Patent Licensing and Implementation refer to the process by which a patent holder grants another party the right to use their patented invention. The following outlines the process, key considerations, and legal basis for patent licensing and implementation:

I. Process of Patent License Implementation

1. Signing the Patent License Agreement

· Clarifying the License Type: Patent licenses can be classified into three types: exclusive license, sole license, and non-exclusive license.

o An exclusive license grants the licensee the sole right to use the patented technology within a specified period and region, meaning even the patent holder cannot use the technology.

o A sole license allows the licensee to use the patented technology exclusively within a specified period and region, but the patent holder retains the right to use it.

o A non-exclusive license permits the licensee to use the patented technology while allowing the patent holder to grant licenses to other parties as well.

· Defining the Scope of the License: The contract should explicitly specify the geographical scope, duration, method of implementation, and any quantity restrictions to avoid ambiguities during execution.

· Clarifying Legal Responsibilities in Case of Patent Expiry or Invalidation: According to Chinese law, the validity period of an invention patent is 20 years from the filing date, while utility model and design patents are valid for 10 years. The contract should specify the legal consequences if the patent expires or is declared invalid.

2. Preparing Application Materials

· Patent License Agreement: The contract should include the names and addresses of the parties, the number of patent rights covered, and details of each patent (name, patent number, filing date, grant announcement date), as well as the type and duration of the license.

· Identity Documents: Legal identification or business registration certificates of both the licensor and licensee.

· Power of Attorney: If an agent is appointed, a power of attorney along with the agent’s identification or business registration certificate must be provided.

· Additional Materials: If a supplementary agreement to the patent license contract exists, it should be submitted as necessary. If applying online, scanned copies with a declaration confirming consistency with the original documents must be provided.

3. Submitting the Application

· Online Submission: Applicants can process new applications, modifications, and cancellations via the official patent business handling system (http://cponline.cnipa.gov.cn).

· In-Person Submission: Applicants may submit their applications at local offices of the China National Intellectual Property Administration (CNIPA).

· Mail Submission: Applications sent via mail should be addressed to the local CNIPA office, with "License Recordation" clearly indicated on the envelope.

4. Examination and Recordation

· Examination: The CNIPA or local intellectual property offices will review the application materials within seven working days. If the application meets the requirements, a recordation certificate will be issued.

· Circumstances for Rejection:

o The patent has expired, been invalidated, or the patent application was rejected, withdrawn, or deemed withdrawn.

o A co-owner of a patent entered into the contract without the consent of other co-owners.

o The same contract is submitted for recordation multiple times.

o The contract duration exceeds the patent’s validity period.

o Other violations of legal requirements.

· Circumstances for Recordation Cancellation:

o Submission of false application documents or fraudulent acquisition of the recordation certificate.

o The patent application is rejected or deemed withdrawn.

o The patent is invalidated during the contract period.

5. Obtaining the Recordation Certificate

· Checking Recordation Information: The CNIPA regularly publishes recordation information on its official website and in the Patent Gazette.

· Recordation Fees: The recordation process is free of charge for domestic transactions (except for foreign patent legal status inquiries).

II. Key Considerations for Patent License Implementation

1. Due Diligence on Parties Involved: Both parties should assess each other’s financial status, creditworthiness, and legal qualifications before signing the contract.

2. Defining Authorization Clauses Clearly: Ambiguous wording in authorization clauses can lead to disputes. For example:

o If a license covers "manufacturing" and "use," does it implicitly include the right to "sell"?

o If only "use" is mentioned, does it include "manufacturing"?
A precise definition of rights granted under the license is crucial.

3. Signing a Non-Disclosure Agreement (NDA): Before negotiations, both parties should sign an NDA to prevent the leakage of trade secrets.

4. Ensuring the Validity of the Patent License Agreement:

o Verify that the patent is granted and valid.

o Confirm the licensor is the legal patent holder.

o If the patent is co-owned, obtain consent from all co-owners.

o Ensure that patent maintenance fees have been duly paid.

5. Specifying Obligations of the Licensor: The contract should outline the licensor's obligations, including:

o Providing relevant documentation and technical guidance for implementing the patent.

o Guaranteeing the integrity of the patent rights.

o Disclosing prior usage of the patent before signing the agreement.

III. Legal Basis for Patent License Implementation

1. Patent Law of the People’s Republic of China

· Article 51:

o Any entity or individual wishing to implement an open license patent may notify the patent holder in writing.

o Upon payment of the license fee as per the published standard, the entity or individual is granted the patent license.

o Patent holders who offer open licenses receive reductions on their annual patent fees.

o While an open license is in effect, the patent holder may still negotiate and grant a non-exclusive license, but exclusive or sole licenses are prohibited.

· Article 52:

o Disputes over open licenses should first be resolved through negotiation.

o If negotiations fail, parties may request mediation by the CNIPA or file a lawsuit in court.

· Article 53:

o Under the following conditions, the CNIPA may grant a compulsory license for an invention or utility model patent:

§ The patent holder has not used or has insufficiently used the patent for three years after grant and four years after application without a justified reason.

§ The patent holder’s actions have been deemed monopolistic, and a compulsory license is necessary to mitigate the anti-competitive effects.

· Article 54:

o The CNIPA may grant a compulsory license in cases of national emergencies, extraordinary situations, or for public interest purposes.

2. Regulations on the Recordation of Patent License Contracts

· Recordation Requirements:

o The contract must include party details, patent details (name, patent number, filing date, grant date), license type, and duration.

· Circumstances for Rejection:

o The patent is invalid, rejected, withdrawn, or subject to unauthorized agreements.

o The contract duration exceeds the patent's validity period.

o Other violations of legal provisions.

By following these procedures and key considerations, patent holders can effectively implement patent licenses while ensuring legal protection and contract enforceability.