Patents in Asia-Pacific 2019/2020: China
How do you get a patent in your jurisdiction?
There are three categories of patent in China – invention, utility model and design. Only invention patents must pass substantive examination prior to grant.
Each type offers different protection. Invention and utility model patents provide protection from others manufacturing, using, offering to sell, selling or importing the patented products. Invention patents prevent others from using the patented method or using, offering to sell, selling or importing the products that are developed directly through the use of this method. With regard to design patents, the owners may prevent others from manufacturing, offering to sell, selling or importing the products.
All patent applications must first satisfy the following criteria for subject matter eligibility:
- 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, 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, pattern or a combination thereof, or a pattern or shape combined with a colour.
The practical utility aspect requires that the invention or utility model be reproducible and can provide beneficial effects.
The disclosure and enablement requirements demand that an invention or utility model 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 this country or abroad and must not have been described in any patent application previously filed there (or Patent Cooperation Treaty application nationalised in this jurisdiction) and later published.
‘Inventiveness’ implies that an invention or utility model must have prominent substantive features (for an invention) or substantive features (for a utility model) compared to the state of the art and must represent considerable progress (for an invention) or progress (for a 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.
The application – process and costs
Invention patents must pass substantive examination. Usually, the China National IP Administration (CNIPA) issues one or more office actions prior to allowance. If this rejects an application, the applicant can request that the Re-examination and Invalidation Department (previously the Patent Re-examination Board) review the case. Its decisions are appealable to the courts. Utility model and design patents are granted without substantive examination.
On average, it takes 22 months from the start of the substantive examination for an invention patent application to be allowed. Thus, the applicant may expect to obtain an invention patent three to four years after filing. It may take four to eight months from filing for the grant of a utility model application or a design application. In addition, it takes one to three months from the issuance of notice of allowance to issuance of notice of grant for a patent.
The official fees for an invention patent include the:
- filing fee – Rmb950;
- examination fee – Rmb2,500; and
- re-examination fee – Rmb1,000, if any.
Those for a utility model include the:
- filing fee – Rmb500; and
- re-examination fee – Rmb300, if any.
And those for a design patent include the:
- filing fee – Rmb500; and
- re-examination fee – Rmb300, if any.
If an invention patent application is around 5,000 words in English, the total cost is 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.
Technology-based considerations (eg, software and pharmaceuticals)
For software-related inventions, CNIPA allows the following four types of subject matter for claims:
- products including hardware elements;
- products including software elements in the form of means and function; and
- computer-readable mediums that include instructions.
Programmes and computer programs are not allowed. CNIPA relaxed the requirements for inventions relating to business rules in April 2017. If an invention includes both business rules and technical features, it will not be rejected directly on the ground that it relates to business rules. CNIPA mainly focuses on the novelty and inventiveness of the software-related inventions. For such inventions, it appears to be more sympathetic than the USPTO.
For pharmaceutical-related inventions, applicants should be careful about the requirement on the disclosure of experimental data within the application as originally filed. Post-filing data to prove a technical effect that cannot be derivable from the original disclosure (ie, a new technical effect) would not be accepted in the assessment of both inventiveness and enablement. This criterion is provided for in the Guidelines for Examination and affirmed by many court decisions.
What are the major administrative procedures in your jurisdiction?
Appealing patent office decisions
During prosecution, if an application is rejected by CNIPA, the applicant may request that CNIPA’s Re-examination and Invalidation Department review the case. The decision made by that department is appealable 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
CNIPA used to have opposition proceedings (like the EPO), but later abolished it. A patent can be declared invalid through the inter partes invalidation proceeding before the Re-examination and Invalidation Department only. Any entity or individual may initiate an invalidation procedure with that department at any time after grant of a patent. Usually an oral proceeding is held in the invalidation procedure. Although the patentee may amend the patent claims before the oral proceeding in response to the invalidation request, only very limited claim amendment manners are allowed. Any patent right that has been declared invalid will be deemed to be non-existent from the beginning. Like the re-examination decision, the invalidation decision is appealable to the court.
Administrative enforcement options
A patent owner can request that the administrative authority for patent affairs handle a patent infringement dispute. It may then obtain a permanent injunction through the administrative authority, although this cannot award damages. The decision 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.
How are patents enforced through the courts?
A court action may be the most effective route for a patent owner to enforce its rights in China. By filing a lawsuit before the competent court, the patent owner may obtain the remedies of a preliminary or permanent injunction and damages.
Key forums and their composition (judge versus jury trials)
In this jurisdiction, the questions relating to both fact and law are examined by the collegiate bench, which consists of three or seven members, usually judges and sometimes juries. In the instance that a jury is present, it acts as a judge. In some cases relating to complicated technical issues, there may be one additional technical investigation officer in the bench to help the judges to understand the technical features of the case.
