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Application and protection of Chinese utility model patents
Quick and inexpensive to obtain, utility The Chinese government designed the model patents offer substantial benefits utility model patent system in order to help over other types of patent protection local inventors and companies to obtain some form of patent protection for their innovations. By Martin Meng and Howard Hao, Chang Tsi Since many local applicants are not technically & Partners advanced and are cost sensitive, utility model applications are handled differently from Increasingly litigious Chinese companies are invention applications in various respects, so likely to have hundreds, if not thousands, of that local applicants can obtain such protection Chinese utility model patents. In 2012 more easily and inexpensively. Consequently, utility than 740,000 utility model applications were model applications are a favoured tool among filed in China – a figure that exceeded the Chinese companies looking to build a patent number of applications for both invention portfolio quickly and economically. Currently, patents and design patents. This represents a foreign entities file less than 1% of utility model dramatic increase on the 225,000 utility model patent applicants; more foreign companies patent applications submitted in 2008. Utility should consider utility model patents for both model patents are relatively inexpensive defensive and offensive purposes. and many utility patent applications are of low quality; however, invalidation is often Features of utility model application challenging and damages for infringement A utility model patent application is different are almost the same as for invention patents. from an invention patent application in several Damages for utility model patent infringement key respects. First, a utility model application can be high, but more importantly, a successful is directed to innovations in limited areas – claim of utility model infringement by a specifically, technical solutions related to the Chinese patent holder can potentially prevent shape and/or structure of a product. Methods, a foreign company from manufacturing or uses and chemical compositions or compounds selling its products in China. do not constitute statutory subject matters for Many Chinese companies own a large utility model applications. number of utility model patents (eg, Huawei Second, a utility model application is owns or co-owns approximately 1,600 utility subject to only a preliminary examination model patents; ZTE approximately 1,900; Midea substantially on formalities. This means approximately 5,200; Joyoung approximately that no prior art search and no assessment 1,000; and Haier approximately 3,500). A solid of novelty or inventive step for the claimed understanding of utility model patents is critical solution are conducted during the examination for all companies that manufacture or operate by the State Intellectual Property Office (SIPO). in China. Companies requiring inexpensive and Consequently, almost all utility model rapid protection should consider utility model applications are finally granted and the claims patent applications. This article discusses the of utility model applications usually remain features, application procedure and benefits of unchanged where no formal defects are utility model patents. found. This is the main reason why applicants
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For foreign companies is, the existing features and new features must be separated with the wording “which is just starting their characterised in” or the like. Further, examiners business in China, utility require applicants to define the product only in terms of the shape and/or structure. Features model patents are useful related to function or effect, or the working process of the mechanism in a product, will to build a patent portfolio generally be rejected. quickly and inexpensively Protection based on utility model patent and obtain speedy patent A utility model patent is valid for only 10 protection for their years, whereas an invention patent is valid for 20 years from the filing date. In spite of this products difference, a utility model patent provides almost the same scope of protection as an invention patent. Without the patentee’s can obtain utility model patents rapidly authorisation, no entity or individual and economically. In general, utility model may make, use, offer to sell, sell or import applications are granted within approximately the patented product for production or seven to nine months. For both domestic and commercial purposes. Moreover, the bases foreign applicants, the costs of utility model for claiming damages caused by patent applications are significantly lower than for infringement on invention and utility models invention patents. are the same: Third, the standard of inventive step for • losses suffered by the patentee; a utility model patent is lower than that for • profits earned by the infringer; an invention patent. An invention requires “a • the exploitation fee for the patent under prominent substantive feature and a notable contractual licence; and progress” to establish inventive step over the • a statutory amount of between Rmb10,000 prior art, while a utility model requires only “a and Rmb1 million, depending on various substantive feature and a progress”. In practice, factors such as the type of patent right and for an invention application, the examiner will the nature and gravity of the infringement. consider not only the technical field to which the invention belongs, but also proximate or The quality of utility model patents is other relevant technical fields in which the generally believed to be low, since they are not problem to be solved by the invention would actually examined. However, a utility model