Patent Open License System in China

On May 11, 2022, the China National Intellectual Property Administration (CNIPA) released the Trial Program on Patent Open License. From this document, we can see that “anyone willing to accord with the asking prices and terms may quickly acquire the relevant patent license. Different from the traditional mode in one v. one, the open license system adapts an impartial, easy and fast mode in one v. many, which bridges supply and demand, improves efficiency of negotiations and curbs systematic transaction cost”.

China has built a patent information publication system, the patent authorities may, after a patentee makes a statement that he/she is willing to grant an open patent licence, immediately publish the information about the licence to provide full information for potential licensees. The publication will list the basic information of the patent as well as the prices and terms for using the patent. In practice, a licensee wishing to exploit the patent of others can obtain the licence by simply paying licence fees specified in the publication.

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.

The Scope of the Trial Program

Requirement for selecting patents

• The patent has a market prospect;
• The patent has a wide range of applications;
• The patent has high practicability;
• Its technology is applicable to multi-regional implementation and is not within the validity period of the exclusive implementation license or the sole implementation license;
• In principle, the license period is not less than one year, and all patentees agree to license any unit or individual to implement it;
• For utility model and design patents, a patent right evaluation report or search analysis report shall be provided for open license statement.

Circumstances in which an open license cannot be applied

1. The patent right is within the validity period of exclusive or exclusive license;
2. The patent has been suspended due to a dispute over the ownership of the patent right or a ruling by the people’s court to take preservation measures for the patent right;
3. The patent right is in the late payment period of the annual fee;
4. The patent right is pledged without the permission of the pledgee;
5. Other circumstances that do not meet the statutory conditions for patent open license.

As an innovative measure in the development of China’s patent system, lingering problems like how to find potential licensees, how to be more efficient in licensing, how to identify relevant royalties will be gone after the landing of the patent open license system, which is of great significance for facilitating the smooth flow of patent license information, reducing market transaction costs and improving the efficiency in patent licensing.