By Landy Jiang and Xiao Li

ljiang@iprights.com; xli@iprights.com

Imminent infringement is a new concept for China and has recently been introduced into Chinese Law. It brings China into line with the relevant provisions of the WTO agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS) of 2001. Article 61 of the Patent Law allows a patent holder to seek an order requiring an apparent infringer to suspend its activities and preserve the relevant property in cases where there is reasonable evidence of ¡¥imminent infringement¡¦ that will cause ¡¥irreparable harm¡¦. Although Article 63 does provide exemptions for scientific research and experimental use, drug companies insist that ¡¥experimental use¡¦ must be construed narrowly. They argue that ¡¥imminent infringement¡¦ occurs as soon as experiments are directed towards a clear commercial purpose. This includes the production or use of a patented drug for clinical experiments in order to obtain regulatory approval. In this article we examine the reasons as to why clinical trials are exempted from liability for patent infringement.

Recently, Eli Lilly & Co, the US-based drug maker, claimed ¡¥imminent infringement¡¦ against the Beijing Ganli Drug Co. Ltd. Eli Lilly argued the Defendant used its patented process when obtaining regulatory approval from the State Food and Drug Administration (SFDA) for ¡§recombinant insulin lispro injection¡¨. They sought Rmb810,000 (US$108,000) in damages. The Court, however, held that although the Defendant had already obtained the administrative approval for the registration of the drug, the Plaintiff failed to prove that the Defendant had produced or marketed the drug. Thus the Defendant¡¦s behaviour was not deemed to have breached Article 11 of the Patent Law and had not ¡¥exploited the patent for the purposes of production and marketing¡¦. This decision reaffirms the court¡¦s opinion in an earlier case, Sankyo Co., Ltd. v. Wansheng, that the use of a patented drug in clinical experiments in order to obtain regulatory approval does not constitute a patent infringement. These two cases frustrate many foreign drug makers and create confusion about the system of justice in Chinese Courts.

First, ¡§imminent infringement¡¨ is still seldom determined by Chinese Courts. As it is quite a different concept from home-grown Chinese tort law, the courts apply an extremely strict and narrow interpretation to ¡§imminent¡¨ and ¡§irreparable harm¡¨. In judicial practice, few cases fulfil the strict threshold of imminent infringement. According to statistics from the Supreme People¡¦s Court, approximately 360 cases were finally awarded a preliminary injunction or similar remedy in the five years from 2002 to 2006.

Second, a patent right is a sort of legitimate monopoly right, and should be protected within limits. The concept of imminent patent infringement is subject to very limited and strict application in practice so as to balance the rights of patent owners with public interests. In international practice, the public interest is even more strongly considered when drugs and general public health are involved. For example, the US added an exemption clause (known as the ¡¥Bolar Provision¡¦) into the Patent Law of the USA in 1984 for situations ¡§solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products¡¨. Developed countries such as the UK, US, Germany, Canada, Japan and Australia have already exempted the make and use of patented drugs for clinical research and regulatory approval from infringement liability. It would be expected that a developing country like China would follow this approach as most of the drug makers in the market are still imitators.

In addition, Chinese legislation is following the trend in exempting clinical research from patent infringement. For example, the latest draft of the revised Patent Law clearly stipulates that the ¡§exploitation of other¡¦s patent for the purpose of obtaining and providing the data required for the regulatory approval of a drug does not constitute a patent infringement¡¨. In 2003 the Supreme People¡¦s Court in its judicial interpretation had already prescribed that clinical trials of new drugs should not be deemed as infringement.

International convention and domestic legislative trends are converging to form the conclusion that clinical experiments shall be exempted from imminent infringement.

In a recent noteworthy move, the SFDA issued the Measures for the Registration and Administration of Drugs (2007) which allows applications for the registration of new drugs using a patent within two years of a drug patent expiring. Although it is only an administrative measure, it clarifies that the SFDA refuses to consider clinical trials for obtaining regulatory approval as a patent infringement.