prompt a person skilled in the art to look patent is still presumed valid. To balance the for technical means. For a utility model, the patentee’s responsibility and public interest, examiner will normally focus on the technical an evaluation report on patentability issued field to which the utility model belongs, by SIPO is required before enforcement of unless there is a clear technical teaching. the utility model patent, in order to prevent For an invention application, multiple prior patentees from abusing their utility model art references may further be cited to assess patents. If the evaluation report does not inventive step. However, for a utility model support the patentability of the utility model patent, usually only one or two prior art and the alleged infringer files a request for a references may be cited, unless the utility declaration of invalidation of the utility model model is made just by juxtaposing some prior patent with the Patent Re-examination Board, art means. the court is likely to suspend proceedings and Fourth, the formal requirements applied await the board’s findings. to a utility model application are stricter than If the court has other reasons to believe those which apply to an invention application. that the utility model patent is possibly For example, a utility model application invalid, the judge can also choose to await claim must be drafted in Jepson style – that the board’s decision. Therefore, enforcement
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proceedings for utility model patents are more protection for their products. By filing an stringent than those for invention patents. invention application for the same subject However, a utility model patent cannot easily matter through the dual-filing scheme, the be invalidated. This is due to the fact that a applicant can also enjoy the benefits of an dispute between two parties in a courtroom invention patent. This is significant for foreign is never easy, especially because the number companies whose products can be easily copied. and technical fields of prior art references are For foreign companies that have limited, and there are two further instances of conducted operations in China for years and jurisdictional review to go through. The success have a sizeable patent portfolio, utility model rate for invalidation proceedings for utility patents can prove useful in expanding the model patents is approximately 30%, which is portfolio, controlling costs and increasing the slightly higher than that for invention patents possibility of cross-licensing. Reducing costs is (approximately 25%). Protection afforded to worth considering for applicants which have a utility model patents is strong. The largest limited budget. Increasing the ratio of utility damages award for infringement of a utility model applications may save a significant model patent in China was Rmb334 million amount in attorneys’ fees. In addition, the ($53.4 million; although the parties later renewal fees for utility model patents are settled at approximately half that amount) in much lower than those for invention patents. a dispute between French company Schneider Therefore, when maintaining a large patent Electronic and China’s Chint Group regarding a portfolio, the applicant may consider pursuing circuit breaker utility model patent. utility model patents for short-term products or low-level innovations. Dual-filing scheme Many foreign applicants prefer to file a For non-Patent Cooperation Treaty (PCT) utility model application with the same set patent applications, the applicant can file an of claims as its parent application for which invention application and a utility model the Chinese utility model application claims application for the same subject matter before the benefit of priority. However, this widely SIPO. This does not create a double-patenting adopted practice risks corrupting the utility issue if certain requirements are satisfied, model patent that is eventually granted because including filing on the same day together with the original set of claims is usually broad, with a declaration. The utility model application too much focus on the scope of protection. will be granted early and an invention The applicant of an invention patent has application can subsequently be granted after opportunities to refine the claims through the applicant abandons the utility model amendments in view of prior art references patent. In this way, the applicant can obtain available during the substantive examination. patent protection rapidly via a utility model In contrast, Chinese utility model applications patent but also enjoy the long-term and stable are not substantially examined and the protection of an invention patent. broad claims are normally granted without This filing strategy has been widely used any amendments. The only opportunity to by local applicants for a long time, but is rarely amend the claims of a utility model patent adopted by foreign applicants, because when is during the invalidation procedure, but the a PCT application is entered into the national amendments are strictly limited to deletion of phase, the applicant must decide whether to a claim, combination of claims and deletion pursue an invention patent or a utility model of a technical solution. The patentee is not patent in China. allowed to define the claims further by adding features from the description. How to benefit from Chinese utility model Therefore, the unexamined broad claims patents of a utility model patent may possibly result For foreign companies just starting their in a negative patent evaluation report, business in China, utility model patents are complicating any subsequent enforcement useful to build a patent portfolio quickly procedure or even invalidating the whole and inexpensively and obtain speedy patent patent. To avoid this risk, it is worth taking
