It’s time to update your patent protection strategies in China

31 August 2020

It’s time to update your patent protection strategies in China Administrative adjudication is taking on a larger role in Chinese patent protection strategies. Frank Chen explains why administrative adjudication should be a preferred way to resolve patent infringement disputes, especially when the infringer is located in a developed province.

A few impressive mechanisms have been introduced to China’s patent protection system in the past years concerning both application and enforcement. Taking these new tools into consideration will significantly enhance one’s IP strategies in China.


Changes in prosecution and coping strategies

In the recent past, an invention application was usually examined, at latest, around four years from the priority date, and a design application is examined around six months from the filing date. Pursuant to the 328th announcement concerning amendments to the Guidelines for Patent Examination that took effect on November 1, 2019, an applicant may request the China National Intellectual Property Administration (CNIPA) to defer examination of invention and design applications by one, two or three years. It is strongly recommended to request for deferred examination if a company needs extended time to create a tailor-made arrangement and protection scope of claims or to make preparations for manufacturing a product incorporating a patented design. Especially for the latter, since a design is very easily copied, it is necessary to keep the design unknown to the public before your product is put into the market. Thus, whether to request for deferred examination – and the term for which it should be deferred – should be carefully considered. This may prevent infringement from taking place at an earlier time. It should be noted that the request for deferred examination shall be submitted at the time of filing a request for substantive examination (invention) or of filing an application (design).

With the technology developments in terms of artificial intelligence (AI), internet plus, big data, block chain, etc., keeping pace with the times, CNIPA further amended the Guidelines for Patent Examination by promulgating the 343th announcement which took effect on February 1, 2020. According to the amended Guidelines, an invention containing algorithm features or business rule and method features may be protected by the Chinese Patent Law if it solves at least one technical problem by use of at least one technical means and achieves at least one technical effect. Accordingly, in the priority application documents, it is essential to describe how technical features and algorithm features or business rule and method features functionally work together as a whole, which constitute technical means to solve a technical problem, i.e. how the both kinds of features support each other in functions and what the interactions between the features are. For example, for an invention relating to AI, when algorithm features are involved, it should combine the abstract algorithm with a specific technical field.

In particular, it should describe the process of combination to the extent that the technical features and algorithm features may be considered as a whole when evaluating inventiveness of an invention, not merely mention the applicable technical field. In other words, as demonstrated in the foregoing example, at least one input parameters and a corresponding output outcome should correlate with specific data in a technical field. Furthermore, beneficial effects should be described in the specification, such as improvement on quality, precision, efficiency, or system internal performance. If the invention improves users’ experience objectively, it should demonstrate how improvement is caused by interaction of both the technical features and algorithm features. Correspondingly, claims should comprise technical features and algorithm features that support functionally and interact with the technical features. Adopting this approach, a company may avoid inconformity to Article 2 of the Chinese Patent Law when filing an invention application with claiming priority from an earlier foreign application. In other word, no matter whether the invention application is filed as the same as the priority application or to make amendments to claims based on the priority application, the subject matter of the posterior Chinese application is always patentable.


Taking full advantage of the patent system

In recent years, Patent Prosecution Highway (PPH) pilot programmes haver been launched between CNIPA and the patent offices of the countries or regions listed in Table 1, respectively.

Countries and regions which have cooperated with China on PPH pilot programmes:

Today, there are 28 patent offices cooperating with CNIPA on PPH pilot programmes. However, in practice, only few foreign applicants have submitted PPH requests in patent prosecution in China. Companies are strongly recommended to take into account PPH pilot programmes when creating their IP strategies. If any counterpart application before any above-listed patent offices is allowed prior to examination of the Chinese patent application, and if the protection scope of the allowed claims is appropriate, it will be valuable to request the use of the PPH. First, the procedures for filing the PPH request are relatively simple, thus less time is consumed. This may reduce attorney costs significantly, especially for those applications that would be subject to multiple rounds of office actions and replies if no PPH request is filed. Second, the PPH makes grant of the Chinese patent easier and faster. As a result, a company may enjoy patent rights at an earlier time, so as to beat the possible copycats at the very beginning to safeguard the rights and interests of the patentee or the licensee.

Notably, there are three types of patent applications in China, i.e., invention (being equivalent to a patent application in Europe or utility in the US), utility model and design. Table 2 shows the numbers of each type of applications respectively filed by domestic and foreign enterprises and individuals in 2019.


Statistics on applications from China and abroad


In 2019, foreign applicants filed 157,093 invention applications and 8,425 utility model applications, but those filed by domestic applicants were 1,243,568 and 2,259,765, respectively. For utility models, the number of applications filed by foreign applicants only accounts for 0.4% of applications filed, and the ratio between invention and utility applications filed by foreign applicants is around 19:1. This shows that fewer foreign applicants make use of the utility model system to protect their technologies, which may be caused by the perception that the level of innovation in utility model patents is relatively low. However, it is not helpful to stick to this misperception and to ignore benefits provided by the utility model system. In China, inventions mean new technical solutions proposed for a product, a process or the improvement thereof, and utility models mean new technical solutions proposed for the shape, structure, or their combination, of a product.

