Utility Models: Latest Developments

There are three main types of patents in China: utility model, invention and design. 

Initially utility model regime was brought as an alternative solution to innovations that are small in term of technological improvement and have a short life cycle.  Nevertheless, it becomes an important part of the Chinese patent system and is welcome particularly by small and medium-sized enterprises (SMEs) due to its significant role in product development, protection and commercialization. Now, the government authorities also acknowledge the utility model’s strong presence. For example, utility model patents held by an enterprise are taken into account when evaluating whether the enterprise can be classified as high-tech enterprise, to therefore enjoy preferential policies. The China Patent Awards organized by the State Intellectual Property Office (SIPO) and the World Intellectual Property Organization (WIPO) has setup an award category specifically for utility models.

With the sharp growth of China's utility model applications in recent years, the number of new filings reaches 868,000 in 2014[i], which is estimated to account for about 80% of the world's total.

Chinese patent law developments

The Chinese utility model regime is established in 1984 when the Chinese Patent Law was first legislated. At the time, the protection term of a utility model patent was five years and can be extended for another three years.

Then, in 1992, the first amendment of the Patent Law extends the protection term of utility models to ten years and abolished the renewal procedure for the patent.

In 2000, the second amendment of the Patent Law introduced some new operations in utility model practice, such as, post-grant search reports to helps determine novelty, inventiveness and applicability of a utility model patent, and juridical remedy procedures regarding ownership disputes of patent applicants or patentees and others.

In 2008, the third amendment of the Patent Law further strengthened the operation and protection of utility models. For example, 1) at filing, based on the same inventive-creation, a utility model and an invention applications can be filed in parallel on the same day; 2) at examination, the quality of utility model patent is emphasized by the further-disciplined preliminary examination; 3) the utility model search report was replaced by a patent evaluation report, which can be used as evidence or may be required by courts for patent infringement litigation cases; and 4) a prior art defense system was also introduced in patent infringement litigations.

Basics

Under the provisions of the Patent Law, utility model refers to any new technical solution relating to the shape, the structure, or their combination, of a product, which is fit for practical use.

Therefore, all processes, methods and uses are not patentable subject matters under utility model patents. Additionally, any matter that exists naturally and is not made by man, and any compound, composition, medicine, or chemical material that has no certain shape (for instance gas, solid, powder, particle) is not patentable subject matters under utility model patents.

For utility models, a preliminary examination will be carried out, and if there is no ground for rejection, patents can be granted. There is no substantive examination procedure.

Generally, it takes about six to twelve months from filing a utility model application to obtaining the patent certificate.

The duration of patent rights for a utility model is ten years, counted from the date of filing.

Filing schemes

A utility model patent application in China can be filed directly or by entering the Patent Cooperation Treaty (PCT) international application into the Chinese national phase as a utility model patent application. 

After filing, a utility model application cannot be converted into an invention application during its prosecution or by filing a divisional application. However, the dual or parallel filing of applications for invention and utility models is possible.

Applications for parallel filing must relate to the same invention-creation, and both invention and utility model patent applications must be filed by the same applicant on the same day, and each must indicate the other application in the filing request. Then, before the invention patent is granted, the applicant must abandon the utility model patent to avoid double patenting. This option is beneficial for seeking protection for important products of higher inventiveness, through which the applicant may obtain a quick protection through utility model patent (after about six month to one year) and a long-term protection through invention patent (twenty years). However, please note that parallel filing can be applied to Paris Convention filing only. It is not available via PCT route even if the PCT application and the Chinese utility model application are filed with SIPO on the same day.

Utility model examination

Preliminary examination practice has been applied under the Patent Examination Guidelines (PEG) since February 2010. Before February 2010, examinations were mainly carried out on the formality of documents and application procedures, prohibitive rules on non-patentable subject matters, unity, amendments and non-patentable subject matter of utility model patents. According to 2010 PEG, however, examiners generally determine, without conducting a search, whether a utility model obviously lacks novelty based on the obtained information of related prior art or conflicting applications (section11, chapter 2, part I). In practice, the obtained information includes contents under background in the description of the application, and information or search report submitted with the application (for example an international search report for a PCT application entered into Chinese national phase as utility model application). Therefore, examination on novelty is still limited.

Decree 67

On October 15 2013, SIPO promulgates Decree 67[ii] revising the PEG and applies new regulations on utility model examination.

The new regulations apply higher standards for novelty examination on utility model applications by deleting the previous term “without conducting search”. Accordingly, examiners may, depending on the obtained information of prior art or conflict applications, examine whether the patent application for a utility model obviously lacks novelty. 