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time to prepare another set of claims in New developments consideration of prior art references for In 2010 the implementing regulations of the a utility model application to be filed in Patent Law were revised to expand the scope China and the special requirements for the of preliminary examination of utility models. utility model. For example, the applicant SIPO is in the process of revising the guidelines should define in the claims features that will for patent examination again; to this end, it distinguish the utility model from the prior art published draft amendments to the guidelines references, rather than simply describing them for patent examination in February 2013. The in the description. In this way, the patentee draft regulations encourage examiners to will have some back-up claims and can avoid assess novelty and inventive step of utility invalidation of the entire utility model patent. model applications based on “the information Another reason for preparing a set of related prior art or conflicting applications of claims specifically for a utility model obtained not through sophisticated prior art application is that the guidelines for patent searches”. This move is intended to strengthen examination have additional requirements preliminary examination of utility model on the claims of utility model applications. applications and reduce junk patents. For example, in addition to the subject Adoption of the draft amendments will matter of the claims being restricted to a likely prolong the time spent on preliminary technical solution relating to the shape and/ examination. However, since no prior art or structure of a product, each dependent searches are required, it will probably not claim of the utility model application must substantially change utility model patents recite an additional feature relating to the practice. shape and/or structure of the product. The examiner will object to a dependent claim Conclusion that purely recites the operations, materials Utility model patents can be an effective, low- and functions of the product. Since most cost tool for protecting innovation in China. foreign attorneys may be unfamiliar with Many utility model patents are of low quality these requirements, it is recommend to since they are either too broad or too specific. engage a Chinese patent attorney to review However, many Chinese companies are gaining the application before filing. substantial benefits from securing large and If prior art searches show that the claimed relatively high-quality utility model portfolios solution fails to satisfy the patentability by paying more attention to the quality – not requirement for an invention patent, but the just the quantity – of their patents. Foreign solution might satisfy the requirement for companies need to understand the potential a utility model patent, the applicant should infringement risks presented by the large consider pursuing a utility model patent. This number of utility model patents in China and is especially useful when the prior art searches should consider developing their own utility reveal several prior art references in different model patent portfolios for both defensive and technical fields. offensive purposes. By having capable Chinese Chinese patent attorneys may help counsel carefully craft the claims, the patentee to overcome any formal problems in the can obtain a high-quality utility model patent specification and claims to save prosecution with an appropriate scope of protection. High- costs and expedite the allowance. quality utility model patents can be effectively Most rectification notifications issued used to maintain technical advantage over by examiners during the preliminary competitors and deter copycats. examination conducted for utility model applications filed by foreign applicants are directed to formal defects of the application documents, since the formal requirements for a utility model application are different from those for an invention application or PCT national phase application.
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Martin Meng Howard Hao Partner Client manager [email protected] [email protected]
Martin Meng manages the Howard Hao is a patent patent department at Chang attorney and deputy manager Tsi & Partners. He has more of the patent department at than a decade of experience as a Chang Tsi & Partners. Mr Hao patent and IP attorney, expertly provides consultation services assisting foreign and domestic on a wide range of patent issues companies in IP prosecution in China, including inventions, and enforcement. He focuses utility models and industrial on drafting and prosecuting designs. He regularly provides patent applications, patent opinions on patentability infringement litigation and and enforceability. He has invalidation of patent rights. filed more than 600 patent Mr Meng is skilled in assessing applications and responded patentability and enforceability to more than 500 office and handling invention, utility actions relating to medical model and industrial design equipment, engines, patents across many sectors. automotive technology, Originally trained as a machine tools, metal materials physicist, with a master’s in and mechanical and electrical physics from Jilin University, control systems. Mr Meng also has an LLM in Mr Hao has a master’s intellectual property from the in mechanical engineering University of New Hampshire from Tsinghua University School of Law. Mr Meng is a and a master’s in intellectual member of both the Chinese property from the University of Bar and Patent Bar, and has also New Hampshire School of Law. passed the US Patent Bar. He also has a bachelor’s degree in mechanical engineering from Tsinghua University.
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