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    Is China's Establishing Patent Linkage System More Favorable to Generic Drug Companies or Innovator Drug Companies?


    author: KOU Fei by the NTD

    The China Patent Linkage System embedded in the 4th Amendment of the China Patent Law got passed and will be effective on June 1, 2021. In principle, it outlines that during the drug marketing approval procedure, both the drug-related patentee and the marketing approval applicant can initiate judicial or administrative proceedings for the timely resolution of patent disputes. China’s National Medical Products Administration (NMPA, a counterpart of FDA) in turn will decide whether or not to approve the drug within a specified time limit, according to an effective judgment rendered by the court.

    Although it’s too early to say how this long-expected system can be smoothly implemented, we catch sight of certain specifics in a recent exposure draft of the Measures for Implementation of the Patent Linkage System, including the highlights of the Chinese "Orange Book", Paragraph I-IV Patent Certifications, ANDA 9-Month Stay of NMPA Approval, 12-Month Exclusivity Period, etc.

    With an estimation of the Measures being effective along with the newly effective Patent Law after further modification, the implementation of the patent linkage system is round the corner. With quite a lot of aspects are borrowed from the US Linkage System (vs. EU Linkage System), it is NOT a simple mirror of it. The following differences are worthy of more attention.

    i.              A “China-style” artificial act of infringement. Unlike a “real” artificial act of infringement, the act of application for marketing approval will NOT be deemed as an infringement of the patent right. Accordingly, remedies like monetary compensation cannot be pursued at this stage.

    ii.              Alternative remedy approaches. In addition to the courts, the Chinese Patent Office is also awarded jurisdiction over the so-called China-style artificial act of infringement, which procedure would likely be managed to align with invalidity proceedings.

    iii.              Real-time monitoring of the generics’ ANDA by the patentee. The generic drug companies have no obligation to notify the patentee of the ANDA. Instead, the patentee needs to proactively monitor the publication of the generics’ ANDA on the website of NMPA.

    iv.              Shorter stay of drug approval. A 9-month stay of NMPA approval procedure is designed to wait for an effective judgment (normally after two instances of trial) by a court. Being FAR SHORTER than the 30-Month stay in the U.S. aside, unless there is a special “green channel” for these cases, it’s more like an impossible mission to expect an effective judgment in 9 months, given currently the average duration of 32 months in total for two instances of trial in China.

    v.              Extended 12-Month Exclusivity Period. While the U.S. has a 180-day Exclusivity Period, China’s is double that length. Undoubtedly, a significantly extended 12-Month exclusivity period will highly incentivize one or more generics to scramble to challenge the patent.

    The China patent linkage system should be interpreted as being more favorable to generic drug companies than the Innovator Drug Companies at least for the above items iv and v, which means more challenges to the patentees. To better adapt to the approaching change and make better business decisions in China, the innovators may bear the following takeaways in mind:

    i.              Identification and incorporation of the qualified patent(s) or claim(s) into Chinese "Orange Book" in due course: It’s a prerequisite to effectively enforce the rights..

    ii.              Preparation of legalized and notarized empowering documents in advance: To ensure the judicial or administrative proceeding can be duly initiated within 45 days from the publication of generics’ ANDA, these works normally taking 2 to 3 months, or even longer must get started early.

    iii.              Defense, Defense, Defense: An unofficial statistic of invalidity proceedings shows that about 70% of drug-related patents were invalidated entirely or partially in the past three years. To defend the tougher patent challenge shortly, the patentees can’t make too much preparation.