If a technical scheme meets criteria of both an invention and a utility model, it is highly recommended to file patent applications for both invention and utility model simultaneously for the technical scheme. Although the term of a utility model patent is only 10 years, which is much shorter than that of invention patent, a utility model patent has the following advantages: 1) unlike an invention patent, substantive examination will not be required in respect of an application for utility model. As a result, the entire examination will typically take six to 10 months, which means that a utility model patent may be granted easier and much faster, and companies may enjoy patent rights at an earlier time. Even though it takes two months to obtain a patent evaluation report for enforcement, the total time spent is much less than that of an invention patent, which may be two to four years; 2) the criteria in relation to inventiveness of an utility model patent is lower than that of an invention. This means that, for the same technical scheme, the stability of a utility model patent right is greater than that of an invention patent. In other words, it is more difficult to invalidate a utility model patent than an invention patent. This is beneficial to protect the relevant technology. If the counterpart invention patent is granted at a later time, the applicant may abandon the utility model patent and maintain the invention patent only. Even if the application for an invention patent is rejected, utility model patent may not be invalidated due to use of the prior references cited in the invention application as the criteria with regard to inventiveness are different.


Changes in enforcement and coping strategies

On November 14, 2019, CNIPA issued the Notice Concerning Model Creation of Administrative Adjudication on Patent Infringement Disputes, by which local IP administrative authorities are required to push model creation work of administrative adjudication so as to make administrative adjudication play an important role in settlement of patent infringement disputes. Pursuant to the notice, administrative adjudication on patent infringement should be enhanced by publicizing the advantages, efficacy, and typical cases in connection with administrative adjudication of patent infringement, encouraging and guiding the relevant right holder to resolve patent infringement disputes by administrative adjudication, and introducing new methods in the procedure of administrative adjudication. For example, for a design or utility model patent infringement case in which the petitioner has submitted a patent evaluation report at the time of filing the case, based on statements and cross-examination of evidences by the parties involved, the relevant administrative authority may handle the case by examining the records without hearing.

Besides, for a case with sufficient preparation before hearing and comprehensive evidence collections, it is encouraged to pronounce a judgment immediately following the oral hearing. Further, it is encouraged to employ professional technicians to take part in the trial of the case by assisting in ascertaining technical facts and providing consulting opinions.

If a request for invalidation has been filed in connection with the involved patent, the relevant local IP administrative authority may contact the Reexamination and Invalidation Examination Division of CNIPA to perform a joint trial. Therefore, the procedure of administrative adjudication and the procedure of invalidation of the patent may be eventually merged. It is seen that, in the future, patent infringement disputes will be settled in a more convenient and cost-effective fashion through administrative adjudication.

In my opinion, if the primary purpose is to stop patent infringement earlier without focusing on potential damages (usually limited), and if the determination of infringement is relatively direct without need of special experiment analysis, administrative adjudication should be a preferred way to resolve patent infringement disputes, especially when the infringer is located in a developed province, as the local IP administrative authorities of developed provinces have rich experiences in handling patent infringement cases. Also, patent examination collaboration centres have been established in such provinces as Beijing, Tianjin, Guangdong, Jiangsu, Hubei, Sichuan and Henan to assume responsibility for patent examination. As a result, local IP administrative authorities may easily and conveniently access the examiners in such centres as technical and IP professionals for their consultancy in order to ascertain technical facts and make accurate determinations. This may significantly reduce the possibility of lawsuits brought to courts by the involved parties, and the dispute may be resolved in one proceeding.

However, if one of the purposes is to obtain payment of damages, it is advisable to settle patent infringement disputes by court proceedings. Although local IP administrative authorities may make mediation on damages according to the Guidelines for Administrative Mediation of Patent Disputes issued by CNIPA in July 2020, depending on our experiences, it is very difficult for concerned parties to reach consensus on damages by mediation, especially when the infringer is a small entity or an individual.

In general, the Chinese IP system is developing. For an international company, it is not sufficient to develop an IP strategy for China solely from its own perspective. Rather, it needs to consider carefully the ongoing changes in China’s IP system as they have an impact on a valid IP strategy.

About the author

 Frank Chen

Frank Chen

Frank Chen is a partner with GoldenGate Law Firm, where he also servesas head of the firm’s patent department. Chen practices in both patent prosecution and patent litigation. He represents numerous high-tech clients, with a focus on electronics and automotive technology companies. He has extensive experience on the protection and enforcement of designs and a wide range of electrical and mechanical technologies, including electronic circuits, electrical  and electronic engineering, control/monitoring systems, information and communication technology, automotive engineering, manufacturing, machinery &machine tools, analytical/measurement systems, medical devices, data recording mediums, semiconductor fabrication, and LED lighting.

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