Patents in Asia 2020-2021: China
How do you get a patent in your jurisdiction?
Types of protection and eligibility criteria
There are three categories of patent in China: invention, utility model and design. An invention patent provides protection for any new technical solution relating to a product, process or improvement thereof. A utility model patent provides protection for any new technical solution relating to a product’s shape or structure (or a combination of the two), which is fit for practical use. Further, a design patent protects a design’s shape or pattern (or a combination of the two), or a combination of colour with the shape or pattern of the whole or part of a product, which creates an overall aesthetic and is fit for industrial application.
The fourth revision of the Chinese Patent Law, which was adopted on 17 October 2020 and is due to come into effect on 1 June 2021, allows applications to be filed for partial designs.
Any invention or utility model for which a patent may be granted must possess novelty, inventiveness and practical applicability. Any design for which a patent may be granted cannot be a prior design. Further, for the novelty aspect of an invention, utility model, or design, conflicting applications, (ie, filed before the filing date but published after the filing date at the China National IP Administration (CNIPA)) should be also considered.
Patents cannot be granted for:
- scientific discoveries;
- rules and methods for mental activities;
- methods for the diagnosis or treatment of diseases;
- animal and plant varieties;
- methods of nuclear transformation and substances obtained by means of nuclear transformation; and
- designs of 2D printing goods, made of the pattern, colour or a combination of the two, which serve mainly as indicators.
Methods of nuclear transformation are a new addition to the revised Patent Law, which highlights that such methods and the substances obtained therefrom are of significant concern with national interests in economy, defence, scientific research and public order, and must not be monopolised by individuals or entities.
The application – process and costs
When filing an application for an invention or utility model patent, the document must contain a description, an abstract and claims. The description sets forth the invention or utility model in a clear and comprehensive manner so as to enable a person skilled in the relevant field of technology to carry it out. The claims are supported by the description and concisely define the extent of the desired patent protection. When filing an application for a design patent, it is necessary to submit drawings or photographs and a brief explanation of the design. These must clearly indicate the design of the product for which protection is sought.
An applicant will enjoy priority rights if it files, within 12 months from filing for an invention or utility model patent, or within six months from the date on which any applicant first filed in China or a foreign country an application for a design patent, an application for a patent for the same subject matter.
The revised Patent Law now provides priority for design patents in China. Further revisions include amendments to the time limit for submitting a certificate of the priority right. The time limit for invention and utility model patents has been extended to 16 months from the first filing date, and the time limit for submitting the certificate of the priority right with respect to a design patent is three months from the filing date in China.
Invention, utility model and design patents are subject to a formality examination (also referred to as preliminary examination). Invention patents must pass a substantive examination prior to grant. However, this is not required for utility model and design patents.
On average, it takes 16 to 22 months from the start of the substantive examination for an invention patent application to be granted and three to eight months from filing for a utility model application or a design application to be granted. The patent term for an invention patent is 20 years, and 10 years for a utility model patent. The patent term for a design patent has been extended from 10 years to 15 years under the revised Patent Law. The revision also introduces patent term compensation, which may be requested by the patentee to compensate for unreasonable delay that was not caused by the applicant.
The official fees for an invention patent include:
- filing fee – Rmb950;
- examination fee – Rmb2,500; and
- re-examination fee –Rmb1,000, if any.
Official fees for a utility model include:
- filing fee – Rmb500; and
- re-examination fee – Rmb300, if any.
Official fees for a design patent include:
- filing fee – Rmb500; and
- re-examination fee – Rmb300, if any.
For invention and utility model patents, the additional charge for more than 10 claims is Rmb150 per claim.
Technology-based considerations (eg, software and pharmaceuticals)
For software-related inventions, four types of subject matter for claims are permitted:
- products including hardware elements or a combination of hardware and software elements;
- products defined in the form of means and function; and
- computer-readable mediums, which store programs or instructions.
Programs and computer programs are not permitted. Applicants are encouraged to write claims for software-related inventions in the form of a combination of hardware and software elements (eg, processor and memory storing programs or instructions that the processor can execute).
With regard to pharmaceutical-related inventions, experimental data can be submitted after the application has been filed, but it will not be accepted if it proves a technical effect that cannot be derived from the original disclosure (ie, a new technical effect).
In the fourth revision of the Patent Law, patent term compensation has been introduced for new drugs to make up for the time taken to review and approve their marketing. The compensated term must not exceed five years and the total term that the patent is effective must not exceed 14 years after marketing has been approved.
What are the major administrative procedures in your jurisdiction?
