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Entrepreneurship and Small Business Management

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SIPO Invalidates Viagra’s Patent
In May, 2004, Pfizer announced that it was partnering with the Chinese government to
enforce its patent on Viagra that had been granted in 2001. But on July 7, 2004, the SIPO
revoked the patent. The alliance cited six alleged grounds for invalidity. Pfizer won on
three and lost on one and two others remained undecided. The review board said that
Pfizer was on the wrong side of the patent law as it had failed to accurately explain the uses
of the Viagra’s key ingredient, Sildenafil.
SIPO Ruling Leads to International Outcry
Due to the huge market potential for ED drugs and the dispute between local and foreign
firms, the Viagra patent litigation issue generated a lot of interest around the world. The
decision of SIPO to invalidate Pfizer’s patent for Viagra led to an international outcry.
They viewed the adverse ruling as an indication that China was unwilling to comply with
the guidelines set by its membership in the WTO. Some accused it of regressing back to the
past when IPRs were violated by Chinese firms while the Chinese government looked the
other way.

Analysts See a Silver Lining
But some experts felt that the legal challenge to Viagra had a silver lining as it indicated
the continuing development and progress of the Chinese IPR regime. The Chinese
pharmaceutical companies’ decision to legally challenge Pfizer’s patent demonstrated
significant progress by China toward the rule of law in the IPR arena. They noted that on
earlier occasions Chinese firms had blatantly violated IPRs and this new emphasis on
seeking legal routes was indicative of the Chinese companies’ growing appreciation of
the value of patent laws.
China’s Huge Market can’t be Ignored
Analysts did not read too much into Pfizer and other MNC pharmaceutical companies’
assertion that the ruling against Pfizer would lead to decreased investment in China.
China continues to be an attractive market for multinational pharmaceutical companies.
Alan Adcock, senior associate Rouse & Co. International said that the Chinese
pharmaceutical market was “too attractive” for the foreign players to ignore.

Pfizer’s Viagra Patent Restored
In late 2004, Pfizer sued SIPO’s PRB for wrongfully invalidating its patent for Viagra. It
appealed to the court to withdraw the PRB’s decision. The case was argued in March 2005.
Pfizer’s attorney, Tai Hong (Hong), argued before the court that Pfizer had provided the
information that was needed for granting of the patent.

She said, “The decision made by the PRB had errors in facts and [was an] erroneous
application of the law.” Hong also argued that SIPO’s decision violated the TRIPS
agreements. She also hinted that the right decision was not reached because the attorney
applying for invalidation of the patent, Xu Guowen, was a retired official with the PRB.
China Cracks Down on Counterfeiters

In November 2006, the Chinese government cracked down on Viagra counterfeiters. A
Chinese man, Xi Yongli (Yongli), was jailed for eight years for producing 60 tonnes of fake
pills for ED. It was alleged that Yongli and his accomplices had sold pills worth 21.8
million yuan ($3.6 million) under the names, America Number One, Male Exclusive,
Great Big Brother.

Contd...

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