Top legal experts in China provide an exclusive insight into the country’s patent prosecution and litigation strategy for 2018
How do you get a patent in your jurisdiction?
There are three categories of patents in China: invention patents, utility model patents and design patents. Only invention patents must pass substantive examination prior to grant.
Types of protection and eligibility criteria
Different types of patent offer different protections.
For invention patents or utility model patents, the patent owner may prevent others from (for production or business purposes):
- manufacturing, using, offering to sell, selling or importing the patented products, or using the patented method; or
- using, offering to sell, selling or importing products that are developed directly through the use of the patented method.
Methods can be protected by invention patents only.
For design patents, the patent owner may prevent others from (for production or business purposes) manufacturing, offering to sell, selling or importing the design patented products.
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 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 combination thereof, or a pattern or shape combined with a colour.
The practical utility requirement requires that the invention or utility model be reproducible and capable of producing beneficial effects.
The disclosure and enablement requirements require 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 China or abroad, and must not have been described in any patent application previously filed in China (or Patent Cooperation Treaty application nationalised in China) 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).
A design patent must not relate to 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
For invention patents, the claims must pass substantive examination. Usually, SIPO will issue one or more office actions before allowance. If an application is rejected by SIPO, as a remedy, the applicant may request the Patent Reexamination Board (PRB) to review the case. The board’s decision can be appealed to the court.
For utility models and design patents, claims will be granted without substantive examination.
On average, it takes about 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. It takes approximately three to six months from filing for a utility model application or design application to be granted. In addition, it takes around one to three months from the issuance of notice of allowance to the issuance of notice of grant for a patent.
The official fees are:
- for an invention patent:
- filing fee – approximately $139;
- examination fee – approximately $365; and
- re-examination fee (if any) – approximately $146;
- for a utility model:
- filing fee – approximately $73; and
- re-examination fee (if any) – approximately $44; and
- for a design patent:
- filing fee – approximately $73; and
- re-examination fee (if any) – approximately $44.
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.
Technology-based considerations (eg, software and pharmaceuticals)
For software-related inventions, SIPO now allows the following types of subject matter for claims:
- products, including hardware elements; and
- computer-readable mediums, including instructions.
Program products and computer programs are not patentable. Since April 2017, SIPO has specifically relaxed the requirements for inventions relating to business rules. 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. Instead, SIPO focuses on the novelty and inventiveness of software-related inventions. As such, it appears friendlier towards applicants for such inventions than the USPTO.
For pharmaceutical-related inventions, applicants should carefully consider the requirement on the disclosure of experimental data in 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) will be rejected in the assessment of both inventiveness and enablement. This criterion is provided for in the newly amended Guidelines for Examination and has been affirmed by several court decisions.
What are the major administrative procedures in your jurisdiction?
Appealing patent office decisions
If an application is rejected by SIPO during prosecution, the applicant may request the PRB to review the case. The board’s decision is appealable to the Beijing IP Court at first instance and the Beijing Municipal High People’s Court at second instance.
Third-party challenges – oppositions and invalidations
In the past, SIPO would conduct opposition proceedings, similar to the EPO; however, this has been abolished. Now, a patent can be declared invalid only through inter partes invalidation proceedings before the PRB, and not through any proceedings before the court. Any entity or individual may initiate invalidation proceedings with the board at any time after the grant of a patent. Usually, an oral proceeding is held during the invalidation process. Although the patent owner may amend the patent claims before the oral proceeding in response to the invalidation request, only very limited claim amendments may be allowed. Any patent right that has been declared invalid will be deemed to be non-existent from the beginning. As with a re-examination decision, an invalidation decision is appealable to the court.
Administrative enforcement options
A patent owner may request the administrative authority for patent affairs to handle a patent infringement dispute. The patent owner may obtain a permanent injunction for the patent through the administrative authority, but the authority cannot award damages. The administrative authority’s decision is appealable to the intermediate people’s court that has jurisdiction ove/Users/tmorgan/Desktop/article html /aurthors.htmlr the authority for the first instance and to the high people’s court of the province where the intermediate court is located for the second instance.
How are patents enforced through the courts?
Court action may be the most effective route for a patent owner to enforce its rights in China. By filing suit before the competent court, the patent owner may obtain the remedies of preliminary injunction, permanent injunction and damages.
