NPCSC Passes Export Control Law & Biosecurity Law, Updates Patent Law, National Flag/Emblem Laws, Election Law & Minors Protection Law

The 13th NPC Standing Committee (NPCSC) concluded its 22nd session on Saturday, October 17, 2020 and adopted seven bills. We will summarize five of them in some detail below, while briefly noting the other two. The texts of the bills and relevant legislative documents can be found on the individual bill pages linked below.

Patent Law Amendment

The amendment to the Patent Law [专利法] adopted on Saturday is the fourth major update to China’s patent regime. Its key provisions are as follows:

  • Design patents: Under the amendment, just part of a product design is now eligible for design patent (art. 2, para. 4). The amendment also extends the term of a design patent from 10 years to 15 years, consistent with the Hague Agreement (art. 42, para. 1).
  • Patent term restoration: If an invention patent is granted four years after the initial filing and three years after substantive review began, the applicant may request restoration of the patent term due to any “unreasonable delay” not caused by the applicant herself (art. 42, para. 2).
  • Novelty “grace period”: In light of the COVID-19 pandemic, the amendment adds a new provision that permits the initial disclosure of an invention during a national emergency or “extraordinary circumstances” without compromising the novelty of the invention, if made in the public interest and within six months before the filing of a patent application (art. 24, item 1).
  • Pharmaceutical patents
    • Patentees may request up to five years of patent term restoration for invention patents related to “new drugs” that have been approved for marketing in mainland China (art. 42, para. 3).
    • The amendment adds a new article providing a legal basis for a future “patent linkage” system, whereby a generic drug cannot be granted marketing approval before the patent in its branded equivalent expires or is declared not infringed or invalid (art. 76). This article allows a court or the patent office to adjudicate such disputes during the marketing approval process, and allows the drug administration agency to stay review of a generic drug based on the court ruling (id. paras. 1–2). The approved amendment retains only a barebones version of the patent linkage provision; instead, it tasks the State Council’s drug administrative and patent agencies with formulating more detailed linkage measures (id. para. 3).
  • Statute of limitations: The amendments extends the statute of limitations for patent infringement suits from two to three years, to start running when the patentee knows or should have known both the infringement and the infringer (art. 74, para. 1).
  • Damages
    • The amendment authorizes up to quintuple punitive damages if the infringement is “willful” and “the circumstances are serious” (art. 71, para. 1).
    • The amendment also increases the statutory damages to between 30,000 and 5 million RMB (from between 10,000 to 1 million RMB), to be imposed when the damages cannot otherwise be determined (art. 71, para. 2).

The amendment will take effect on June 1, 2021.

Export Control Law

The Export Control Law [出口管制法] is China’s first omnibus national legislation on export controls, which have previously been governed by rules scattered in various statutes and administrative regulations. The Law consists of five chapters with 48 articles and will enter into force on December 1, 2020.

Controlled items. Items subject to export control under the Law include (1) dual-use items, (2) military products, (3) nuclear items, and (4) other items (including goods, technologies, and services) that “relate to the safeguard of China’s national security or the fulfillment of China’s anti-proliferation and other international obligations” (art. 2, para. 1). The Law makes clear that controlled items also include the technical and other data relating to those items (id. para. 2).

Scope. The Law applies to both the transfer of controlled items from the mainland China to outside the mainland as well as the provision of controlled items by Chinese entities to foreign entities (art. 2, para. 3). It also applies to the items’ transit, transshipment, through shipment, re-export, and export from a bonded area or a special customs area (art. 45). Overseas entities who violate the Law, thereby “endangering China’s national security and interest or obstructing the fulfillment of its anti-proliferation and other international obligations,” will also be prosecuted under the Law (art. 44).

Regulatory Tools

  • Controlled items will generally be identified in export control lists promulgated by the export control authorities (art. 9, para. 1). Consistent with China’s national interest, the authorities may also subject unlisted items to temporary export control, not to exceed two years (id. para. 2).
  • An export license must be obtained to export any item that is on the control lists or is subject to temporary export control (art. 12, para. 2). A license will also be required for any other item that the exporter knows or should have known entails certain risks, such as the risk of being used for manufacturing weapons of mass destruction (id. para. 3). An applicant may seek administrative reconsideration of the denial of a license, but may not seek further judicial review of the decision on reconsideration (art. 41).
  • When in China’s national interest, the export control authorities may impose a complete ban on the export of certain controlled item, or a more limited ban on their export to certain jurisdictions, entities, or individuals (art. 10).
  • Exporters with “well-run” [运行良好的] internal compliance programs may be given “facilitation measures,” such as general export licenses.

The Law prohibits Chinese entities from providing “export control–related information” to overseas entities, if doing so may endanger China’s “national security and interest” (art. 32, para. 2). It also authorizes China to take reciprocal measures when a foreign government “abuses export control measures to endanger China’s national security and interest” (art. 48).

