The new Patent Law in China provides an open license scheme

A patent is an exclusive right that no one else may use without the patentee’s permission. Most patentees, on the other hand, do not simply want to monopolize their patented technology; they also want to license their patents so that others can profit from their use.

The patentee informs that anybody who desires to use his or her patent can get a license for exploitation of the patent by paying the required license fees through the China National Intellectual Property Administration’s patent grant department (CNIPA).

On June 1, China’s new Patent Law will take place. To fulfill market demand, effectively minimize transaction costs, and increase patent licensing efficiency, The original law’s chapter 6 was amended from “Compulsory Licence for Patent Exploitation” to “Special Licence for Patent Exploitation,” which included not only the original compulsory license system, but also a new article of open license based on international laws.

Article 50 stipulates the standard of licensing costs and means of payment, as well as the statement and withdrawal of open license, in which a patentee voluntarily makes a written statement to the CNIPA that he or she is prepared to license any organization or individual to use his or her patent. The CNIPA then publishes a public statement about the license, and it is issued as an open license.

Article 51 specifies how to get a patent license, how to reduce or eliminate patent annuities throughout the open license term, and how to pay license costs. Article 52 specifies the procedures for settling conflicts over open patent licenses, broadening the types and methods of patent exploitation licenses available in China. If a dispute occurs over an open license for patent exploitation, the parties may reach an agreement through discussion. If the parties are unwilling or unable to reach an agreement, they may consider mediation from the CNIPA or take the issue to court.

These articles show that the amendments fulfill new demands on patent exploitation and promote high-quality development of patent applications, as well as IP policies, laws, and implementation measures. This change also creates a viable path for patent licensing. As a result, the system implemented this time has significant implications:

1. The open patent license system can enhance licensing efficiency by lowering transaction costs. Because China has developed a patent information publication system, when a patentee declares that he or she is prepared to give an open patent license, the patent authorities may instantly publish information about the license to provide full information to possible licensees. This system serves as a national patent transaction and a market-oriented publication platform. In this way, the system reduces the cost of search of patent information, thus improving efficiency in licensing.

2. With the help of the CNIPA’s patent publication platform, the open patent licence system ensures that transactions between the two parties are closed. In practice, a licensee wishing to exploit the patent of others can obtain the licence by simply paying licence fees specified in the publication. Therefore, not only lengthy negotiations can be dispensed with, but transaction charges and terms are clearly specified in the statement. This solves the problem of difficult valuations in patent matters to some extent, as well as preventing patentees’ changing transaction terms at will.

3. Individuals, small and medium-sized businesses, and huge corporations with several patents all benefit from the open patent license system, which encourages them to issue an open patent license as soon as feasible. Patent annuities are becoming more expensive as the number of patents grows. Those who are ready to offer an open patent license when the new Patent Law takes effect can save a lot of money.

4. Patent license transactions are more secure thanks to the open patent license system. Transaction security is a good way to ensure high efficiency and low costs. By verifying the declaration on an open patent license, as well as the statement on acceptance and controlling patentees, the new patent law ensures the security of the transactions.

In summary, the open patent license system improves in the smooth flow of patent license information, minimizes market transaction costs, increases patent licensing efficiency, and improves the quality of patent exploitation and application efficiency.