It was unclear how the patent review board at China's State Intellectual Property Office would react to the decision. Staff at SIPO in Beijing said they had no comment.
New York-based Pfizer Inc. had appealed in 2004 against a decision by the patent review board supporting the claims of at least a dozen Chinese drug companies for the right to make sildenafil citrate, the main active ingredient in the anti-erectile dysfunction drug Viagra, the AP reports.
Pfizer's situation has been seen as a test of China's willingness to protect the intellectual property rights of foreign companies.
Most drugs with the "Viagra" label sold in China are counterfeit versions. Viagra was introduced in China in 2000, and after six months on the market, state media reported that some 90 percent of Viagra pills sold in Shanghai were fake.
China is a potentially huge market for the little blue pill given the country's tradition of using various substances to boost sexual performance.
Pfizer's spokesman in China was not immediately available for comment.
Local drug companies have stepped up patent challenges in hopes of being allowed to market generic copies without having to pay royalties.
As a part of its agreement when it joined the World Trade Organization in 2001, Beijing agreed to tighten patent protections and to encourage its own companies to invest in creating profitable new drugs and other products. But enforcement of many court decisions in favor of foreign manufacturers has been weak.
After it turned out that Deputy Prime Minister Andrei Belousov included the Fonbet betting company in the list of backbone enterprises that can count on state support, everyone started talking about these bookmakers.