Foley & Lardner article on the history of the Chinese Bayh-Dole Act

China Bayh-Dole Act: A Framework Fundamental to Achieving the Economic Potential of China’s National Patent Development Strategy (2011 – 2020)

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.

BIO Hosts U.S./China Biotechnology Examiner Workshop with U.S. Patent and Trademark Office and China’s State Intellectual Property Office

Press Release:

 
WASHINGTON, D.C. (Tuesday, April 05, 2011) – The Biotechnology Industry Organization (BIO) hosted a U.S./China Biotechnology Examiner Workshop with U.S. Patent and Trademark Office (PTO) and China’s State Intellectual Property Office (SIPO) on March 28, 2011 in Beijing, China. The workshop which was organized by BIO for SIPO examiners, focused on biotechnology patenting and encouraged bilateral cooperation between SIPO and the USPTO.“BIO recognizes the commitment on behalf of the Chinese Government and SIPO to spur innovation in the biotech industry and, together with the PTO, we pledge to partner with Chinese leaders to move the industry forward to benefit patients and other consumers worldwide,” said Jim Greenwood, CEO and President of BIO.The workshop was the first of a series of meetings intended to open communication and establish a relationship between the two groups. BIO will work with the SIPO to strengthen China’s regulatory system to encourage innovation and protect intellectual property within the country. The commitment of SIPO will be critical for sending a message to companies that want to do business in China.

“Robust development of the biotech industry in China depends on an advanced intellectual property and patent system,” said Scott Sindelar, Minister Counselor of Agricultural Affairs. “Today’s workshop is timely in sharing experience and regulations of patenting and IP both in the U.S. and China, and establishing greater understanding of each other.”

“Since most Chinese attendees are examiners of intellectual property, [the workshop] provides an opportunity to share experiences and ideas with our American counterparts,” said Yang Xiaowei, deputy Director General of International Cooperation Department of SIPO.

In each of three panels, USPTO and SIPO speakers discussed how each issue is handled by the pertinent provisions in their current patent law and rules. They also addressed office practice and shared practical experiences with the different technical arts in biotech.  Industry and academic speakers provided user perspectives in their interaction with the patent law and practice in each country.

The workshop featured the following panels:

·         The first panel focused on taking a balanced approach to written description and enablement requirements, which are necessary for preventing impediments to patenting activity. Panelists also discussed the type of information that is required for an invention to satisfy the written description and enablement requirements.

·         The second panel focused on issues arising from claims with sequence homology. Panelists discussed the scope of claims using homology or percent of sequence identity language and issues that often arise during examination.

·         The third panel addressed meeting discussed China’s new requirements for patent disclosure for genetic resources, stakeholders’ experiences with China’s new genetic disclosure requirement, and alternative ways to ensure appropriate access and benefit sharing.

The three groups (BIO, PTO and SIPO) are looking forward to future opportunities to work together on issues of common interest.  

Upcoming BIO Events 

BIO Intellectual Property Counsels Committee Spring Conference and Committee Meeting
April 13-15, 2011
Seattle, WA

World Congress on Industrial Biotechnology & Bioprocessing
May 8-11, 2011
Toronto, Ontario, Canada

Partnering for Global Health Forum 2011
June 27, 2011
Washington, DC

BIO International Convention
June 27-30, 2011
Washington, DC

2011 BIO Human Resources Conference
June 26-28, 2011
Washington, DC

The Business Forum at the BIO International Convention
June 28-30, 2011
Washington, DC

BIO India International Partnering Conference
September 21-22, 2011
Hyderabad, India

BIO China International Conference
October 12-13, 2011
Shanghai, China

About BIO

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. BIO produces BIOtech Now, an online portal and monthly newsletter chronicling “innovations transforming our world.” Subscribe to BIOtech Now.

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BIO’s Intellectual Property Counsels Committee Seattle Meeting Topics

Join us for BIO’s Intellectual Property Counsels Committee Meeting in Seattle April 13-15.  You can find the session topics below.

Whose Rights Are They, Anyway? Implications from and a Discussion on Stanford v. Roche

The pending Supreme Court review of Stanford v. Roche has brought out multiple perspectives on the disposition of ownership rights in federally funded inventions under Bayh-Dole. This session will explore the different interpretations of the Act’s provisions, and their practical implications for small business grantees or biotech companies who wish to collaborate with federal grantees.

