An Introduction to Patent Term Compensation

Watson & Band Patent Team

In response to the amendment of the Patent Law and its Implementing Rules, the National Intellectual Property Administration of the PRC has been continuously revising the Patent Examination Guidelines and released the Draft Amendment to the Patent Examination Guidelines (Second Draft for Comments) and its explanation on October 31, 2022, seeking opinions from all sectors of society. In this article, Watson & Band Patent Team will discuss the concept of patent term compensation in the said Second Draft for Comments and provide some insights:

Reasons for establishing the patent term compensation system:

The legal protection period for a patent starts from the filing date instead of the granting date of the patent. However, a patent can only be protected once it has been granted. The purpose of the patent term compensation system is to reasonably assess the responsibility for delays in granting patents, provide legal relief for the reduction of the protection term of the patent right for reasons not attributable to the applicant, compensate for the effective term of protection of the patent right, and protect the economic interests of the patentee.

Definition of Patent Term Compensation

According to Paragraph 2, Article 42 of the Patent Law, which took effect on June 1, 2021, if an invention patent is granted after four years from the application date and after three years from the date of the substantial examination request, the patent office should, at the request of the patentee, compensate for the unreasonable delay in the granting of the patent, unless the delay is attributable to the applicant. 

The date of the substantial examination request refers to the date on which the applicant makes a substantial examination request in accordance with Article 35.1 of the Patent Law and fully pays the substantial examination fee for the invention patent application. If the date of the substantial examination request is earlier than the publication date, it should be calculated from the date of publication.

The applicant should note that this clause does not apply to the compensation for the patent term of the invention patent application if the same applicant applies for both a utility model patent and an invention patent for the same invention-creation on the same day and is granted a utility model patent first. 

When to make a request for compensation

Patentees who meet the above criteria could make a request to the Patent Office within three months from the announcement of the patent granting and pay the required fees. If the patent is jointly owned by several patentees, a representative should be appointed by the patentees to make the request. If a patent agency has been appointed, the patent term compensation request should be handled by the patent agency.

How to determine the compensation period 

The compensation period is generally calculated based on the actual number of days of unreasonable delays in granting the patent. In other words, it is the number of days obtained by subtracting the unreasonable delays attributable to the applicant from the unreasonable delays in granting the patent.

A detailed analysis is given below in two perspectives:

1. Unreasonable delays in granting the patent refer to:

(1)    General invention patent applications: The date of announcement of granting minus the date of expiration of four years after the filing date of the invention patent and three years after the date of the substantial examination request.

(2)    PCT applications entering the Chinese national phase: The date of announcement of granting minus the date of expiration of four years from the date of the international application entering the Chinese national phase and three years after the date of substantial examination request.

(3)    Divisional applications: The date of announcement of granting minus the date of expiration of four years after the date of filing of the divisional application and three years after the date of the substantial examination request.

2. Unreasonable delays attributable to the applicant refer to:

(1)    Delays caused by failure to reply to notices from the Patent Office within the prescribed time limit: The delayed period from the end of the time limit to the actual submission of the reply.

(2)    Delayed examination at the request of the applicant: The actual delayed examination time.

(3)    Delays due to submission of additional documents: The delayed period resulting from the implementation of Article 45 of the Implementing Rules of the Patent Law.

(4)    Delays caused by requesting restoration of rights: The delayed period from the expiration of the original period to the issuance of the notice on the approval of right restoration, unless the patentee can prove that such delay is attributable to the Patent Office. 

(5)    Delays caused by the failure of the applicant to request earlier processing for the international application entering the Chinese national phase within 30 months from the priority date: The delayed period from the date of entering the Chinese national phase to the date of expiration of 30 months from the priority date.

Circumstances not considered unreasonable delays in patent granting

For example, delays due to suspension proceedings, preservation measures, administrative litigation, and re-examination procedures for granting the patent after modification of patent application documents pursuant to Article 66 of the Implementing Rules of the Patent Law are not considered unreasonable delays.

Examination for approvals and notices by the Patent Office   

(1)    If, after examination, the Patent Office deems that the request does not meet the requirements for compensation, it should give the requestor at least one opportunity to make a statement and/or correct the documents. If the amended request still does not meet the requirements, the Patent Office should make a decision not to grant compensation for the patent term.

If, after examination, the Patent Office determines that the request meets the requirements for compensation, it should make a decision to grant compensation, inform the number of days of the compensated period, and register the relevant matters in the Patent Register and announce them in the Patent Gazette.