Compulsory licences can be granted in China on the basis of Article 48 or 49 of the Chinese Patent Law. The applicable conditions will vary depending on the alternative to be followed.
A request to the patent holder on reasonable commercial terms should be made, including:
• information about the requesting party;
• the expected volume of production;
• the royalty to be paid;
• the form of payment;
• the intended mode of use of the invention;
• quality controls;
• trademark to be used, if any;
• the duration of the licence;
• the licensee's right to control sales for determination of royalties due;
• the applicable law and jurisdiction in case of disputes.
The “reasonable period of time” for the patent holder to accept or reject the offer is undefined in the Chinese Law and Regulations. One to three months may be a reasonable period.
Under Article 49, there is no need for prior negotiation (provided that Article 51 of the Law is understood to apply to Article 48 only). “Public interest” is a legitimate ground for issuance of a compulsory licence under Article 49.
Declaring a “national emergency” is not a pre-condition for granting a compulsory licence under Article 49. If this option is followed, it should be borne in mind that an “emergency” may be a long-lasting situation, as in the case of the HIV/AIDS epidemic, not just a short-term problem.
An Article 49 compulsory licence is preferable to a licence grounded on Article 48, because there is no requirement for prior negotiation, and because an Article 49 licence would make clear from the outset that public health reasons are the key governmental consideration in granting a compulsory licence. This will make it politically more difficult for patent holders, their business associations and respective governments to challenge the compulsory licence.