In the past year, there were many changes in Chinese law and practice relating to IP protection, especially for patent section. Such changes involved not only prosecution of patent applications but also enforcement of patent right. It is recommended that a company should take into account these changes when making IP strategies.
★ Changes in Prosecution and Coping Strategies
Previously, an Invention application is usually examined at latest around four years from the priority date, and a Design application is examined around six months from the filing date. Pursuant to the 328th announcement concerning amendments to “Guidelines for Patent Examination”that took effect on 1 November 2019, an applicant may request the China National Intellectual Property Administration (“CNIPA”) to defer examination of invention and design applications by one, two, or three years. It is strongly recommended to request for deferred examination if a company needs extended time to tailor arrangement and protection scope of claims or to make preparation for manufacturing a product incorporating a patented design. Especially for the latter, since a design is very easily copied, it is necessary to keep the design unknown to the public before your product is put into market. Thus whether to request for deferred examination and the term to be deferred should be carefully considered. This may prevent infringement from taking place at an earlier time. It should be noted that the request for deferred examination shall be submitted at the time of filing a request for substantive examination (Invention) or of filing an application (Design).
With the technology developments in terms of artificial intelligence (AI), internet plus, big data, block chain, etc., keeping pace with the times, the CNIPA further amended “Guidelines for Patent Examination” by promulgating the 343th announcement which took effect on 1 February 2020. According to the amended Guidelines, an invention containing algorithm features or business rule and method features may be protected by the Chinese Patent Law if it solves at least one technical problem by use of at least one technical means and achieves at least one technical effect. Accordingly, in the priority application documents, it is essential to describe how technical features and algorithm features or business rule and method features functionally work together as a whole, which constitute technical means to solve a technical problem, i.e. how the both kinds of features support each other in function sand what the interactions between the features are. For example, for an invention relating to AI, when algorithm features are involved, it should combine the abstract algorithm with a specific technical field. In particular, it should describe the process of combination to the extent that the technical features and algorithm features may be considered as a whole when evaluating inventiveness of an invention, not merely mention the applicable technical field. In other words, as demonstrated in the foregoing example, at least one input parameters and a corresponding output outcome should correlate with specific data in a technical field. Furthermore, beneficial effects should be described in the specification, such as improvement on quality, precision, efficiency, or system internal performance. If the invention improves users’ experience objectively, it should demonstrate how improvement is caused by interaction of both the technical features and algorithm features. Correspondingly, claims should comprise technical features and algorithm features that support functionally and interact with the technical features. Adopting this approach, a company may avoid in conformity to Article 2 of the Chinese Patent Law when filing an invention application with claiming priority from an earlier foreign application. In other word, no matter whether the invention application is filed as the same as the priority application or to make amendments to claims based on the priority application, the subject matter of the posterior Chinese application is always patent able.
★ Taking Full Advantage of Patent System
Since past years, Patent Prosecution Highway (PPH) pilot program has been launched between the CNIPA and the patent offices of the countries or regions listed in the following table 1 respectively.
【Table 1】: countries and regions cooperated with China on PPH pilot programs:
Notably, there are three types of patent application in China, i.e. Invention (being equivalent to Patent Application in Europe or Utility in US), Utility Model, and Design. The following table 2 shows the numbers of each type of applications respectively filed by domestic and foreign enterprises and individuals in 2019.Up to date, there are 28 patent offices cooperating with the CNIPA on PPH pilot program. However, in practice, only few foreign applicants have submitted PPH requests in patent prosecution in China. Companies are strongly recommended to take into account PPH pilot program when making IP strategies. If any counterpart application before any above-listed patent offices is allowed prior to examination of the Chinese patent application, and if the protection scope of the allowed claims is appropriate, it will be valuable to request for the use of PPH. First, the procedures for filing the PPH request are relatively simple, thus less time is consumed. This may reduce attorney costs significantly, especially for those applications that would be subject to multiple rounds of office actions and replies if no PPH request is filed. Second, PPH makes grant of the Chinese patent easier and more quickly. As a result, a company may enjoy patent right at an earlier time, so as to beat the possible copy rats at the very beginning to safeguard the rights and interests of the patentee or the licensee.
