By Max Lin, Foley & Lardner LLP
This article is part of our Spring 2011 edition of Legal News: China Quarterly Newsletter, Eye on China.
China’s National Patent Development Strategy (2011 – 2020) (Plan) was announced in November 2010. The proposed measures focus on enhancing China’s IP system and encouraging local individuals, institutions, and companies to pursue IP protection domestically and abroad. By the end of 2015, the number of Chinese patent applications are projected to double. Chinese authorities clearly view patents as vital commercial assets central to the country’s development.
Fully achieving the Plan’s potential economic value depends upon establishing an effective framework for the commercialization of government-sponsored technology through licensing and transfer. Those seeking to buy or license cutting-edge technologies from Chinese universities or scientific research institutes should be familiar with China’s regulation governing such technology transfers or licenses — the so-called “China Bayh-Dole Act.”
Before 2002, China’s regulatory system did not address regulating the intellectual property ownership of technology developments sponsored by government funding. As a result of China’s booming economy, there was increased demand for advanced technologies by private individuals or companies, who then sought the commercial development of technologies that remained in universities or research institutes. As a result, technology licensing or transfer activities began to emerge from universities or research institutes. The primary challenge for those activities was the intellectual property ownership of the technologies. Most Chinese universities or research institutes are state-owned, and the cost of research is sponsored by government funding. As such, it was unclear and undefined under the law who owned the involved technology.
In March 2002, the Ministry of Finance and the Ministry of Science and Technology co-issued Several Regulations Concerning Intellectual Property Management of State Scientific and Research Program Result (Regulations) to improve the process of technology licensing or transfer. The Regulations first emulated the core spirit of the U.S. Bayh-Dole Act and set forth the ownership of intellectual property. Except in cases where national security, national interests, or significant public interests are involved, the state granted the intellectual property developed in scientific research programs sponsored by government funding to the performing organization so that it can implement, license, or transfer the intellectual property independently. The state retained the right to use the intellectual property freely. If the performing organization — as the intellectual property owner — does not implement the intellectual property or obstructs the public from utilizing the intellectual property, the state can intervene by licensing a designated party to implement it freely or by paying royalties to the performing organization, depending on the specific circumstances. The Regulations do not detail the circumstances, leaving the decision up to government discretion.
In December 2007, China passed the Scientific and Technological Progress Law, which upgrades the provisions of the Regulations with respect to intellectual property ownership to the level of national law. The law sub-divides intellectual property rights into four items, namely, invention patents, computer software copyrights, exclusive rights to layout-design of integrated circuits, and new variety right of plant. Utility model patents and design patents as well as other intellectual property are excluded from the scope of intellectual property defined in the law. In addition, the law uses the name “project undertaker” to refer to units undertaking a project, such as scientific institutions, universities, enterprises, and so forth, but it does not exclude individuals.
The law grants the intellectual property ownership that is formed though a project sponsored by treasury money to the project undertaker, which encourages the project undertaker to continue being innovative. With intellectual property ownership in hand, the project undertaker has more motivation for the highly efficient commercial development of the intellectual property. Besides implementation by the project undertaker himself, the project undertaker can transfer or license the intellectual property. However, there is restriction on such transfer or license: Because the state has paid for the formation of the intellectual property, the state encourages such intellectual property to be utilized domestically. It is noted that such encouragement does not forbid transfer or license outside of China. However, the transfer of intellectual property rights to overseas organizations or individuals, or the licensing of exclusive use rights to overseas organizations or individuals, is subject to governmental approval. No approval is required for the licensing of non-exclusive use rights.
It is important for companies to secure key positions in their intellectual property. The acceleration of IP creation and protection for Chinese innovation under the Plan creates increased commercial opportunity for licensing and technology transfer. For companies seeking to acquire government-funded technology through license or technology transfer in China, it is important to become familiar with the regulations governing such transactions.
