Patents in Asia 2017: China

What are the criteria for patentability in your jurisdiction?

In China, there are three types of patent: invention, utility model and design. Only invention patents are subject to substantive examination.

All patent applications must first pass the patent eligibility bar:

• An invention patent application must be directed to a new product or process of a technical nature.
• A utility model application must be limited to a product’s shape or structure (or a combination thereof). Protection for a process or unknown type of material should be sought under an invention patent, rather than a utility model.
• A design application must be directed to a new aesthetic industrial design of a product’s shape or pattern (or a combination thereof), or a pattern or shape combined with a colour.

To satisfy the practical utility requirement, an invention or utility model must be reproducible and produce beneficial effects.

To satisfy the disclosure and enablement requirements, an invention or utility model must be described in a manner that is sufficiently clear and complete so as to enable an ordinary person in the art to carry it out.

The absolute novelty bar applies in China. This means that an invention or utility model must not be part of any prior art in China or abroad, and must not have been described in any patent application previously filed in China or a Patent Cooperation Treaty application valid in China.

‘Inventiveness’ implies that an invention or utility model must have prominent substantive features (invention) or substantive features (utility model) compared to the state of the art, and must represent considerable progress (invention) or progress (utility model). For a design patent, it must not be a prior design or conflict with any legal rights obtained by other parties before the filing date. Further, it must be significantly different from a prior design or a combination of prior design features.

For an invention or utility model, the claims must be supported by the description, contain all essential technical features for solving the technical problem and be definite and concise.

What types of invention are explicitly excluded form patent eligibility?

Some types of subject matter are legally excluded from patent protection, including:

• inventions that are contrary to the laws of the state;
• inventions that are contrary to social morality;
• inventions that are detrimental to the public interest;
• scientific discoveries;
• rules and methods for mental activities;
• methods for the diagnosis or treatment of diseases;
• plant varieties and animal breeds;
• substances obtained by means of nuclear transformation; and
• designs for two-dimensional printing goods comprising pattern, colours or a combination thereof, and which serve mainly as indicators.

Further, subject matter that is not reproducible, is contrary to natural law, is created by unique natural conditions or relates to a surgical method will be filtered out for lack of practical utility.

To what extent can inventions covering software or computer-implemented inventions be patented?

Software, computer programs and program instructions per se are categorised as ‘rules and methods for metal activities’ and are not patentable subject matter. Nevertheless, inventions that are implemented wholly or partially through software can be patentable if they involve a technical character.

The conventional method for drafting a product claim relating to a computer program is to present a claim defining more than one functional component, each of which corresponds to a step in a computer-implemented method. This approach may be unfavourable when it comes to litigation, due to the difficulty in identifying counterparts of the software components in the relevant product.

In April 2017 the revised Guidelines for Patent Examination came into effect and the means for drafting software-related or computer-implemented claims have since become relaxed. According to the revised guidelines, computer-readable media carrying program instructions – which were previously excluded from patent protection – have become patent eligible. In addition, claims seeking to protect an apparatus comprising a memory in which computer-executable instructions are stored and a processor configured to perform actions on execution of the instructions are now acceptable.

To what extent can inventions covering business methods be patented?

Inventions covering business methods are not excluded from patent protection, provided that they involve a technical character. If a claim relating to a business model contains not only business rules and methods, but also a technical feature, it will be eligible for patent protection. However, business methods implemented with general computer and internet technology and with no improvement in terms of technical aspects may still be rejected – usually on the grounds of lack of inventiveness, rather than patent-ineligibility.

Are there restrictions on any other kinds of invention?

No.

Are there other forms of protection for inventions that do not meet the criteria for patentability (eg, petty patents)? Are these examined? What kinds of remedy are available when enforcing them?

In China, utility model patents are available for so-called ‘small inventions’ (ie, products characterised by their shape or structure). The inventiveness bar for utility model patents is lower than that for invention patents.

Utility model patent applications are not subject to substantive examination, but rather formality examination only.

Utility model patents have a 10-year term, which is shorter than that of invention patents. In cases of infringement involving a utility model patent, if the defendant requests the court to stay the proceedings by filing an invalidation petition within the response term of a lawsuit, the court will generally stay the proceedings. In addition, the court may request the plaintiff to submit a utility model patent right evaluation report to prove the stability of the disputed patent. In practice, the courts often decide lower statutory damages for utility model patent infringement than for invention patent infringements.

Does your jurisdiction have a grace period? If so, how does it work?