Appealing patent office decisions
During prosecution, if the CNIPA issues a decision to reject an application, the applicant may appeal the decision to the CNIPA’s Re-examination and Invalidation Department. If the applicant is not satisfied with the decision made by this department, it may appeal to the Beijing IP Court at first instance and the IP tribunal of the Supreme People’s Court at second instance.
Third-party challenges – oppositions and invalidations
There are no opposition proceedings in China. Any entity or individual, including the patentee, can request that the Re-examination and Invalidation Department declare a patent invalid after grant. Oral proceedings are usually held during the invalidation procedure. The applicant can only amend the patent claims before the oral proceeding in response to the invalidation request in several limited claim amendment manners (including deletion of claims and/or technical solutions, further limitations on claims and correcting obvious errors) and may amend the patent claims during or after the oral proceeding by deleting the claims or technical solutions provided. An invalidation decision may be issued to declare a patent invalid in whole or in part, or maintained. Once the patent has been declared invalid, it is deemed to be non-existent from the date of filing. If the patentee or petitioner is not satisfied with the invalidation decision, it may appeal to the Beijing IP Court within three months from the decision’s date of issuance.
Administrative enforcement options
A patentee may request that the administrative authority for patent affairs handle a patent infringement dispute, and the administrative authority may order the infringer to immediately stop the infringing act. The order made by this authority is appealable to the intermediate people’s court that has jurisdiction over it at first instance and to the IP tribunal of the Supreme People’s Court at second instance. The authority handling the patent infringement dispute may, on the party’s request, mediate in regard to the amount of compensation for the damage caused by the infringement.
When handling a patent infringement dispute, the administrative authority for patent affairs may:
- query the parties concerned;
- investigate the relevant circumstances surrounding the suspected illegal act;
- carry out an on-the-spot inspection of the site where the party’s suspected illegal acts took place; and
- examine the products relevant to the suspected illegal act.
The revised Patent Law provides that the State Council patent administration department may, on the request of the patentee or any interested party, handle influential patent infringement disputes in China. Further, when handling this type of dispute, the administrative authority for patent affairs under the local people’s government may collectively handle cases of infringement of the same patent within its own administrative region, and may request the administrative authority for patent affairs under higher-level local governments to handle cross-regional cases of patent infringement.
How are patents enforced through the courts?
A patentee may institute court proceedings to handle an infringement dispute. By filing a lawsuit before the competent court, the patentee may obtain the remedies of a preliminary or permanent injunction and damages.
In the fourth revision of the Patent Law, the statutory maximum amount of compensation for damage has been increased by five times to Rmb5 million. Further, the court can now make punitive damages on intentional infringing acts, specifically with regard to the intentional infringement of patent rights. If the circumstances are serious, the amount of compensation for damage may be determined as no less than equal to and no more than five times the amount determined normally.
Key forums and their composition (eg, judge versus jury trials)
In China, questions relating to both fact and law are examined by a collegiate panel consisting of either three judges or seven members, including three judges, for cases of important influence. In cases relating to complicated technical issues, especially patent-related cases, a technical investigation officer (who is usually a senior patent attorney or technical expert and chosen by the relevant authority) may be added to the bench to query the technical facts, explain the state of art and help the judges to understand technical issues.
Trial flow – discovery, trial, witnesses, timing and cost
There is no discovery procedure in China. The burden of proof is usually on the party that makes the claim. For an infringement dispute related to an invention patent for a new product’s manufacturing process, the accused entity or individual manufacturing the identical product must provide proof that the process of manufacture is different from the patented process.
The revised Patent Law provides that in order to determine the amount of compensation for damages, the court may order the infringer to provide account books and materials related to the infringement if the rights holder has tried its best to provide evidence but the account books and materials related to the infringement are mainly in the infringer’s hands. If the infringer does not include the requested materials or provides false accounting books and materials, the court may refer to the claims of the rights holder and the evidence provided in order to determine the amount of compensation. Here, it is crucial to provide evidence in support of allegations, which is then presented in court and cross-examined by the parties concerned. The categories of evidence that can be presented include:
- documentary evidence;
- material evidence;
- audio-visual material;
- witness testimonies;
- party statements;
- expert conclusions; and
- records of inspection.
The evidence must be verified before it can be taken as grounds for ascertaining a fact.
A court session is held once submissions from the plaintiff, defendant and third party (if any) have been exchanged. A court debate may be conducted, after which a judgment is made.