【Table 2】: Statistics on Applications from Home and Abroad (citation: http://english.cnipa.gov.cn/statistics/2019/201912/1146705.htm)
In 2019, the foreign applicants filed 157,093 Invention applications and 8,425 Utility Model applications, but those filed by domestic applicants are 1,243,568 and 2,259,765 respectively. For Utility Model, the number of applications filed by foreign applicants only accounts for 0.4% and the ratio between invention and utility applications filed by foreign applicants is around 19:1. This shows that fewer foreign applicants make use of utility model system to protect their technologies, which may be caused by the perception that the level of innovation in utility model patents is relatively low. However, it is not helpful to stick to this misperception and to ignore benefits provided by utility model system. In China, inventions mean new technical solutions proposed for a product, a process or the improvement thereof, and utility models mean new technical solutions proposed for the shape, structure, or their combination, of a product. If a technical scheme meets both criteria of an invention and utility model, it is highly recommended to file patent applications for both invention and utility model simultaneously for the technical scheme. Although the term of a utility model patent is only 10 years which is much shorter than that of invention patent, utility model has the following advantages: 1) unlike an invention patent, substantive examination will not be required in respect of an application for utility model. As a result, the entire examination will typically take 6-10 months, which means that a utility model patent may be granted easier and much faster. Thus, companies may enjoy patent rights at an earlier time. Even though it needs two months to obtain patent evaluation report for enforcement, the total time spent is much less than that of Invention patent, which may be 2-4 years; 2) the criteria in relation to inventiveness of an utility model patent is lower than that of an invention. This means that, for a same technical scheme, the stability of utility model patent right is greater than that of invention. In other words, it is more difficult to invalidate a utility model patent than an invention patent. This is beneficial to protect the relevant technology. If the counterpart invention patent is granted at a later time, the applicant may abandon utility model patent and maintain the invention patent only. Even if the application for an invention patent is rejected, utility model patent may not be invalidated due to use of the prior references cited in the invention application as the criteria with regard to inventiveness are different.
★ Changes in Enforcement and Coping Strategies
On 14 November 2019, the CNIPA issued the Notice Concerning Model Creation of Administrative Adjudication on Patent Infringement Disputes, by which local IP administrative authorities are required to push model creation work of administrative adjudication so as to make administrative adjudication play an important role in settlement of patent infringement disputes. Pursuant to the Notice, administrative adjudication on patent infringement should be enhanced by publicizing the advantages, efficacy, and typical cases in connection with administrative adjudication of patent infringement, encouraging and guiding the relevant right holder to resolve patent infringement disputes by administrative adjudication, and introducing new methods in the procedure of administrative adjudication. For example, for design or utility model patent infringement case in which the petitioner has submitted a patent evaluation report at the time of filing the case, based on statements and cross-examination of evidences by the parties involved, the relevant administrative authority may handle the case by examining the records without hearing. Besides, for a case with sufficient preparation before hearing and comprehensive evidence collections, it is encouraged to pronounce a judgement immediately following oral hearing. Further, it is encouraged to employ professional technicians to take part in trial of case by assisting in ascertaining technical facts and providing consulting opinions. If a request for invalidation has been filed in connection with the involved patent, the relevant local IP administrative authority may contact the Reexamination and Invalidation Examination Division of the CNIPA to perform a joint trial. Therefore, the procedure of administrative adjudication and the procedure of invalidation of the patent may be eventually merged. It is seen that, in the future, patent infringement disputes will be settled in a more convenient and cost effective fashion through administrative adjudication.
In my opinion, if the primary purpose is to stop patent infringement earlier without focusing on potential damages (usually limited), and if the determination of infringement is relatively direct without need of special experiment analysis, administrative adjudication should be a preferred way to resolve patent infringement dispute, especially when the infringer is located in a developed province, as the local IP administrative authorities of developed provinces have rich experiences in handling patent infringement cases. Also, a patent examination collaboration center is established in such provinces as Beijing, Tianjin, Guangdong, Jiangsu, Hubei, Sichuan, and Henan to assume responsibility of patent examination. As a result, local IP administrative authorities may easily and conveniently access to the examiners in such center as technical and IP professionals for their consultancy in order to ascertain technical facts and make an accurate determination. This may significantly reduce possibility of a lawsuit brought to court by the involved parties, and the dispute may be resolved in one proceeding.
However, if one of the purposes is to obtain payment of damages, it is advisable to settle patent infringement disputes by court proceedings. Although local IP administrative authorities may make mediation on damages according to the Guidelines for Administrative Mediation of Patent Disputes issued by CNIPA in July of 2020, depending on our experiences, it is very difficult for concerned parties to reach consensus on damages by mediation, especially when the infringer is a small entity or an individual.
In general, the Chinese IP system is developing. For an international company, it is not sufficient to develop an IP strategy for China solely from its own perspective. Rather, it needs to consider carefully the ongoing changes in China’s IP system as they have an impact on a valid IP strategy.