical issue whether to stay an ongoing infringement proceeding litigated in a court other than the Beijing People's Intermediate Court. The new Patent Law is silent in this regard.

A Supreme Court's circular on this point issued before the promulgation of the new Patent Law suggested that the courts have discretion (as opposed to a mandatory obligation) to order a stay if invalidity is pled for an invention. While if the petition involving invalidity of a utility model or design patent is petitioned within he time frame of submitting the answer, the infringement proceeding will be suspended until the validity issue is finally resolved by the PRB. The difference in the procedural steps taken by the court can be partly explained by the fact that, under the original Patent Law, a decision by the PRB of the validity of a utility model or design patent is final, a decision by the PRB of the validity of an invention patent is subject to appeal. Although it is doubtful that this Supreme Court's circular is still effective after the 2000 amendment of the Patent Law, the different approaches may still be valid in the sense that utility model and design patents did not undergo a substantive examination while invention patents are only granted until after a substantive examination has been conducted. In this context, one view is that the People's Court should proceed with the infringement proceeding involving an invention patent on the basis that the invention patent is valid. Nonetheless, the problem of conflicting decisions cannot be avoided in the situation where the first court in the infringement proceeding holds the defendant liable while the second court reviewing the validity decision of the PRB finds that the underlying invention patent is not valid. This does not appear to be fair to the defendant if the judgment made by the court in the infringement proceeding has become effective and therefore irreparable harm has been done to the defendant by the first judgment.

In addition to the above problem that different courts could potentially make conflicting decisions regarding the validity of the patent rights in dispute and whether infringement occurred, the fact that it may take up to two years for the PRB to issue a decision may further make the invalidation proceeding difficult to implement. The new Patent Law does not provide a mechanism to speed up the invalidation examination by the PRB when a litigation proceeding is pending. Some commentators have suggested the People's Court instead of the PRB should consider the invalidation issue. The authors take the view that the role of the PRB to decide the invalidity of a patent should be retained because decisions in this regard are highly technical in nature and given the institutional shortcomings of the People's Courts, they are not well suited to review often complex and technical decisions. Alternatively, in the long run, it may be a good idea to set up a special patent court under current Supreme People's Court to centrally adjudicate patent invalidation cases without the administrative review done by the PRB. Presumably, judges with the requisite technical knowledge and expertise serving on the bench will take the role of the PRB.

We would like to point out that, despite various salient improvements in the Patent Law, certain questions such as contributory or indirect infringement have not been addressed in the new Patent Law. Understandably, the immediate purpose of the recent amendment of the Patent Law is to resolve the compatibility issue with the TRIPS Agreement after China's accession to the WTO. It should be noted, however, that the TRIPS Agreement was intended to require its member states to maintain minimum levels of protection for intellectual property rights. Thus, further steps to be taken by China in both legislative and enforcement aspects to strengthen and increase the minimum protection are recommended.

One important point that should be stressed is that according to the transitional arrangement provided by Article 65 of the TRIPS Agreement, China, as a developing country that is also in the process of transformation from a centrally-planned economy into a market-oriented one, can enjoy the transitional arrangement. The numerous improvements made during formal amendments of the Patent Law over the years since 1992 demonstrate that China, as far as its legislation is concerned, has taken steps to complete this transition ahead of schedule.

China's patent system was established from scratch in 1984. Over the past 16 years, China has revised its Patent Law twice. The progress of China in the field of patent legislation is well recognized and highly evaluated both at home and abroad. By analyzing the specific revisions of China's Patent Law through comparison with their corresponding provisions of the TRIPS Agreement, the authors take the position that China has put in place a transparent, fair and open patent system fully compatible with the international practice. We hope that China will make concrete efforts to enforce the rights of patent holders under its legal framework to show that the patent protection in China is not a "paper tiger", but a tiger with real teeth.