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In China, questions relating to both fact and law are examined by a collegiate bench. The collegiate bench consists of an odd number of members (normally three), who are usually judges. Although one or two people juries may also be included in a collegiate bench, they act as judges. In cases relating to complicated technical issues, there may be one additional technical investigation officer in the bench to help the judges’ understanding.
Trial flow – discovery, trial, witnesses, timing and cost
There is no discovery process in China. The burden of proof is normally on the side of the claimant. However, where the patent relates to a method for producing a new product, the burden of proof shifts to the defendant to prove that the method that it uses differs from the patented method if the patent owner can prove that the defendant is producing an identical product. In addition, for some evidence (eg, evidence of damage), the account books and materials relating to the infringement will often be under the control of the defendant; therefore, if the patent owner has provided initial evidence regarding the benefit obtained by the defendant, the court may order the defendant to surrender its account books and any relevant materials. If the defendant refuses without cogent reason, the court may determine the damages by reference to the patent owner’s evidence.
After exchanging the submissions of the plaintiff, defendant and any third party, a court hearing will be scheduled. Various categories of evidence can be used during trial, including (but not limited to) documentary evidence, material evidence and declaration of expert witnesses. When declaration is used, the expert witness must often attend the hearing and be cross-examined by the opposite parties.
According to legislation and judicial interpretation, first-instance trials should be concluded within six months for civil cases and three months for administrative cases. These time limits can be extended once or twice by permission of the superior court. However, many cases have been delayed due to a significant backlog in the courts. In addition, no time limit will be set if a foreign entity or individual is involved in the suit.
The costs involved in a trial vary greatly depending on the amount being claimed and the attorneys’ fees. Therefore, it is difficult to provide even a rough estimate.
Legal doctrines, available remedies and the appeals process
The doctrine of equivalents is applicable in China. If a feature is not identical to a feature in the patented claim, it will still be regarded as an equivalent feature if:
- it is implemented by substantially the same means;
- it realises substantially the same function and effect; and
- it is easily conceived without requiring creative labour from a person skilled in the art.
However, prosecution history estoppel and the disclosure-dedication rule are also recognised by Chinese courts. Through prosecution history estoppel, 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. Under the disclosure-dedication rule, subject matter that is disclosed in the description but not claimed in the patent is dedicated to the public.
In addition, according to judicial interpretations of the Supreme Court of China, the claim should be construed on consideration of the patent’s prosecution history, including:
- written materials submitted by the applicant or patent owner in the process of patent examination, re-examination and invalidation;
- the examination opinions of SIPO and the PRB;
- meeting records; and
- oral hearing minutes.
The prosecution history of the divisional application or parent application can also be considered in the construction of the claim.
According to legislation and judicial interpretation, second-instance trials should be concluded within three months for civil cases and two months for administrative cases. Other provisions on time limits are similar to those at first instance.
How are patents commercialised in your jurisdiction?
Patent working requirements and pharma-specific rules
According to the Patent Law, compulsory licences may be issued on request from other parties if the patent owner fails to practise the invention after a certain period from grant.
In addition, the government may issue compulsory licences to eligible local pharmaceuticals to produce generic versions of patented drugs during state emergencies, under unusual circumstances or in the interests of the public. In addition, local pharmaceuticals can apply to export these drugs to other countries under the treaties that China has joined.
However, no compulsory licence has ever issued in China so far.
Laws and rules applicable to licensing (including FRAND)
Patent law does not stipulate any other forms of licensing, other than the compulsory licensing discussed as above. The court may use FRAND terms in deciding the licensing fee for SEPs relating to telecoms. For example, the court may consider total control, anti-hold up and anti-royalty stacking rules. Cases relating to FRAND in China are relatively few. More mature practices may be expected in the future.
Inventor remuneration issues
According to Article 6 of the Patent Law, the right to apply for a service invention patent belongs to the company. After the application has been approved, the company is the patentee. An invention can be defined as a ‘service invention’ if it is made by a person in the execution of the tasks of the company to which they belong or by a person mainly using the material and technical means of the company.
Pursuant to Article 16 of the Patent Law, the party that is granted a patent right must award to the inventor of a service invention a reward and, on exploitation of the patented invention, must pay them a reasonable remuneration based on the extent of spreading and application, and the economic benefits yielded. The manner and amount of remuneration is further explained in Rules 76, 77 and 78 of the Implementing Regulations of the Patent Law. In addition, the company policy or the employment contract regarding the remuneration prevails over the statutory remuneration.