Are Clinical Trials Exempted from Liability
for Patent Infringement?

 In February 2006, the Japanese Sankyo Co., Ltd, (the patentee) brought an action in the court against the Beijing Wansheng Drug Industry Co., Ltd (the defendant) on the ground that the defendant had used its patented process in the course of application for registration of a new drug, requesting the defendant to cease its infringement and compensate for the damages. In December 2006, the Beijing No. 2 Intermediate People’s Court ruled, upon hearing the case, that use of another person’s patent for the purpose of regulatory approval of a new drug without the authorization of the patentee did not constitute an infringement. This ruling represents the latest judicial view on the issue of prolonged controversy.
 Under the current Chinese Patent Law, unauthorized exploitation of another person’s patent for the purpose of production and marketing constitutes an infringement of patent, but exploitation of another person’s patent only for the purpose of scientific research and experimentation does not. Drug imitators and patentees usually had their own interpretation of this provision. For the former, clinical trial of a drug is an act of scientific research and experimentation for the purpose of presenting to the regulatory authorities the data and information about the safety and effectiveness of a drug required for the approval of the new drug, and not for the purpose of production and marketing, so it does not infringe another person’s patent right. By contrast, for the latter, clinical trial of a drug, on the one hand, has the character of scientific research and experimentation, and, on the other, it is performed for the purpose of obtaining regulatory approval from the regulatory authorities for making and marketing a new drug, so it is performed for the purpose of production and marketing the drug, and not merely for the purpose of scientific research and experimentation. The act of exploiting another person’s patent having these duel purposes constitutes an infringement of the patent right within the meaning of the current Patent Law.
 As early as 2000, Glaxo v. Southwestern Pharmaceuticals, a case of patent infringement involved the same issue. The Chongqing Intermediate People’s Court heard the case, and did not directly answer the question of whether clinical trial of a new drug constituted an infringement of the patent in suit, but supported the plaintiff’s full claim for the damages calculated on the basis of the economic losses caused because of the defendant’s use of the patent for the purpose of regulatory approval of a new drug during the period of clinical trails.
 In 2001, the China Drug Administration issued the Measures for the Registration and Administration of New Drugs, in which it is provided that when applying for the registration of a new drug, the applicant is required to provide the relevant patent information, and declare that the new drug it applies for registration and his process for making the drug does not infringe another person’s patent. In respect of a drug for which another person has been granted the patent right, the applicant may file an application for the registration of a new drug within two years before the drug patent expires.
 In 2003, the Supreme People’s Court drafted the judicial interpretation with respect to patent infringement establishment, in which it is provided that clinical trial of a new drug does not constitute a patent infringement. The draft interpretation has not been officially issued to date as a result of the controversy on part of it.
 In 2002, the State Intellectual Property Office proposed, in the Draft Third Amendment to the Patent Law (submitted to the State Council for review), addition of the provisions on exemption from liability: exploitation of another person’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. The Draft is now still under discussion and review.
 In this general situation, the court of the present Sankyo case decides under the Patent Law that “... the drug in suit is under administrative examination and approval for registration. Although the defendant has used the patented process in suit to make said drug for the purposes of clinical trial for applying for approval of the production of it, its act of making the drug has been done to meet the requirement of the relevant State agency for the regulatory approval of the drug to test the safety and effectiveness of the drug it makes. Given that the defendant does not make the drug in suit directly for the purpose of marketing it, its act is not one to exploit the patent for the purposes of production and marketing under the Patent Law of the People’s Republic of China. Accordingly, it is decided that the defendant’s act does not constitute an infringement of the patent right in suit.■

By Wu Yuhe, Attorney-at-law and Patent Attorney of China Patent Agent (H.K.) Ltd.(wyuhe@cpahkltd.com)