A Landmark Case: The Aftermath of Myriad

This session will provide an update on the status of the case and the arguments that have been made by the various amicus groups, with particular emphasis on the US Government’s brief. We will also explore the impact of “gene patents” on up-and-coming technologies, especially whole genome/whole exome testing.

The Business Case for International Humanitarian Approaches to IP Management and Collaborations

Guest Speaker:

Erik Iverson, Associate General Counsel, Global Health, Gates Foundation

 

Best Practices in Research Collaborations: Joint Inventorship Pitfalls and Ethical Issues in Joint Representation

Don Ware of Foley Hoag will lead a discussion of pitfalls that may arise from prosecuting joint inventions conceived in the course of research collaborations among multiple institutions, including companies, universities and hospitals. Irene Pleasure, Associate General Counsel and Director of Patent Law at Genentech, will provide the in-house perspective on managing patent issues in research collaborations. David Hricik, Professor of Law at Mercer University School of Law and co-author of the treatises Patent Ethics – Prosecution (2009) and Patent Ethics – Litigation (2010), will address the professional responsibilities of patent attorneys involved in the prosecution of jointly-owned patent applications.

How to Stay in the Frying Pan and Out of the Fire: Hot Topics in Ethics for In-House IP Attorneys

Professor David Hricik and Barbara Fiacco of Foley Hoag will present on developments in ethics law for in-house IP counsel, including law firm conflict issues, how to protect the attorney-client privilege, ethical dilemmas created by 21st century social media, in-house counsel ethical pitfalls, and recent developments in IP malpractice law. The game-show format of this panel will be thought-provoking and fun, and will encourage audience participation. CLE Ethics credit is being requested.

Learn How to Navigate IP Landscape in Emerging Markets

BIO members have indicated a strong desire to hear about challenges and key developments in emerging markets such as Korea, China, Brazil and India. Specific challenges, lay of the land, how to negotiate better in these markets.

Double Patenting

This panel will include new developments on the Boehringer Ingelheim Federal Circuit Case, collaboration of multiple parties/how to avoid double patenting rejections and possible coverage of the Sun v. Lilly case.

The Next Chapter: Biosimilars Beyond the Health Care Reform Act

Will Policy Issues Slow the Pace of Implementation? Will the FDA Look to Europe for Guidance on Antibody Biosimilars? Emerging Markets, Emerging Strategies? The panel will cover recent developments in biosimilar, including policy issues based on move to repeal healthcare reform, the recent FDA public hearing on biosimilars, further debate on the meaning of exclusivity, the necessity of clinical trials, the possibility of interchangeability, and developments in Europe with respect to antibody biosimilars.

BIO Comments to USTR on 2011 Special 301 Review

BIO Comments to USTR on 2011 Special 301 Review (February 15, 2011)

In comments to the U.S. Trade Representative (USTR), BIO stresses the critical importance of protecting intellectual property abroad and made recommendations about which countries to include on the Priority Watch and Watch List, which to elevate as a Priority Foreigh Country, and which countries to monitor.

Read the Comments (link to http://bio.org/pdfs/BIO_2011_Special_301_Submission.pdf)

Read the Press Release (link to http://bio.org/news/pressreleases/newsitem.asp?id=2011_0221_01)

President Obama stresses the importance of Intellectual Property with President Hu of China

Here are some quotes on intellectual property from yesterday’s press conference with President Obama and President Hu of China.

I did also stress to President Hu that there has to be a level playing field for American companies competing in China, that trade has to be fair.  So I welcomed his commitment that American companies will not be discriminated against when they compete for Chinese government procurement contracts.  And I appreciate his willingness to take new steps to combat the theft of intellectual property.

  

Some of it has to do with intellectual property protection. So we were just in a meeting with business leaders, and Steve Ballmer of Microsoft pointed out that their estimate is that only one customer in every 10 of their products is actually paying for it in China.  And so can we get better enforcement, since that is an area where America excels — intellectual property and high-value added products and services.

And the Chinese government has, to its credit, taken steps to better enforce intellectual property.  We’ve got further agreement as a consequence of this state visit.  And I think President Hu would acknowledge that more needs to be done.  

Full Press Conference