China adopts national patentleft to boost patent monetization
date: 2022-05-23

    The China National Intellectual Property Administration (CNIPA) on May 11 launched a pilot program on the formation of a national patent open source licensing system in a bid to game the patent system to the maximum. The phased goal set for the program was declared to be that by the end of this year, over 1,000 patents will have been made open sourced to boost the returns in terms of profit upon their commercialization with over 100 higher education institutions (HEIs), research organizations, and state-owned enterprises (SOEs) involved as main participants.


    The primary framework of the patent open source licensing system was officially introduced in Chapter 6 of the fourth amendments to the Patent Law of the People’s Republic of China effective on June 1, 2021. The Chinese government intended the system’s institution to mirror premium international law and practice related and thus the innovators to benefit from the patent system both ways—protection and sharing. The pilot program is designed as a foundational move before the enactment of the amended Implementing Regulations of the Patent Law (《专利法实施细则》), where the regime will be fleshed out with operational details.


    Patent open source licensing is conventionally termed as patentleft, referring to the practice of licensing patents (especially biological patents) for royalty-free use, on the condition that adopters license related improvements they develop under the same terms. A patent is a right granted to the inventor and the right to exclude others from using a new technology. Patent law is designed to encourage inventors to disclose their new technology to the world by offering the incentive of a limited-time monopoly on the technology. The inventor is protected by the patent law where the term, “society's benefit” is not considered at all in the current law. Broader patents may sometimes disturb the progress of science.


    This is where patentleft comes in, where patents are deemed as humanity’s creative commons instead of mere self-enriching vehicles. Tesla, Inc., for instance, conspicuously opened up its patents in 2014 in exchange for the collective exponential growth of the global electric vehicle (EV) market, which in turn expanded its own playing field without sabotaging its lead. The undergoing discussion of the COVID-19 vaccine patent rights waiver under the TRIPS Agreement is another example of the necessity of counterbalancing patent open source licensing systems.


    The CNIPA pilot program is to be implemented in eight major pilot administrative units including Beijing municipality, Shanghai municipality, Shandong province, Jiangsu province, Zhejiang province, Guangdong province, Hubei province, and Shaanxi province, with some other administrative units named in 2020 serving as secondary testing venues. The intellectual property authorities of the selection of the pilot municipalities and provinces are to function as brokers between patent owners and licensees. The IP authorities are to initiate promotional and educational activities to raise the awareness of the pilot program at various professional seminars and trade conventions in their jurisdictions. Information about the patents subject to the open source licensing terms is to be vetted by the IP authorities before being released on platforms provided by them.  


    Higher education institutions (HEIs) and research organizations are to be mobilized to offer patents with convincing commercial prospects to be licensed to technically-driven companies, especially small and medium-sized enterprises (SMEs), under the pilot program. These patent owners are entitled to the four optional payment methods specified in licensing deals: 1). free of charge; 2). base fees plus royalties; 3). flat fees; 4). payments in installments. Patent owners are suggested to reference preceding average licensing rates in certain industries collected and published during the period of the 13th Five-Year Plan (FYP) when proposing and determining licensing rates under the pilot program and license their patents to multiple parties in one lump. They are encouraged to ultimately lower monetary bars or become open to flexible payment methods in exchange for the limited reduction of the annual maintenance fees of their own patents payable to the CNIPA.

Source: Wechat: CIP Today