This change is in response to the concerns both in China and aboard about the quality of utility model patents, and seeks to enhance the quality of utility model patents and avoid granting patent for utility models that obviously lack novelty.

The new regulations also enhance the examination on double patenting by deleting “without conducting search” in the PEG, to try to avoid possible double-patenting caused by not requiring a search as in the past.

However, SIPO still does not conduct examination on the inventiveness.

After the implementing of Decree 67, examiners have indeed issued more office actions than before the fourth quarter of 2013. Among all the office actions, two types are more frequently seen than others: novelty-related (technical features all or partly disclosed) and subject matter-related.

When the examiner points out a utility model claim obviously lacks novelty, the applicant should first check if the cited reference is an eligible reference, and find out the differences between each technical feature of the reference and each technical feature of the claim. Such differences should not be direct replacements of conventional means in the art.

In practice, the examiner usually points out that the technical features of the reference correspond to the technical features of the claim, even though the corresponding technical features of the utility model claim are different to the technical features of the reference. Therefore, the applicant should look carefully at the different technical features and refute the examiner’s opinions one by one. If there are also differences on technical field, technical problem to be solved and the technical effects, the applicant should also point out these differences and refute the examiners’ opinions correspondingly.

For technical features that have not been disclosed by the reference, examiners will generally state that they belong to conventional technical means. If the undisclosed technical features are not conventional technical means in the art, the applicant should refute them with well-directed response and ask the examiner to provide evidence for what were considered as conventional technical means.

In subject matter-related office actions, the examiner usually points out that the product claim actually relates to an improvement of a method per se. For example, some module functions in a product structure need to be implemented by using computer software while hardware acts only as a carrier, which is not in conformity with the provisions of Article 2.3 of the Patent Law, and does not belong to the patentable subject matters of utility model patent.

Examiners generally consider features related to computer programs and data processing and controlling (such as transmitting and receiving) as a software-related feature. However, some processing and controlling can be achieved completely by hardware circuits or through hardware circuits. In such circumstances, the applicant should give a corresponding explanation in the description, so as to avoid the misunderstanding or misjudgment of examiners. The explanation will also help when responding to future office actions.

If the apparatus or device involved in technical scheme of the claim needs the running of a computer program, but the function realized already exists, or involves method features but the method features are prior art (that is, no improvement is made for the computer program itself or the method) such situation can be explained in the response to the office action.

If the apparatus or device involved in technical scheme of the claim does involve method (or computer program) features that are novel and inventive, the applicant should file an invention application to seek the protection but not utility model application.

Nevertheless, the applicant should note that whether in the description or in the responses to the office action, once the applicant admits that certain technical features are prior art, they cannot renege on this recognition in later procedures and say the features are not prior art.

Further, it should also be noted that, when intentionally making limitations to the structure of a product to avoid certain issues, the applicant should consider whether in future enforcement and protection, the limitative content also limits the protection scope. This May leave grounds for possible infringers to claim no infringement has occurred.

Invalidation and enforcement

After the grant of a utility model patent, one can challenge the patent by the invalidation process before the Patent Reexamination Board (PRB).

It generally takes about one year for the PRB to make its decision. Both parties can file an administrative lawsuit against such decision.

Further it generally takes about one year for the court of first instance (trial court) court to make a judgment, and if an appeal is filed, it takes another year for the court of second instance (appellate court) to make the final judgment.

For a utility model patent, without a patentee’s authorization, no entity or individual may exploit the patent (to manufacture, use, offer to sell, sell of or import of the patented product, for production or business purposes).

The patentee can enforce its patent in both administrative and legal channels against patent infringement.

- For administrative actions, the patentee of the utility model patent is usually asked to present the patent evaluation report made by SIPO to the competent administrative authority to uphold the validity of the utility model patent, before the authority takes any action.

- For legal proceedings, the court may ask for SIPO’s patent evaluation report m to ascertain validity of the patent. However, if the utility model is under invalidation proceedings, the court may stay for the PRB’s decision to proceed, but the court may not stay if evidence submitted by both parties can sufficiently prove the validity or invalidity.

The utility model patent regime has made remarkable achievements in China over the past thirty years. We have no doubt that it will continue to improve and strive to better serve the needs of the country's economic and social developments and capacity for innovative.

[i] http://www.sipo.gov.cn/jldzz/scy/zyjh/201501/t20150126_1067036.html

[ii] http://www.sipo.gov.cn/zwgg/jl/201311/t20131106_876947.html

This article is first published on China IP Focus 2015 published by Managing Intellectual Property.