When the State Intellectual Property Office's (SIPO) Chinese Patent Re-examination Board issued a decision invalidating Pfizer's Chinese patent on the use of Viagra for male erectile dysfunction last year, it prompted strong negative reactions in the United States.

That decision, considered controversial by many, has been cited as yet another example of China's continuing disregard for intellectual property rights (IPR). A careful review of the history and background of the Viagra decision, however, shows that such negative criticisms may be unwarranted.

The Viagra decision relates to Pfizer's Chinese patent that claims the use of sildenafil citrate, the active ingredient in Viagra, for treatment of male erectile dysfunction. The patent was granted on September 19, 2001. On the same day, a Chinese citizen initiated an invalidation proceeding that 12 domestic Chinese pharmaceutical companies subsequently joined.

In July 2004, nearly three years after the beginning of the proceedings, the SIPO issued a decision invalidating the patent. Pfizer's appeal to the Beijing No 1 Intermediate Court is still pending.

The SIPO decision was based on insufficiency of disclosure under Article 26, Paragraph 3, of the Patent Law of China 2000, which requires that the patent description "shall set forth the invention or utility model in a manner sufficiently clear and complete, so as to enable a person skilled in the relevant art of technology to carry out."

The Pfizer patent describes, among other things, nine "preferred individual compounds," including sildenafil citrate. It further states that these compounds are useful in the treatment of erectile dysfunction, and that one of the preferred compounds induces erections in impotent men. The SIPO, however, ruled that the specification lacked concrete experimental data for sildenafil citrate, thus skilled individuals could not tell whether sildenafil citrate was effective or not.

The decision triggered strong negative reactions in the United States. Pfizer, not surprisingly, was "extremely disheartened by this recent action."

"The thin legal grounds underlying the State Patent Office's decision to invalidate the use-patent for Viagra represent a step backwards," says James Zimmerman, vice-chairman of the American Chamber of Commerce in the People's Republic of China (ACCPRC).

"It is hard not to view this case within the pattern of intellectual property infringement in China," adds Richard Wills, a spokesman for the US Trade Representative's Office.

China was not the first country to invalidate the Pfizer patent, however. The UK Patents Court held that the UK rights of the related Pfizer European Patent were invalid for lack of inventiveness. Columbia and Venezuela invalidated similar Viagra use patents for the same reason. These adverse rulings, however, did not draw as much attention as the SIPO decision.

After the Viagra decision, many asked whether China's patent system could protect innovation. The answer is that the future appears positive. While China's patent system is quite young and is dealing with the typical problems that a new system faces, it has made significant progress in recent years.

Unlike the United States, which has over 200 years of patent law, patent history in China barely dates back 20 years. Nonetheless, the country has quickly harmonized its patent laws with the rest of the world.

The first Patent Law of China was enacted in March 1984, became effective in 1985, and was amended in 1992 and 2000.

"China has made significant improvements to its laws governing intellectual property rights since its accession to the World Trade Organization," the ACCPRC acknowledges.

The Chinese government has also made significant efforts to educate the public of the importance of intellectual property rights and has promoted public awareness of IPR protection. Many provincial and municipal governments have enacted programmes to partially reimburse both individuals and companies obtaining domestic and foreign patent protection.

In December 2004, China's Supreme People's Court announced a number of new regulations, including heightened penalties for IPR violations and increased judicial availability to initiate infringement suits.

The recent focus on patent protection in China has resulted in additional patent applications and patents issued to domestic and foreign entities. From 1985 through 2004, a total of 2,284,925 patent applications were filed with the SIPO, averaging an annual growth rate of 18.9 per cent. During the same period, a total of 1,255,499 patents were granted. In 2004 alone, the SIPO received 353,807 patent applications, up from 308,487 applications in 2003. In 2004, the SIPO also granted 190,238 patents, up from 182,226 in 2003.

Enforcement of IPR has also increased. From 1985 to 2004, 69,636 first-trial civil cases relating to IPR disputes were adjudicated in courts around China. In 2004 alone, 9,329 first-trial civil IPR disputes were adjudicated, an increase of 33.51 per cent from 2003.

The rapid increase in patent applications and IPR lawsuits by domestic and foreign entities reflects a growing trend to rely on the legal system for IPR protection and enforcement in China. The fact that 12 pharmaceutical manufacturer challenged the validity of Pfizer's patent through the SIPO, rather than producing Viagra knockoffs, reflects a positive improvement in the pharmaceutical industry in China.

Four Chinese pharmaceutical companies similarly challenged GlaxoSmithKline's patent in the SIPO for Avandia, a drug treating type II diabetes. Within a month of the Viagra decision, GlaxoSmithKline voluntarily withdrew the patent in China and throughout the world.

These cases indicate that domestic Chinese companies have begun to resort to legal procedures to resolve disputes arising from patents, instead of simply ignoring them and infringing on others.

The SIPO's Viagra decision was based on an interpretation of patent laws in China, which signals the emergence of a patent procurement and review system on the basis of laws and regulations. What remains to be seen is whether the SIPO will evenly apply the same standards to both domestic and international companies.

It has yet to be seen whether the Beijing No 1 Intermediate Court will affirm or reverse the SIPO decision on the Pfizer patent. The final fate of Pfizer's Chinese patent, however, will not and should not slow down the continued pursuit of patent protection in China by foreign companies.

The continued use of China's patent system by domestic and foreign entities to protect their intellectual property rights will be a strong driving force for developing a mature reliable patent system in China.

The authors are attorneys with US-based law firm Perkins Coie LLP.

(China Daily 09/12/2005 page9)