Trial flow – discovery, trial, witnesses, timing, cost
There is no discovery procedure in China. The burden of proof is normally on the person who makes the claim. However, when a patent relates to a method for delivering a new product, the burden of proof shifts to the defendant to prove that the method it uses is different from the patented method, if the owner can prove that the alleged infringer is creating exactly the same new product. In addition, with regard to supplying evidence (eg, damage evidence), the account books and the materials relating to the infringing acts are mainly in the hands of the alleged infringer. So, if the patent owner has provided initial evidence with regard to the benefits gained by the infringer, the court can order that the alleged infringer surrender the account books and relevant materials. Should it refuse without cogent reason, the court may determine the damages by reference to the patent owner’s evidence.
A court hearing is scheduled once submissions from the plaintiff, defendant and third party (if any) have been exchanged. Various categories of evidence could be used during trial, including but not limited to documentary evidence, material evidence and declaration of expert witness, among others. When a declaration is used, usually the expert witness who made the declaration attends the hearing and is cross-examined by the opposite parties.
According to the laws and judicial interpretations, the first-instance case should be concluded within six months for civil cases and three months for administrative cases, in which time limits can be extended once or twice by the permission of the superior court. However, many cases have been delayed due to a huge backlog in the courts. In addition, no time limit is set if foreign entities or individuals are involved in the lawsuits.
The cost involved in court trial varies greatly depending on the amount being claimed and attorney fees – it is hard to provide even a rough estimate.
Legal doctrines, available remedies, appeals process
The doctrine of equivalents is applicable in China. A feature will be regarded as an equivalent feature if it is not:
- literally the same as a feature in the patented claim, but is implemented by substantially the same means and realises substantially the same function and effect; and
- easily conceived without requiring creative labour from a person skilled in the art.
However, the courts of China recognise prosecution history estoppel and the disclosure dedication rule. With regard to the former, the patent owner is precluded from invoking the doctrine of equivalents to recapture the content ceded by amendment during prosecution that was intended to differentiate the invention from the prior art. In the latter, subject matter that is disclosed in the description but not claimed in the patent falls in the public realm.
In addition, according to the judicial interpretations of the Supreme People’s Court, a claim should be construed upon considering the patent’s prosecution history, which includes written materials submitted by the applicant or patentee in the process of patent examination, re-examination and invalidation, CNIPA’s examination opinions, meeting records and oral hearing minutes, among others. The prosecution history of the divisional application or parent application and sometimes other Chinese applications from the same patent family could also be considered when constructing a claim.
According to the laws and judicial interpretations, the second-instance case should be concluded even more quickly than the first. Other provisions on time limits are similar to those of the first instance.
How are patents commercialised in your jurisdiction?
Patent working requirements, pharma-specific rules
According to the patent law, compulsory licences can be issued upon request from others if the patent owner has failed to practice the invention after a certain period of time from grant.
In addition, the government can issue compulsory licences to eligible local pharmaceuticals to produce generic versions of a patented drug during state emergencies, unusual circumstances or in the public interest. In addition, local pharmaceutical companies can also apply to export these drugs to other countries under the treaties that China has joined. However, no compulsory licence has ever been issued in China so far.
Laws and rules applicable to licensing (including FRAND)
The Chinese Patent Law does not provide for any other forms of licensing other than the compulsory one discussed above. However, the draft fourth amendments to the Patent Law, which the Standing Committee of the National People’s Congress are deliberating, adds rules about open licensing. With regard to this, the patentee may declare its willingness to license another entity to enforce its patent. This entity can obtain a licence upon notifying the patentee and paying the licensing fee.
The court may also use FRAND terms in deciding the licensing fee for SEPs relating to telecommunication. For example, the court may consider rules such as total control, anti-hold up and anti-royalty stacking. A recent court decision issued by the Nanjing Intermediate Court used a top-down method for computing the 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.
Inventor remuneration issues
According to Article 6 of the Patent Law, with regard to service inventions, the right to apply for a patent belongs to the entity. After the application is approved, the entity is the patentee. An ‘invention’ can be defined as the service invention, under the condition that it is made by a person in execution of the tasks of the entity to which they belong or made by them mainly by using the material and technical means of the entity.
Pursuant to Article 16 of the Patent Law, the entity that is granted a patent right gives to the inventor of a service invention a reward and, upon exploitation of the patented invention, pays the inventor a reasonable remuneration based on the extent of spreading and application and the economic benefits yielded. The manner and amount of remuneration are further explained in Rules 76, 77 and 78 of the modified Implementing Regulations of the Patent Law. In addition, the company policy or the employment contract regarding the remuneration prevails over the statutory remuneration.
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