Invention Patent Term Can Now Be Extended Through Compensation

In today’s era of innovation-driven development, patents are not just the embodiment of innovators’ wisdom but also significant weapons in market competition. However, the prolonged process from patent application to grant often shortens the actual effective term of patents, weakening their commercial value. To compensate for this time loss and ensure patentees fully benefit from their patents, the Chinese government introduced the Patent Term Compensation (PTC) system on June 1, 2021 and issued the detailed regulations on January 20, 2024, making it one of the important legal mechanisms for protecting innovation outcomes and safeguarding the legitimate rights and interests of patentees.

Patent Term Compensation refers to a legal mechanism that provides a certain period of patent term extension as compensation for invention patents that have experienced unreasonable delays during the examination and new drug approval processes. This compensation mechanism is an adjustment to the patent term, aimed at ensuring that patentees could still enjoy a fair protection period when delays in the examination and drug approval processes are caused by reasons beyond their control. This article will introduce the circumstances under which PTC can be obtained, length of compensation period, timing of requesting PTC, associated fees and approval processes, to help patentees effectively utilize this system, reasonably extend the protection period, and maximize the protection of their intellectual property rights.

Situations Eligible for Patent Term Compensation:

1. Delayed Grant: Where an invention patent is granted after the expiration of four years from the date of filing and after the expiration of three years from the date of requesting substantive examination, the CNIPA may, at the request of the patentee, grant a patent term compensation for the unreasonable delay in the examination process of the invention patent, except for the unreasonable delay caused by the applicant.
2. New Drug Approval: In order to compensate for the time taken for the review and marketing approval of a new drug, for invention patents relating to new drugs that have been approved for marketing in China, the CNIPA may, at the request of the patentee, grant patent term compensation. The compensation period shall not exceed five years, and the total effective patent term shall not exceed 14 years from the date of marketing approval of the new drug.

How long can the Patent Term be compensated

1. Patent Term Compensation for Delayed Grant

The compensation system sets “the later of the expiration of four years from the date of filing and the expiration of three years from the date of requesting substantive examination” as the theoretical standard time point for patent grant. The difference in days between this standard time point and the date of grant, minus the number of days of reasonable delay and the number of days of unreasonable delay caused by the applicant, constitutes the compensation period.

For Chinese national phase applications based on PCT international applications, the date of filing refers to the Chinese national phase entry date of the PCT international application rather than the PCT international filing date; for divisional applications, the date of filing refers to the actual date of filing the divisional application instead of the date of filing the parent application.

“The date of requesting substantive examination” refers to the date when the applicant files a request for substantive examination and completes full payment of the official fee for substantive examination. For invention patent applications where the date of requesting substantive examination is prior to the date of publication, it refers to the date of publication of the patent application.

“Reasonable delay” includes: reexamination proceedings involving amendments to patent application documents resulting in patent grant, procedures suspended due to ownership disputes or assisting in enforcing court preservation orders, and procedures involving administrative litigation.

“Unreasonable delay caused by the applicant” includes: delay caused by failure to respond within the specified time limit to the notifications issued by the CNIPA, delay caused by the request for a deferred examination or incorporation by reference, delay caused by the request for restoration of rights, and delay caused by the applicant’s failure to request early processing for a PCT application’s Chinese national phase application filed within 30 months from the priority date.

Exclusions: Where an applicant applies for both a utility model patent and an invention patent on the same day for the same invention-creation and then obtains the invention patent by declaring the abandonment of the utility model patent, the invention patent is not eligible for patent term compensation.

2. Patent Term Compensation for New Drugs

This system establishes “five years from the filing date of a new drug patent application” as the theoretical time required for administrative approval of new drugs. Therefore, the surplus time after deducting five years from the number of days between the filing date of the patent application and the date on which the new drug obtains marketing approval in China constitutes the patent term compensation. However, the total effective patent term shall not exceed 14 years from the date of marketing approval of the new drug.

3. Whether PTC Can Be Granted for Both Delayed Grant and New Drugs

If a patent meets the criteria on compensation for both delayed grant and new drug approval, both forms of compensation can be simultaneously granted.

The CNIPA will determine the compensation period for new drugs after issuing a decision on patent term compensation for delayed grant.

Timing of Filing a Request for Compensation

Requests for patent term compensation due to delayed grant should be filed to the CNIPA within three months from the date of announcement of grant of patent.

Requests for patent term compensation for new drugs should be filed to the CNIPA within three months from the date of obtaining marketing approval in China; and must meet the following conditions:

• 1.  The date of announcement of grant of the patent for which compensation is requested should be earlier than the date of marketing approval of the new drug;
  2. The patent is in force at the time of the filing of the request for compensation;
  3. The patent has not previously been granted drug patent term compensation;
  4. The claims of the patent for which compensation is requested include the relevant technical solutions of the new drug with marketing approval.
  5. Where multiple patents exist for the same drug, the patentee may only request drug patent term compensation for one of those patents;
  6. Where a single patent pertains to multiple new drugs, a request for drug patent term compensation may only be made for one new drug in relation to that patent.

The above three-month deadline is non-extendable and non-restorable. If a request is filed after the deadline, the “Request for Patent Term Compensation” will be deemed not to have been filed.

To request patent term compensation for a new drug, one needs to prepare: the “Drug Registration Certificate” and its attachments, written consent from the drug marketing approval holder if the drug marketing approval holder is not the patentee, and documents explaining that the claims of the patent for which compensation is requested include technical solutions related to the new drug which has been approved for marketing.

Official Fees for Requesting Patent Term Compensation

The official fee for requesting patent term compensation is 200CNY per patent; this fee must be paid within the “three-month” period as stipulated in the aforementioned “Timing of Filing a Request for Compensation.”

Examination of a Request for Compensation and Announcement of its Grant

Where it is determined after examination that the request for patent term compensation does not meet the conditions for compensation, the CNIPA will provide the requester with at least one opportunity to present their arguments and/or make rectifications. If the request still does not meet the conditions for compensation after the arguments and/or rectifications, the CNIPA will issue a decision of denial of term compensation.

Where it is determined after examination that the request for patent term compensation meets the conditions for compensation, the CNIPA will make a decision to grant the term compensation and indicate the number of days for the compensation;

Once the decision to grant patent term compensation is made, the CNIPA will register the relevant matters in the patent register and announce them in the patent gazette.

Annuities for Compensation Period

The annuity standard for the compensation period is 8,000CNY per patent per year. And, no fee will be charged if the compensation period is less than a year.