Proposed new regulations in China on the formulation and revision of national intellectual property (IP) standards involving patents contain several worrying provisions for IP holders, at least in the view of one expert observer.

The Standards Administration of China (SAC) issued the proposed regulations in November and has since been gathering public comments from a wide range of stakeholders. But, as currently worded, the draft regulations are "out of synch with the patent policies of international standards setting organisations and will negatively impact…innovation within China", George Willingmyre writes on Intellectual Property Watch's blog.

The author, president of standards and trade policy consultancy GTW Associates, highlights several proposals he sees of concern. For example, article nine of the SAC draft states that if an existing patent must be licensed to help implement a national standard, this will be done "at a price significantly lower than the normal royalties".

This is a condition not set by other major standards-setting bodies, and may discourage IP owners inside and outside China and impede the adoption of appropriate standards by China, Mr Willingmyre says in the blog (entries to which Intellectual Property Watch notes are solely those of the authors and are not associated with it).

He also points to article 13 of the SAC proposal, which outlines procedures for the compulsory licensing of patents. This says that, in principle, compulsory national standards shall not involve patents. But for those that do, patentees shall grant these free of charge. If agreement cannot be reached, the release of standards will be temporarily withheld or a compulsory licence granted according to law, it states.

"Compulsory licensing should be used rarely and in limited extraordinary circumstances" and within the global rules of the World Trade Organization's TRIPS agreement, Mr Willingmyre warns. The SAC would do well to consider co-ordinating its regulations in this area with other policy bodies in China, and laying out clearer guidelines which limit such licensing to critical extraordinary circumstances using well-defined criteria, he suggests.

China's State Council released a national IP strategy blueprint in 2008, which highlighted the need to significantly improve IP protection and enforcement to help drive the country's economic growth. It has since been moving to strengthen its patent laws, although major trading partners remain concern over whether these will be effectively enforced in practice.

Source: Scrip News