Yes. An invention is not anticipated by the disclosure of an invention in the six months preceding the filing or priority date:

• at an international exhibition sponsored or recognised by the Chinese government;
• at a prescribed academic or technological meeting; or
• by any person without the applicant’s consent.

What types of patent opposition procedure are available in your jurisdiction?

No opposition procedure is available in China. However, there is an invalidation procedure, which is outlined below.

Are there any other ways to challenge a patent administratively without resorting to litigation?

In China, there is only one procedure to challenge a patent – namely, the patent invalidation procedure before the Patent Re-examination Board. Any party may initiate invalidation proceedings with the board at any time after grant of a patent. An oral proceeding is usually held, before which the applicant may amend the patent claims in response to the invalidation request. However, such amendments may be strictly limited. Any patent rights that are declared invalid will be deemed to have been non-existent from the beginning.

What is the process for appealing a decision of the patent office in your jurisdiction? Is there data on the rate of success for such reviews?

If a patent application is rejected, the applicant can ask the Patent Re-examination Board to overrule this decision. Further, in order to challenge a patent, the petitioner must initiate invalidation proceedings with the board. If the applicant or petitioner is not satisfied with the board’s decision, it can appeal to the Beijing IP Court and then to the Beijing High Court to review the first-instance judgment. The second-instance decision is final, although a retrial before the Supreme Court is available.

According to the statistics of the Beijing IP Court, in 2016 the success rate for such reviews was around 12.5% (9.6% for reversing re-examination decisions for rejections and 13.9% for reversing invalidation decisions).

What is the cost of obtaining a patent in your jurisdiction? How long does the examination and registration process usually take?

If an invention patent application is around 5,000 words long in English, the total cost will be around $6,000 from filing to grant, including official fees, attorneys’ fees and translation fees. A utility model or design application will cost between $1,000 and $1,500.

On average, it takes 22 months from the start of the substantive examination for an invention patent application to be granted. Thus, the applicant may expect to obtain an invention patent approximately three to four years after filing. For a utility model or design patent, it may take approximately three to six months from filing for grant of the application. In addition, a patent application takes around one to three months from the issuance of notice of allowance to the issuance of notice of grant.

What are the most effective ways for a patent owner to enforce its rights in your jurisdiction?

A court action is the most effective way for a patent owner to enforce its rights in China. By filing suit before the competent court, the patent owner may obtain remedies such as a preliminary injunction, a permanent injunction and damages.

Does your jurisdiction have non-judicial administrative enforcement mechanisms for patents? What types of remedy are available?

China does have non-judicial administrative enforcement mechanisms for patents. Outside of court action, patent owners may also request the administrative authority for patent affairs to handle a patent infringement dispute. The patent owner may obtain a permanent injunction through the administrative authority, but the authority cannot award damages.

What are the stages in the litigation process leading up to a full trial?

Once the patent owner has filed suit, the defendant has 15 days to respond or 30 days if it is a foreign party. The parties usually have 30 days to file evidence and one or more court hearings may be held. After the hearing, the court issues its first-instance decision. This may be appealed to a higher court by either party; the second-instance decision is final.

What scope is there for forum selection?

In China, there are more than 80 intermediate people’s courts and three IP courts with the power to handle patent infringement cases. Jurisdiction is typically determined by two factors:

• the location of the defendant; and
• the place where the infringing activity took place.

As a strategy, the plaintiff may select a court away from where the defendant is located to avoid possible influence by the defendant.

Are there specialised IP courts in your jurisdiction? What litigation forums are most heavily used by patent owners in your jurisdiction?

There are three specialised IP courts in China: the Beijing IP Court, the Shanghai IP Court and the Guangzhou IP Court. These courts are heavily used by patent owners.

What level of expertise can a patent owner expect from the courts?

The courts in larger cities have more experience of patent cases. In Beijing, Shanghai and Guangzhou, patent-related cases are tried by specialised IP courts. The judges in those courts usually have a high level of expertise.

Are there ways for defendants to delay proceedings? Can plaintiffs prevent them from doing so?

A defendant may delay proceedings for up to three months by filing a jurisdiction opposition petition. The plaintiff cannot prevent this opposition. The defendant may also request the court to stay the proceedings by filing an invalidation petition with the Patent Re-examination Board within the response term of a lawsuit. The court will generally stay the proceedings in cases involving a utility model or design patent.

Is there a procedure for discovery? What are the methods for compelling a counterparty to turn over evidence?

