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China: Measures for Compulsory Licensing of Pharmaceuticals Updated

(Apr. 23, 2012) Compulsory licensing of medicine patents, which allows drug manufacturers to use patents without the authorization of the patent owner if they meet specified legal requirements, is permitted under international treaties such as the World Health Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights.

Compulsory licensing of patented medicines in China has been provided for in the country's Patent Law since 2008, when the Patent Law was amended to officially permit the issuance of compulsory licenses to manufacture patented drugs and to export them to countries and regions that conform to the international treaties to which China has acceded. (Patent Law of the People's Republic of China, art. 50, State Intellectual Property Office website (posted on Jan. 19, 2011).) However, due to the low profits generated by generic medicines and the lack of specific legal standards on the processing of medicine compulsory license (MCL) applications, especially on how to associate them with unspecified international treaties, the practice of compulsory licensing of patented medicines has not progressed far in China. (Interpretation on New Compulsory Licensing for Patent Implementation Rule, BRIDGE IP LAW COMMENTARY (Mar. 21, 2012); Newly Revised Measures for Compulsory Licensing of Patent Implementation to Come into Force, IPR IN CHINA (Mar. 21, 2012).)

In order to comply with the 2008 amendment to China's Patent Law as well as to promote the public interest and the application of patented technologies, on March 15, 2012, the State Intellectual Property Office of China (SIPO) issued a new version of its Measures for Compulsory Licensing of Patent Implementation (SIPO website (posted on Mar. 19, 2012)). This version significantly updates the original Measures by standardizing the scope of, application procedures for, and restrictions on MCLs.

Under the Measures, countries and regions to which medicines can be exported are limited to: (1) the least developed countries or regions; and (2) the developed or developing country members of the World Trade Organization (WTO) that inform the WTO of their intention to be importers according to international treaties. (Id. art. 7.) Regarding the latter category, the competent department of the State Council is obligated to report to the WTO the name and address of the entity obtaining the compulsory license, the license term, and the name and quantity of the exported drugs. (Id. art. 24.)

Applications for MCLs should include the name of the applicant, the patent number, the application date, the grant announcement date, the name of the patentee whose patent the applicant is seeking to license, and the licensing term sought. (Id. art. 9(3).) The application should also set forth the reason for and facts relating to the request for granting of a license, including information about the importers and the medicines they need.(Id. arts. 9(4) & 13.)

Licensees must:

· restrict the amount of exported drugs to the importers' requests and avoid exporting to a third party not disclosed in the application;

· label or tag the medicine in a way that expressly indicates that it has been manufactured under compulsory licensing;

· provide a special color, shape, or package for the medicine, if practical and as long as the medicine's price will not be affected; and

· release, on the licensee's own website or on the website of the WTO, information regarding the amount of exported drugs and the features of the drugs' special label, tag, or package. (Id. art. 23.

Patentees are generally authorized to contest a compulsory license application by requesting a hearing organized by the SIPO before a license is issued. However, since the MCL approach is intended to protect public health, MCL applications are exempted from being made subject to such hearings and can be directly approved by the SIPO. (Id. art. 18.)

The new Measures will come into force on May 1, 2012, at which time the Measures for Compulsory License for Exploitation of Patent Relating to Public Health, which were promulgated by the SIPO in 2005, will be repealed. (Id.)

Prepared by Rong Xiang, Foreign Law Research Consultant, under the guidance of Kelly Buchanan, Chief, Foreign, Comparative and International Law (FCIL) I. Ms. Xiang has a Bachelor of Laws degree from Nanjing University in China and an LL.M degree from the City University of Hong Kong. She recently earned an LL.M. in International Business Law from The American University Washington College of Law.