Introduction:

    China implemented patent open licensing on June 1, 2021. This article introduces the characteristics of China's patent open licensing system and provides related precautions.

    Related legislation:

    Article 50 of the "Patent Law" stipulates: "Where the patentee voluntarily declares in writing to the patent administration department under the State Council that it or he is willing to license any entity or individual to exploit its or his patent, and specifies the payment method and the standard of the royalty, the patent administration department under the State Council shall make an announcement and implement an open license. Where the patentee submits an open license statement for its or his utility model and design, it or he shall attach an evaluation report of the patent. Where the patentee withdraws the open license statement, the withdrawal shall be submitted in writing and be announced by the patent administration department under the State Council. If the open license statement is withdrawn by announcement, the validity of the open license granted earlier shall not be affected."

    Article 51 of the "Patent Law" stipulates: "Where an entity or individual notifies the patentee of its or his willing to implement an open-licensed patent in writing and pays the royalty in accordance with the announced payment method and standard for the royalty, it or he obtains the patent license. During the implementation period of the open license, the annual fee paid by the patentee shall be reduced or exempted accordingly. The patentee whose patent is under an open license may grant a general license after negotiating with the licensee on the royalty, however, the patentee may not grant an exclusive or sole license for that patent."

    Article 52 of the "Patent Law" stipulates: "Where a dispute arises over the implementation of an open license, the parties shall resolve it through consultation. Where the parties are unwilling to consult with each other or where the consultation fails, they may either request the patent administration department under the State Council to mediate the matter, or file a lawsuit in the people's court."

    Currently, several countries around the world have implemented patent open licensing systems, including the United Kingdom, Germany, France, the Czech Republic, Poland, Russia, South Africa, India, Thailand, Malaysia, Brazil, and others. It is worth noting that only a few countries have established such systems, while most countries do not have provisions for patent open licensing in their patent laws. On June 1, 2021, China introduced an open licensing system for patents with the official implementation of the fourth revision of the Patent Law.

    Under the relevant regulations, once granted the patent right, the patentee has the option to voluntarily submit an open license statement to the China Patent Office, specifying the licensing fee. The China Patent Office will then make this information publicly available. During the period of the patent open license, any individual or organization may utilize the patented technological achievements in accordance with the conditions set forth in the open license agreement.

    Patent open licensing has several advantages, including:

    1. Facilitating the exchange of patent licensing information: By making licensing information public, it creates a platform for communication between the licensor and the licensee, which helps connect supply and demand.

    2. Streamlining the negotiation process: The simplicity of the licensing process allows both the supply and demand sides to reach an agreement more efficiently, avoiding complicated negotiations and reducing licensing costs.

    3. Minimizing transaction risks: The open licensing system establishes mechanisms for disclosing licensing information and mediating disputes. This ensures that licensees have a clear understanding of the licensing conditions and other relevant terms in advance. It also helps avoid "jack up the price" and avoid exposing the licensee's technical roadmap and business plans during licensing negotiations.

    4. Providing incentives for patentees: During the implementation period of the open license, patentees can receive reductions or exemptions in the payment of patent annual fees.

    The patent open license is also applicable to foreign patentees who have obtained Chinese patent rights. With the help of the patent open licensing system, patentees can improve the efficiency of patent management and operation, and can reduce related costs. Especially for certain foreign patentees who own a large number of Chinese patents, this system is very beneficial.

    China's patent open licensing system has developed from scratch and is currently in a transitional phase. The following are the issues that foreign patentees should take note of:

   (1) When submitting a patent open license statement, the patentee should provide relevant notarized documents and a Chinese translation of the foreign language text.

   (2) It is recommended to engage a patent agency to submit the patent open licensing statement and required certification materials in paper format to the Patent Office of the State Intellectual Property Office.

   (3) In the case of shared patent rights among multiple patentees, the open license statement must be accompanied by the signature or seal of all patentees indicating their agreement to the open license.

    Foreign companies or individuals can also utilize relevant information platforms to search for patents they are interested in obtaining licenses for in China.

    For instance, they can access the "Query of patent examination information in China and many countries" (https://cpquery.cponline.cnipa.gov.cn/chinesepatent/index) on the official website of the China Patent Office to inquire about open patent licenses that have been issued. However, it should be noted that the website currently only supports searching by application number and record number of open license statement.

    In addition, China has piloted open licensing platforms in most regions, including Beijing, Shanghai, Tianjin, Fujian, Henan, Hebei, Guangdong, and Zhejiang. These provinces and cities have established their own open licensing platforms for the release of information and transaction services related to patent open licensing. These platforms offer various search methods, such as keyword searches and searching by patentees, making it more convenient to find relevant patents based on individual needs.

    The operating modes and principles of each country are basically the same for the patent open licensing system, but there are some differences in details such as application methods, licensing fees, and withdrawal conditions.

    For instance, countries like Kazakhstan, Uzbekistan, Kyrgyzstan, and Turkmenistan stipulate that the open license cannot be withdrawn. In contrast, China, like most other countries, allows the patentee to withdraw the patent open license, and the request must be made in writing.

    Furthermore, the United Kingdom and Germany halve the annual fee for patents under open licensing, whereas China allows for the annual fee to be "reduced or exempted". In Chinese policy, the expression "reduced or exempted" includes "exemption", meaning that patents meeting certain conditions may be exempted from annual fees. However, due to the transitional period of the system, the conditions for relief are still unclear. Future amendments to the implementing rules of the Patent Law may provide further clarification and supplementation to the relevant systems.

    The author will continue to monitor the latest policies from the China Patent Office regarding the patent open licensing system and update relevant information promptly.