The application and protection of utility model patents in China
The first Chinese Patent Law was implemented in 1985 and was designed to provide legal protection to three types of creation: inventions, utility models and designs. The utility model patent system is intended to provide protection for small inventions and creations and is supplementary to the invention patent system. Over the last 30 years, utility model patents have become widely used in China as they are inexpensive and can be granted quickly, yet have the same legal effects as invention patents.
The first Chinese Patent Law was implemented in 1985 and was designed to provide legal protection to three types of creation: inventions, utility models and designs. The utility model patent system is intended to provide protection for small inventions and creations and is supplementary to the invention patent system. Over the last 30 years, utility model patents have become widely used in China as they are inexpensive and can be granted quickly, yet have the same legal effects as invention patents. In 2013, for example, the Chinese Patent Bureau received over 890,000 applications for utility model patents, accounting for 37.54% of the total number of applications.
Chinese utility model patent system
Chinese utility model patents protect any technical solution relating to a product’s shape, structure or a combination of these which is fit for practical use. Accordingly, they are not suitable for protecting improvements to an existing method or a product’s use, material component or similar.
The examination process for applications has evolved from an initial formal examination plus opposition procedure to the current preliminary examination plus evaluation report. During the preliminary examination, examiners look for formal defects, as well as for obvious substantive defects (eg, subject matter to be protected, novelty and practical applicability). If, after preliminary examination, there are no obvious grounds for rejection, a utility model patent will be granted. After this, the patentee or other interested party (eg, the licensee of an exclusive patent licence contract or the licensee of a common patent licence contract which has an authorised right of action from the patentee) may request the State Intellectual Property Office (SIPO) to carry out an evaluation report for the utility model patent.
SIPO provides only one evaluation report per utility model patent. If the patentee or interested party has any objection to the report’s contents, it may submit a request for correction within two months of receipt.
Utility model patents last for 10 years and have the same legal effects as invention patents – that is, no entity or individual may exploit the patent (ie, make, use, offer to sell, sell or import the patented product for production or business purposes) without the patentee’s authorisation.
Applications for utility model patents
Applicants should consider the following aspects when deciding whether to apply for a utility model patent or an invention patent.
Target to be protected
As mentioned above, utility model patents merely protect the technical solution relating to a product’s shape, structure or a combination of these, where they have a practical purpose. Therefore, utility model patents are suitable for protecting structural improvements to an existing product, but not improvements to the method, flow, use or similar.
In addition, utility model patents are suitable for protecting small inventions and small creations, as well as invention-creations that do not display a high level of innovation. Utility model patents can provide a more stable patent right than invention patents, as the requirements for inventive step are lower for utility models than for inventions.
There are rarely any opportunities to amend applications for utility model patents once these have been filed. Consequently, there are high requirements with regard to drafting applications for utility model patents
Publication time
A utility model patent is granted after a preliminary examination. Generally speaking, a patent certificate may be obtained within between six and 12 months from the filing date. This makes utility model patents suitable for protecting products that are due to enter the market quickly.
However, if a project is in the R&D stage and progress is being kept secret from competitors, then an invention patent may be more useful, as applicants can take advantage of the 18-month gap between filing an application and publication.
Duration
Utility model patents last for 10 years – half the duration of invention patents, which last for 20 years. This makes utility model patents more suitable for products that will be upgraded quickly and that have a short lifecycle.
In addition, the 2008 Patent Law allows applicants to file applications for both utility model and invention patents for the same invention-creation. This is useful for important patents, as it gives applicants the benefits of the utility model patent’s quick grant, alongside the stable rights and longer duration that characterise an invention patent – although applying for both types of patent will result in much higher application costs.
If an applicant applies for both a utility model and an invention patent for the same invention-creation, the application for the utility model patent is usually granted first. Where the examiner for the invention patent application finds that the application satisfies the requirements for being granted a patent and the application’s claims have the same scope of protection as that of the granted utility model patent, an invention patent will be granted only once the applicant abandons the previously granted utility model patent.
Applications for both invention and utility model patents may be filed with SIPO for a foreign invention-creation via the Paris Convention. However, foreign applicants must choose between an invention or a utility model patent if they are filing via the Patent Cooperation Treaty.
In addition, since utility model patents are granted after a mere preliminary examination, the resulting rights are not always sufficiently stable and patents may be subject to invalidation. As shown by SIPO’s statistical data, among the 9,532 requests for invalidation of utility model patents filed between 2002 and 2011, 35.6% of these resulted in total invalidation, while 11.85% led to the utility model patents in question being partially invalidated. Invalidation was usually a result of issues with the invention’s novelty/inventiveness or errors in the drafting. There are rarely any opportunities to amend applications for utility model patents once these have been filed. Consequently, there are high requirements with regard to drafting applications for utility model patents. Drafters should be familiar with the technical solutions for which protection is sought, as well as with Chinese patent law and the accompanying regulations.