In cases where the standard procedure is followed, the court must conclude the case within six months after it has been docketed. Under special circumstances in which an extension is necessary, a six-month extension can be permitted subject to the approval of the president of the court. If a further extension is needed, it must be reported to a higher-level court for approval. The second-instance case should be concluded more quickly than the first-instance case.
The costs involved in court trials can vary greatly as they depend on the remedy amount being claimed by the plaintiff, as well as attorney fees. Therefore, it is difficult to provide even a rough estimate.
For pharmaceutical-related patents, the revised Patent Law provides that, during the process of drug marketing review and approval, if an IP rights-related dispute arises between the applicant applying for drug marketing authorisation and the relevant patentee or interested party, the relevant party may institute court proceedings and request a decision on whether technical solutions related to the applied-for drug fall within the scope of protection of the other party’s drug patents. The State Council drug regulation and administration department may, within the prescribed time limit, hand down its decision on whether to suspend the approval of marketing of the related drug based on the enforced decision of the court.
Legal doctrines, available remedies and appeals process
During patent infringement trials, the doctrine of equivalents is applied to determine whether the defendant has infringed the disputed patent. A feature will be regarded as equivalent if:
• it is not literally the same as a feature in the patented claim, but is implemented by substantially the same means and carries out substantially the same function with the same effect; and
• it is easily conceived without requiring creative labour from a person skilled in the art on the date of being accused of infringement.
The court will also adopt the principles of prosecution history estoppel and the disclosure dedication rule. With regard to the former, the patent holder is precluded from invoking the doctrine of equivalents to recapture the content ceded by amendment during prosecution, which was intended to differentiate the invention from the prior art. This has the institutional function of redressing any inconsistent understandings with regard to the scope of the patent, which might exist between the patent examination authority and the judicial authority. With regard to the latter, subject matter that is disclosed in the description but not claimed in the patent falls into the public realm.
The protection scope of a claim should be determined by primarily referring to the description and drawing of the patent document. The prosecution history of the patent, the divisional application, the parent application and other applications from the same patent family may all be considered when interpreting a claim.
How are patents commercialised in your jurisdiction?
Patent working requirements and pharma-specific rules
Compulsory licences can be issued on request from any entity or individual who provides proof that they have made requests for authorisation from the patentee to exploit the patent on reasonable terms and conditions and such efforts have not been successful within a reasonable time frame.
For a pharmaceutical patent, the patent administration department may, for public health purposes, grant a compulsory licence to manufacture a pharmaceutical product that has been granted patent rights and export it to countries or regions specified in the relevant international treaties to which China is a party.
The fourth revision of the Patent Law introduces open licences for patents and specifies the relevant rights and obligations of the patentee and the party that implements the open-licensed patent. A patentee may voluntarily declare to the CNIPA that it is willing to license any entity or individual to use the patent and may withdraw the declaration of open licence. Any entity or individual that is willing to implement an open-licensed patent must inform the patentee and pay the exploitation fee for a patent licence.
Laws and rules applicable to licensing (including FRAND)
The courts may use FRAND terms in deciding licensing fees for SEPs relating to telecommunications. For example, the court may consider rules such as total control, anti-hold up and anti-royalty stacking. A court decision issued by the Nanjing Intermediate People’s Court in 2019 used a top-down method for computing a FRAND licensing fee. In this case, the formula for determining the licensing fee for SEPs in China is that the licensing fee for a single family of patents in China is equal to the industry cumulative fee of the standard in China and multiplied by the contribution ratio of the single family of patents.
The behaviours of both parties during negotiation will also be considered in the range of FRAND terms. A party that clearly displays poor behaviour in terms of obeying FRAND terms will most likely receive negative results from the court’s judgment (some judgments from the Beijing High People’s Court and the Shenzhen Intermediate People’s Court provide examples of this).
In addition, the Chinese Supreme People’s Court was put under the spotlight in determining its impact on a foreign court’s decision and the Chinese courts’ competence in accepting an international IP dispute that involved a Chinese company.
Inventor remuneration issues
When an employee creates an invention at work, or the invention is made by them using mainly the business’s materials or technical means, then the right to apply for an invention patent belongs to the employer. Further, the revised Patent Law provides that the company may deal with the rights related to the invention-creation in accordance with the laws and promote the invention-creation’s implementation and utilisation.
An entity that is granted a patent, on exploitation of the patented invention, must remunerate the inventor or creator based on the extent of its application and the economic benefits yielded.
The revised Patent Law encourages entities granted with patent rights to implement property rights incentives, adopting methods such as stock rights, options and dividends, among other things, so that inventors or designers can reasonably share the benefits of innovation.