Tailoring filing strategies to obtain comprehensive protection

With the development of the Chinese economy, patent protection is becoming an increasingly important aspect of competition. On the one hand, patents can be used against competitors to protect new creations and designs and to maintain technical advantages. On the other hand, patents also provide leverage for defendants against claims of infringement, even enabling them to countersue the claimant. For many businesses, China has become a tier-one market – maybe even as important as the United States – and they are spending millions of dollars in pursuing Chinese patents.

The goal of filing a patent application should not just be to obtain a patent certificate; it should be to secure comprehensive protection that helps and promotes the business. The Chinese patent system has certain unique characteristics and the question of how to obtain comprehensive protection by tailoring filing strategies to Chinese patent practice has become paramount.

This chapter focuses on two issues: how to accelerate patent prosecution and how to make full use of design patents. The first issue is critical because infringers can act very quickly in China and infringing products can enter the market long before the grant of patent rights. Obtaining protection quickly thus means a great deal. The second issue is also important, since design patents are often overlooked by companies hoping to operate in China.

The perspectives in this chapter come from real cases; they are thus practical and targeted, based on the reality that every business wants every dime to be spent in a meaningful way.

Types of patent

Chinese patent law provides for three types of patent:

• inventions (ie, new technical solutions relating to a product or process or an improvement thereto);
• utility models (ie, new technical solutions relating to a product’s shape or structure or a combination thereof, which are fit for practical use); and
• designs (ie, new designs of a product’s shape or pattern or combinations thereof – as well as combinations of colour and the shape or pattern of a product – which create an aesthetic feeling and are fit for industrial application).

Accelerating patent prosecution

Invention applications can take years to be granted, since the State Intellectual Property Office (SIPO) conducts both preliminary examination and substantive examination. This creates a lengthy period between commercialisation of a new product and grant of the patent, during which no meaningful protection is available.

Patent infringement in China is rampant and infringers have become ever more sophisticated. Once a new product has been released or displayed at a tradeshow – including international tradeshows – similar or identical products may appear on the market very quickly. This is especially true for products which can be reverse-engineered easily by competitors, such as mechanical devices and home appliances. The swift appearance of competing products on the market may harm the applicant’s business significantly, since such products may sell at a much lower price than the authentic product, take up market share and cut profit margins.

Frustratingly, all of this may happen long before grant of the patent, meaning that applicants have no strong legal basis to take action against infringers.

Several approaches can be taken to accelerate the prosecution of patent applications.

Patent Prosecution Highway

The SIPO has signed Patent Prosecution Highway (PPH) agreements with major patent offices around the world. A PPH agreement can greatly accelerate prosecution. In practice, the first office action usually issues about one or two months after a PPH request is accepted. This may shorten prosecution by up to a year.

In order to file a PPH request, the pending claims must substantially correspond to those allowable by other patent offices. However, opportunities to make voluntary amendments to claims are limited. Once the opportunities to make voluntary amendments pass, the applicant may not file a PPH request unless the pending claims already correspond to those allowed in other countries – which is rare. In practice, Chinese patent attorneys are frequently asked to handle claims that are admissible in other jurisdictions, but cannot be amended at the SIPO, meaning that PPH requests cannot be filed. Therefore, when opportunities to make voluntary amendments arise, it is good practice to research the family applications in different jurisdictions to see whether any have been granted. If they have, a PPH agreement is a great way to accelerate prosecution.

PCT or Paris Convention

Foreign applicants generally file Chinese applications though Patent Cooperation Treaty (PCT) national phase or Paris Convention applications. Generally, a PCT national phase application will result in a 30 to 32-month delay from the earliest priority date, while a Paris Convention application will result in a 12-month delay from the earliest priority date.

Increasing numbers of applicants are filing PCT Chinese national phase applications. PCT filing has many benefits over Paris Convention filing – for example, some preliminary examination can be done during the international phase, saving the applicant a lot of effort in dealing with patent offices in different jurisdictions. The PCT international phase also provides applicants with an international search report and a written opinion on patentability; this may provide applicants with an estimate on the patentability of inventions and the prospect of grant before they decide to spend real money on prosecution in different jurisdictions.

However, the 30 to 32-month delay can be a real concern. In one case, a company commercialised a product which quickly became popular among consumers. However, infringing products began to sell on the market almost immediately. The PCT Chinese national phase application had not even been filed. On discovering the infringement, the company instructed local patent attorneys to file a national phase application. However, if the company had filed earlier through the Paris Convention, the situation would have been different.