There is no discovery procedure in China. The burden of proof usually falls on the plaintiff. However, where the patent relates to a method for producing a new product and the patent owner can prove that the defendant is producing an identical product, it will fall on the defendant to prove that the method it uses is different from the patented method.

In addition, for some evidence (eg, damages) the accounting books and materials relating to the infringing act will mostly be under the defendant’s control; therefore, if the patent owner has provided initial evidence regarding the benefit obtained by the defendant, the court may order the defendant to surrender such books and materials. If the defendant refuses without cogent reason, the court may determine the damages by reference to the patent owner’s evidence.

Are cases decided by one judge, a panel of judges or a jury?

Patent cases are usually decided by a panel of three judges, although a panel of five judges may sit in important cases. There is no jury system in China.

What role can and do expert witnesses play in the proceedings?

An expert witness may provide an affidavit to the court as evidence of the parties. The expert must be present in court to undergo cross-examination in order for his or her evidence to be considered by the court, unless there are extenuating circumstances. In some cases, the court may request the parties to call certain experts to explain the technology at issue.

Does your jurisdiction apply the doctrine of equivalents and if so, how?

China applies the doctrine of equivalents. If a feature is not the same as a feature in the patented claim, but is implemented by substantially the same means, realises substantially the same function and effect, and is easily conceived without requiring creative labour from a person skilled in the art, it will be regarded as an equivalent feature.

Is it possible to obtain preliminary injunctions? How serious is the risk of disruption to an accused infringer’s business?

It is possible to obtain a preliminary injunction if:

• it is highly likely that the act being conducted or to be conducted will infringe IP rights;
• such an act will likely cause irreparable harm to the petitioner’s legitimate rights;
• the petitioner has paid the necessary deposit; and
• the grant of a provisional or preliminary injunction will not harm the public interest.

How are issues around infringement and validity treated in your jurisdiction?

Infringement issues are handled by the courts and validity issues are handled by the Patent Re-examination Board. A patent is presumed valid unless it is pronounced invalid by the board. The board’s decision as to whether a patent is valid may be appealed to the Beijing IP Court, whose decision may in turn be appealed to the Beijing High Court. The decision of the Beijing High Court is final.

What are the remedies available to a successful plaintiff? Which remedies are most often awarded by the courts?

In China, the court may grant a preliminary injunction, a permanent injunction and damages to a successful plaintiff. Permanent injunctions and statutory damages are those most often awarded by the courts.

How are damages awards calculated? Is it possible to receive punitive damages?

A damages award may be calculated based on:

• the profits lost by the patent owner due to the infringement;
• the illegal profits made by the infringer due to the infringement; or
• multiples of the licence fee for the patent.

If the profits lost by the patent owner or made by the infringer are not clearly determinable and no royalty rate can be referred to, the court may award statutory damages at its discretion within the range of Rmb10,000 ($1,500) to Rmb1 million ($150,000). Punitive damages are not available.

How common is it for courts to grant permanent injunctions to successful plaintiffs, and under what circumstances will they do this?

In most cases, the courts will grant permanent injunctions to successful plaintiffs. The court will grant a permanent injunction if:

• the plaintiff so requests;
• the court finds that infringement has occurred; and
• the grant of a permanent injunction will not affect the public interest.

How long does it take to get a decision at first instance and is it possible to expedite this process?

It takes between six and nine months to obtain a decision at first instance if the parties are domestic companies or individuals. The timeframe will be longer if a foreign party is involved as there is no time limit for the courts to try foreign-related cases. This process cannot be expedited.

Under what circumstances will the losing party in a first instance case be granted the right to appeal? How familiar are the higher courts with patent matters? How long does an appeal typically take?

The losing party in a first-instance case is always entitled to appeal. The higher courts are often highly familiar with patent matters. An appeal typically takes between three and six months for domestic cases or longer for foreign-related cases.

Xiaowei Wei
Patent attorney
[email protected]

Xiaowei Wei is a patent attorney and deputy director of the electric department at CCPIT Patent and Trademark Law Office. After graduating from Tsinghua University with a master’s in engineering in the field of digital communication, she started her IP career by joining CCPIT. Her practice focuses on drafting, prosecuting, invalidating and litigating patents.

Guoxu Yang
Deputy director, patent litigation
[email protected]

Guoxu Yang is deputy director of the patent litigation department. His practice focuses on patent infringement litigation and legal opinions, administrative protection of patent rights, patent licensing and other IP-related issues. Mr Yang has vast experience in patent litigation and is the co-author of Patent Infringement and Litigation, a textbook for Chinese patent attorneys.