Joff Wild

The Chinese utility model and design patent regimes have mainly driven the surge in patenting activity we have seen in the country over recent years. As a result of generous subsidies offered at the local government level and certain tax breaks available to patent owners, tens of thousands of Chinese entities have applied for and received both kinds of right. 

What makes both utility model and design patent protection so attractive is that there is no substantive examination process. Instead, if the forms have been filled in correctly, the grant is made. The only time there is any scrutiny of an award is if it ends up in litigation. The result is that, according to statistics released by China’s State IP Office, in the 11 months to the end of November 2012, 416,926 utility model patent applications had been submitted, along with 385,781 relating to design patents. By contrast, the office had received 267,316 invention patent applications –these are subject to substantive examination. According to WIPO, close to 83% of all utility model applications filed in the world in 2011 were submitted in China, as were over 65% of all applications for industrial design protection.

But it’s not just those looking for quick and cheap protection and/or tax breaks that like to obtain utility model and design patent protection in China. There is also a problem with parties that have more aggressive intent. In the past, this blog has looked at the ways in which Chinese entities have used utility models against foreign companies, while writing in the last issue of IAM  Dan Prud’homme, business manager of the IP rights and R&D groups at the European Union Chamber of Commerce in China, talked of the way in which utility models are used in bad faith:

Utility models appear to run a higher risk than invention patents of being filed in bad faith and used in malicious prosecution actions, and so are more likely to be of lower quality than invention patents. Given that utility models are cheaper and easier to obtain than invention patents (because utility models have lower patentability thresholds and do not undergo a mandatory and rigorous examination), in principle it makes more sense for applicants to apply for utility models if they intend to utilise patents for the sole purpose of malicious prosecution actions. Applicants are also more likely to choose utility model patents for bad-faith filings for this same reason. While it is not possible to assess fully to what extent patents are being filed for and used in such ways (although some news articles suggest that up to 50% of patents in China are used as such), a number of sources confirm that there have been concerning cases in China where utility models – patents in particular – were filed on inventions that were already part of the prior art and were used as harassment tools, barriers to entry and restrictions on freedom to operate.

Now it seems, the Chinese authorities, have decided to do something about this. Prud’homme has been in touch again to advise that comments on proposed changes to SIPO’s examination guidelines – covering both utility models and designs – are being sought. He has also supplied an unofficial translation of the Chinese text relating to the proposals, which has been put together by law firm Taylor Wessing. Looking at what is being mooted, it does appear as if the aim is to tighten up the rules in order to deter bad faith applications. Prud’homme himself, who authored a major report on patent quality in China for the EU Chamber of Commerce last year, says that the proposals are “positive and representative of the commitment of SIPO to improve patent quality in China”. He adds that he hopes “further discussions with the government will lead to even more definitive improvements”.

My understanding is that SIPO will be accepting comments until the middle of next month. Past experience is that when these are submitted the are taken seriously by the office, so if this is an area that affects you – and it should be of concern to any party with an interest in China’s patent regime – here’s an opportunity to have your say and to be heard.