Regarding new inventions from overseas, therefore, applicants are strongly recommended to file in China through the Paris Convention after the prior application is filed. This may shorten the prosecution period by up to a year and a half.

Dual invention and utility model filing

Chinese invention patents generally correspond to utility patents in US practice. New apparatus, compositions and methods can all be eligible subject matter.

Chinese utility model patents protect only new apparatus, including electronic circuits. The value and importance of utility model patents are often ignored – especially by foreign applicants. The primary reason for this is that utility model patents are granted without substantive examination and the resulting patent right may not be as stable as an invention patent.

However, if properly used, utility model patents can greatly benefit a company. Chinese patent law allows the applicant to file both an invention application and a utility model application for the same creation, under the following conditions:

• Both applications must be filed on the same day;
• The dual application should be clearly indicated on the request form; and
• The application may not be through the PCT national phase.

One major benefit of this dual-filing strategy is fast protection. The utility model patent will be granted very quickly, since the SIPO will conduct only a preliminary examination (ie, without a substantive examination). The invention application will then proceed as usual. Immediately after grant of the utility model patent, the patentee can take action against infringers. After the invention patent has been granted, the patentee simply abandons the prior utility model patent. The protection provided by the utility model and invention patents is continuous: it not only comes into effect faster, but also lasts longer.

In summary, utilising PPH agreements, Paris Convention filing and a dual-filing strategy can help an applicant to obtain protection faster.

Design patents

Many patent practitioners know that design patents can be extremely helpful for protecting new designs in China. However, they often encounter frustrating situations in which companies either file no design application or have no comprehensive filing strategy, and consequently their designs are poorly protected. The following two cases exemplify this.

No design application

In the first case a company did not file design applications for its new industrial products at all and competitors copied the exact appearance of the products.

This case reinforces the importance of filing design applications for products. The subject matter and patentability requirements for design patents are not high. So long as it is an industrial product and a new design, a party may file a design application. In this case, the company had to rely on copyright law and unfair competition law to take action against the infringers. However, Chinese copyright law and unfair competition law do not give the rights holder exclusive rights. For example, if a copyright owner wants to claim for infringement, it must prove that the alleged infringer has or may have access to the copyrighted work. However, if the alleged infringer can show that it designed the work independently, infringement may not be established. By contrast, with a design patent the patentee need only prove the similarity between the design patent and the product – whether the alleged infringer designed the product independently is irrelevant.

Filing and prosecuting design applications is relatively cheap and fast. Generally, $1,000 will cover official fees and attorneys’ fees from filing to registration and it takes only a few months to obtain a design.

No comprehensive filing strategy

In the second case, a company created a new design embodying a new concept and filed a design application. However, after the product was commercialised, competitors adopted the design and applied it to prior designs of their own. The resulting products looked slightly different from the authentic products, although they shared the same design concept.

This case reinforces the importance of filing multiple designs in one application. The SIPO allows multiple similar designs to be combined in one application. Therefore, the application may cover not only the finally commercialised design, but also modified versions which apply the same design concept. This way, the design and its concept can be protected more comprehensively. This will not increase the total cost of filing, since only one application will be filed.

In summary, companies should:

• ensure that their important products are protected by design patents; and
• protect not only the final design, but also modified designs which could be adopted by competitors, by combining multiple designs in one application.

Conclusion

Companies filing for patents in China should not just apply for patents; they should seek to obtain comprehensive protection for their products. The issues discussed in this chapter arose from actual cases and are representative of Chinese patent filing practice. The above tips can help businesses to tailor their filing strategies in order to obtain comprehensive protection.

Chang Tsi & Partners

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Beijing

China

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Howard Hao
Patent partner
[email protected]

Howard Hao is a patent attorney and the deputy manager of the patent department. Mr Hao provides consultation services on a wide range of patent issues, including inventions, utility models and industrial designs. Mr Hao specialises in patent prosecution in China. He has filed over 600 patent applications and responded to over 500 office actions relating to medical equipment, engines, automotive technology, machine tools, metal materials and mechanical and electrical control systems. He also provides broad IP legal services on a strategic scale.

Martin Meng
Patent partner
[email protected]

Martin Meng manages the patent department at Chang Tsi & Partners. Mr Meng has more than a decade of experience as a patent and IP attorney assisting foreign and domestic companies in IP prosecution and enforcement. He specialises in patent infringement litigation, invalidation of patent rights and drafting and prosecution of patent applications. Mr Meng is also skilled in assessing patentability and enforceability, as well as handling invention, utility model and industrial design patents across many sectors.