China's third amendment to its patent law contains several controversial articles.

China's Patent Law entered into force in 1984 and has since then been revised twice, in 1992 and 2000. In 2008, the Chinese State Intellectual Property Office is expected to finalize the draft of a third revision, which will affect several aspects of the Chinese Patent Law.

First, the draft amendment provides for several situations where a compulsory license for a patent may be granted by the SIPO. Article 48 of the amendment allows the grant of a compulsory license when a patentee is determined to be abusing his intellectual property rights in order to prevent or restrict competition. Articles 49 and 50 allow for the grant of a compulsory license in order to treat or prevent an epidemic in China, or when a developing country needs to import a pharmaceutical product from China for the same purposes.

Other articles affect the treatment of prior art in litigation: Article 62 states that in a judicial or administrative proceeding for patent infringement, an alleged infringer would be held as not infringing if he can provide sufficient evidence showing that the patented subject matter falls within the scope of the prior art. Article 63 prohibits litigation in bad faith, stating that where a patent owner brought an action against another party knowing that his patented technology is prior art, the owner will be held liable to the alleged infringer for damages caused by the allegations.

Article 74 proposes to add parallel importation as an exception to infringement: if a product patented in China is sold outside of China and then imported into the country by another, the Chinese patent rights are deemed to be exhausted. Furthermore, Article 74 provides another exception to infringement that is similar to the Bolar exception in the United States, allowing the use of a patented invention without the patentee's permission if the use is related to providing information required to obtain regulatory approval. Effectively, this would allow generic drug manufacturers to put their products on the market right after a pharmaceutical patent expires.

As they serve to limit the rights and interest of patent holders, Articles 49, 50 and 74 are perhaps the most controversial and the ones of most interest to foreign corporations doing business in China, especially those involved in the medical and pharmaceutical industries.