National Flag & Emblem Laws Amendments

The amendments are the first substantive updates to the National Flag Law (NFL) [国旗法] and the National Emblem Law (NEL) [国徽法] since their initial passage in the 1990s. They are part of the Communist Party’s May 2018 plan to embody the “core socialist values” in legislation.

Both amendments allow the two national symbols to be made in sizes other than the “universal” scales specified in the two Laws (NFL art. 3; NEL art. 16). Such non-universal scales must be proportional to the universal scales, however, and must match the purpose of their use and the surroundings (id.).

The amendments add new required displays of the two national symbols:

  • Under the NFL amendment, the flag must be flown daily at the offices of the Party Central Committee, the Central Commission for Disciplinary Inspection, and the State Supervision Commission, in addition to all other central state organs (art. 5). All local party and state institutions as well as the Democratic Parties and mass organizations must also fly the flag on business days (art. 6). All schools and public cultural or sports organizations (e.g., libraries, museums, stadiums) must also fly the flag on days they are open (art. 6, paras. 2–3). The flag must also be flown on important anniversaries such as the National Constitution Day by all government institutions and at public places like squares and parks (art. 7).
  • Under the NEL amendment, all state organs must display the national emblem above the main entrances to their buildings (township-level governments were previously subject to different rules) (art. 4). The emblem must also be displayed at venues for taking the constitutional oath and on practically all official government websites (arts. 5, 7).

The amendments also introduce various new prohibitions:

  • Under the NFL amendment, the national flag must not be flown upside down, flown or used in any other way that “undermines the dignity of the national flag,” or discarded at will (art. 19). It is also forbidden to use the flag or its patterns as part of a patented product design (art. 20).
  • Under the NEL amendment, the national emblem or its patterns, too, must not be used as part of a patented product design (art. 13). It cannot be used in household items or “the decorations of everyday life,” either (id.).

Citizens are encouraged to use the national flag on appropriate occasions to “expressive patriotic sentiments” (NFL art. 9, para. 1). Similarly, citizens may wear national emblem pins on “solemn occasions” for the same purpose (NEL art. 10, para. 3).

The national flag may now be flown at half-mast at state memorial ceremonies or during public health emergencies that cause mass casualties, either nationwide or at particular regions or venues (art. 15, para. 2). The flag may also be used to cover the bodies, coffins, or urns of state leaders, “persons who have made outstanding contributions to China,” and martyrs during the mourning ceremonies for these persons, provided that the flag must not touch the ground (art. 12).

Both amendments will take effect on January 1, 2021. Because the two Laws apply to Hong Kong and Macau via Annexes III to the two cities’ Basic Laws, they will need amend their local implementing ordinances in accordance with the amendments.

Election Law Amendment

This amendment to the Election Law for the National People’s Congress and Local People’s Congresses at All Levels (Election Law) [全国人民代表大会和地方各级人民代表大会选举法] is adopted pursuant to the Party’s 2019 Fourth Plenum Decision to “appropriately increase the number of delegates to grassroots-level people’s congresses”—that is, county-level and township-level people’s congresses. This change is necessary, according an NPCSC vice chairman, because the number of people’s congress delegates has dropped by sixteen percent over the past forty years. As urbanization continues, townships were merged into counties or urban districts as subdistricts [街道], but the subdistricts are not themselves a separate level of government, so the townships’ people’s congresses would cease to exist, leading to the decline in delegates count.

To deal with this problem, the amendment increases the base number of delegates to a county-level people’s congress to 140 (from 120) and the base number of delegates to a township-level people’s congress to 45 (from 40) (art. 12, para. 1). The amendment requires the number of delegates to these two levels of people’s congresses to be redetermined, in advance of the elections next year. Relatedly, the amendment adds a new provision providing that the elections of delegates to the people’s congresses shall adhere to the Communist Party’s leadership (art. 2).

The amendment has already taken effect on October 18.

Very Briefly

The NPCSC also approved comprehensive revisions to the Minors Protection Law [未成年人保护法] and a new Biosecurity Law [生物安全法]. We unfortunately will not be able to offer detailed summaries of these two bills, so very briefly:

  • The revised Minors Protection Law has 132 articles in nine chapters. Notable new provisions include ones dealing with bullying among students, abuse of minors by persons working in industries that are in close contact with minors, and protection of minors on the internet. The revised Law will take effect on June 1, 2021, the International Children’s Day.
  • The Biosecurity Law consists of 88 articles in ten chapters. It governs a range of issues, from the prevention and control of epidemics and the security of human genetic resources, to the security of pathogenic microbiology laboratories, biotechnology, and bioterrorism. It will take effect on April 15, 2021.

We expect the NPCSC to solicit public comments on the following bills this coming week:

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