Great article about leading stem cell scientists stating that the ECJ Advocate’s recommendation to ban stem cell patents will block development of stem cell-based therapeutics in Europe. Here are the highlights from the article:
By Kate Kelland, Health and Science Correspondent
LONDON | Wed Apr 27, 2011 1:05pm EDT
LONDON (Reuters) – Research scientists hit out on Wednesday at a European Court of Justice (ECJ) case they say could block development of embryonic stem cell-based therapies in Europe.
The ECJ’s advocate general has said all patents on embryonic stem cell-related technologies should be banned on moral grounds, but in a letter in the journal Nature and during a briefing in London, leading stem cell scientists said that could spell disaster for drug firms seeking treatments for conditions such as blindness and spinal chord injuries.
“If the ECJ was to follow this opinion, the reality is that all patents in Europe that relate to human embryonic stem cells will be eliminated,” said Austin Smith of the Center for Stem Cell Research in Cambridge, one of letter’s 13 signatories.
“This will put Europe at a huge disadvantage.”
Smith and his fellow signatories — who include leading stem cell researchers from all over Europe — argued that patenting is a key step in the development of new medical treatments.
Without the protection of patents, they said, drug companies will not invest in the research or in the cell manufacturing technologies needed to develop stem cell therapies.
“Innovative companies must have patent protection as an incentive to become active in Europe,” they wrote.
The International Society for Stem Cell Research (ISSCR) said a move to ban patents “will preclude investment in potentially life-saving treatments.”
WASHINGTON, D.C. (Friday, April 15, 2011) – Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood released the following statement regarding the America Invents Act, H.R. 1249, which passed the House Committee on the Judiciary yesterday:
“BIO has consistently praised House Judiciary Committee Chairman Lamar Smith (R-TX) for his introduction of a comprehensive patent reform bill similar to the bill adopted by the U.S. Senate earlier this month by a nearly unanimous vote. Unfortunately, given the addition of the Goodlatte supplemental examination amendment, added to the bill during Committee consideration, we have no choice but to oppose floor consideration of the bill until this issue is repaired.
“The supplemental examination provision as passed by the Senate and originally included in the House bill would allow patent holders to seek a review of their issued patents at their own risk. The Goodlatte amendment undercuts this provision by creating disincentives for patent owners to use the new procedure by having the U.S. Patent and Trademark Office (PTO) act as quasi-investigative body.
“We commend Chairman Smith for all the work he has done to craft a bill, the America Invents Act, which is a clear improvement over prior House versions of patent reform legislation. BIO was very supportive of Chairman Smith’s Manager’s Amendment. We are pleased that the legislation will end, once and for all, the diversion of fees collected by the PTO, allowing the agency to use all of its fees to hire more examiners, reduce the backlog of pending applications, and make other improvements to its operations. We also commend the inclusion in the bill of many other reforms that will improve the patent system and enhance patent quality, including transition to a “first-to-file” system, the creation of an inter partes review system, and the elimination of other subjective elements of patent law.
“Nonetheless, given the importance of adopting a supplemental examination provision much like that which passed the Senate on a bipartisan, 95-5 vote, BIO notes our objection to this bill being considered on the House floor. We commit to work with Chairman Smith and others to rectify this issue, so that a patent reform bill with broad support can be brought to the floor of the House.”
Filed under: Patent Reform | Tagged: America Invents Act, backlog, BIO, biotechnology, fee diversion, First to file, Goodlatte, inter partes review, Lamar Smith, Patent and Trademark Office, Patent Reform, PTO, supplemental examination, USPTO | Leave a comment »
An article out of the Genomics Law Report discussing the recent law suit citing violations of the Bayh Dole Act.
A second article from Patent Docs discusses the request for rehearing of the patients petition to the NIH for march-in.
USPTO Prepares for Possible Government Shutdown
In the event of a government shutdown on April 9, 2011, the United States Patent and Trademark Office will remain open and continue to operate as usual for a period of six business days – through Monday, April 18, 2011 — because the USPTO has enough available reserves, not linked to the current fiscal year, to remain in operation until then. Should a shutdown occur and continue longer than the six-day period, we anticipate that limited staff will be able to continue to work to accept new electronic applications and maintain IT infrastructure, among other functions. More information will be posted on this website as it becomes available. Thank you.