Registering IP of Pharmaceutical Products in China

The market pharmaceutical products in China is now worth more than $120 billion, second only to America’s. China imported more than $55 billion worth of drugs last year, and these numbers are expected only to grow as the population ages. In spite of the increase in the number of patented drugs in the pharmaceutical industry in China, patents have made relatively low contribution to the industrial values.

The IP held by Chinese firms is less competitive compared with that of foreign companies. While companies from the U.S. have consistently filed more international patent applications under the Patent Cooperation Treaty than companies from other countries, they have been filing only half as many patent applications in China as their Japanese counterparts.

Pharmaceutical Trademarks Regulators in China

In China, pharmaceutical trademarks are regulated by both the pharmaceutical law and trademark law. Pharmaceutical generic names are prohibited to be registered as trademarks as per Article 11 of the PRC Trademark Law, but only those distinctive pharmaceutical names can be registered as trademarks. Biotechnology companies need to pay close attention to this disclosure requirement because failure to comply could result in either the denial or invalidation of a Chinese patent. It should be noted that there is no equivalent requirement in the patent laws of Europe, Japan, or the United States.

Quick Overview of Pharma IP Law of China

A pharmaceutical trademark should not conflict with another’s pre-existing copyright, trademark right or any other interests protected by Chinese law. According to the relevant law, the registration of pharmaceutical trademarks has numerous restrictions. Pharmaceutical trademarks should have distinctive features and must not conflict with any pre-existing lawful rights of others in order to qualify for registration.

The Opportunities of China’s Pharmaceutical Market

China’s pharmaceutical market is a multi-billion-dollar sector with substantial amounts of drugs imported. With an ageing population and Beijing also looking to remove import tariffs on commonly imported drugs, such as cancer drugs, this market is expected to grow. Potential pharmaceutical investment opportunities in China may involve more complexity than opportunities in countries with longer histories of partnerships with U.S. businesses, but opportunities in China represent tremendous potential.

However, the reports are, as of yet, unconfirmed and the new rules appear to be conditional, raising some questions over how the news will be perceived globally. China’s current Patent Law, promulgated in 1992, treats pharmaceuticals like any other patentable item. Nevertheless, the categories “methods of treatment of diseases” and “scientific discoveries” are still prohibited from patent protection.

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A Realistic Assessment of Transferring IP to China

The protection of IP in China is the biggest challenge for foreign businesses. As China works to continue to evolve its economy and become more innovative, Beijing has reshaped its IP laws. Under the 13th Five Year Plan for the Protection and Enforcement of Intellectual Property, the Chinese government has been actively enforcing patent law. Main objectives of the plan include: to promote IP creation and utilization; to strengthen IP protection and management; and to expand international IP cooperation.

The government said it would accelerate the passage of a new foreign-investment law that includes administrative measures to protect the IP of foreign companies and ease pressure on them to transfer technology. China has consciously sought to fulfill its international obligations in intellectual property rights protection, endeavoring to bring its intellectual property protection level near the new international standards, and has taken many major measures to further raise its current level of intellectual property rights protection.

Foreign companies in China should be extra careful to employ well-established practices of IP protection. These include:

  • Standard practices to protect inflows and outflows of sensitive classes of material
  • Monitoring access to key labs, and control of computers, laptops and mobile phones
  • Use of secrecy agreements with employees and suppliers as well as restricted-access rights to internal databases

What IP can be Protected in China?

Trademarks, patents, copyrights, trade secrets (know-how), geographical indications, and plant breeders’ rights are all recognized forms of IP that can be protected under Chinese law.

If a foreign firm doesn’t file its patents, copyrights, and trademarks in China, its IP has no formal protection there. Businesses should register eligible IP in China as early as possible. Companies should also understand the full range of IP for which they might file, including multiple types of patents (utility model, design, and invention), as well as trademarks and copyrights. In the view of the China IP lawyers, it is good to conduct a realistic assessment of the business risks and benefits of transferring IP to China.

By registering your IP in China, you can perform takedowns of infringing products from all the major Chinese websites. Alibaba, Taobao and Baidu have takedown procedures. Effective protection and enforcement of intellectual property rights are critical for China’s successful transition to an innovation-driven economy and this has created a strong impetus for sustained progress in this area.

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