The utility model patent system plays an important role in promoting the development of small and medium-sized Chinese enterprises as the market begins to reform and open up. In order to encourage distribution and development, local governments throughout China have been pushing through preferential policies (eg, subsidies for patent applications and tax cuts) in order to encourage enterprises to apply for patents. While this has succeeded, it has also resulted in a lot of low-quality applications for utility model patents. Some enterprises and individuals have taken advantage of the fact that applications for utility model patents are not subject to substantive examination and filed several similar applications or filed prior art simply in order to secure subsidies. This flood of low-quality, poorly drafted applications has interfered with customs investigations and disrupted the normal market order.
SIPO has begun to acknowledge this issue and has switched its focus from patent quantity to quality, promoting patent industrialisation and enforcement. Given this, the examination of utility model patent applications has also become stricter. In the last round of amendments to the Patent Law’s Implementing Regulations, the examination of obvious novelty was added to the preliminary examination and the list of reasons for rejecting an application; the examination of other legal provisions was also tightened. SIPO has established a three-stage examination quality administration system to ensure that examinations of utility model patents meet certain standards and are consistent. Moreover, SIPO has also increased its efforts to crack down on improper application behaviour, such as plagiarism of prior art and repeat applications. In response to these measures, the annual rate of increase for applications for utility model patents fell to 26.4% and 20.5% respectively in 2012 and 2013, down from 37.8%, 31.9% and 42.9% respectively in 2009, 2010 and 2011. Correspondingly, the annual rate by which applications for invention patents increased rose to 26.4% in 2013, exceeding the annual rate of increase of applications for utility model patents. It appears that these measures are succeeding in promoting the long-term healthy development of the utility model patent system.
Protecting utility model patents
Similar to an invention patent, a utility model patent defines the scope of protection through its claims. The legal effects of a utility model patent are the same as those of an invention patent. In accordance with the Patent Law, when calculating the amount of compensation for damages caused by the infringement of a patent right, this must first be assessed on the basis of the actual losses suffered by the rights holder as a result of the infringement. Where actual losses are difficult to determine, the amount is assessed on the basis of any profits earned by the infringer as a result of the infringement. Either way, the method for calculating the amount of compensation for damages is the same for both invention and utility model patents. The only slight difference is that where it is difficult to determine both the actual losses that the rights holder has suffered and the profits that the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the licence fee for the patent in question. Where it is also difficult to determine the amount of the licence fee, the court may award damages of between Rmb10,000 and Rmb1 million, with the amount depending on factors such as the type of patent right and the nature and circumstances of the infringing act. In both cases, the amount of compensation for damages caused as a result of infringing a utility model patent is usually slightly less than those for an invention patent.
In one well-known case Chint Group, China sued Schneider for infringing its utility model patent for a miniature circuit breaker. The court ordered Schneider to pay compensation of Rmb335 million to Chint Group in the first trial, based on the amount of profits it earned as a result of the infringement. This case finally settled when Schneider paid compensation of Rmb157.5 million to Chint Group and agreed a global blanket settlement.
In order to standardise utility model patent rights, where a patentee sues others for infringing its rights, the court or other administrative body may request that it submit SIPO’s evaluation report for its patent. As mentioned earlier, this is issued by SIPO after it evaluates the utility model upon the patentee’s request. Generally, such a report will be sufficient to prevent the litigation process being terminated as a result of the accused infringer counterattacking with an invalidation claim.
However, an accused infringer may submit an invalidation request for the utility model patent at issue to the Patent Re-examination Board, claiming a prior art defence or a prior user right.
Conclusion
At present, foreign enterprises are not making full use of the Chinese utility model patent system. This may be because they are not sufficiently familiar with it.
Among the 892,362 applications for utility model patents received by SIPO in 2013, there were only 7,136 applications for utility model patents from foreign applicants, accounting for 0.8% of the total, while applications for invention patents submitted by foreign applicants accounted for 28.7% of the total during the corresponding period. Based on the system discussed in this article, foreign enterprises may wish to consider taking advantage of the Chinese utility model patent system, which can be useful not only for reducing costs, but also for promoting rapid market expansion in China.
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Simon Tian
Patent attorney
Simon Tian joined Kangxin in 2010 after four years working as a patent examiner at the State Intellectual Property Office (SIPO). During this time he worked on the quality control of patent examinations conducted by SIPO, as well as gaining extensive experience in patent prosecution and patent retrieving.
At Kangxin, Mr Tian practises in a wide range of technical fields, focusing particularly on display, electronics and communication technology. He has handled hundreds of patent prosecutions for foreign clients. In addition, Mr Tian has developed patent application strategies and provided patent infringement analysis for several multinational companies.