Under any of the following circumstances, the administrative department for patent in the State Council may grant a compulsory license to exploit a patent for invention or utility model upon the application of a unit or individual with the implementation conditions:
(1) The patentee fails to exploit or fully exploit his patent for three years from the date of the grant of the patent right and four years from the date of the patent application without justifiable reasons.
(2) The patentee's act of exercising the patent right is recognized as a monopolistic act according to law, so as to eliminate or reduce the adverse effects of the act on competition.
Article 73 of the Detailed Rules for the Implementation of the Patent Law 1
The term "not fully exploiting the patent" as mentioned in Item (1) of Article 48 of the Patent Law means that the way or scale of patent exploitation by the patentee and its licensee cannot meet the domestic demand for patented products or patented methods.
However, due to the very high requirements and strict examination and approval of compulsory license, there has not been any case of compulsory license in China since the promulgation of the patent law.