Chinese intellectual property circumstances (Part 1)

May 23, 2003
HARAKENZO World Patent & Trademark Patent Law Firm
Mitsutoshi HIRATA
Patent Department General manager, & Foreign Department General manager

China became a full member of World Trade Organization (WTO) on December 1, 2001. This showed that China had been steadily creating the framework of a nation to make its huge market open to the world and enter the competitive economic society based on the common rule of global standard.
Various features including a huge market, the great work force, high competence to learn techniques, and low personnel expenses have been attracting companies of all over the world and causing a big wave of foray into Chinese market. In the middle of this wave of foray, nearly 14,000 Japanese companies indeed have expanded into China.
Competition among the companies for acquisition of the Chinese market will be getting harder and harder. Every company has noticed that it is important to take part in the competition with a tactful plan for obtaining intellectual property rights in China in order to come out a winner.
This article is intended to provide one side of the Chinese intellectual property circumstances by approaching some topics concerning the intellectual property in China.

1. The change in Chinese patent systems 1950
"Interim Regulations concerning Protection of Patents and Inventions" was put into force.
Only a total of four patents and six invention certificates were granted before the Interim Regulations concerning Protection of Patents and Inventions were fade out.

1963
"Regulations concerning Awards for Inventions" was put into force.
In this system, an inventor is granted an inventor's certificate and a reward of maximum 10,000 yuan (13 years' worth of wage of the time for an employee working in a heavy industry).
Although it came under criticism in China's Cultural
Revolution and "Regulations concerning Awards for Inventions" was kept in abeyance, it is said that it played a sufficient role as means for promoting technical development in China.

December 1978
Guidelines for vitalizing domestic economy and opening Chinese market to foreign countries were determined (The third national convention of Chinese Communist Party of the eleventh term).
This was an epoch-making event for introducing the principle of competition.

March 12, 1984
The Chinese Patent Law was enacted.
(The second meeting of board of officers at the sixth nationwide representative conference)
The patent system was positioned as an essential system for promoting introduction of technique from abroad.

April 1, 1985
Chinese Patent Law entered into force.

September 1992
The first amendment to Chinese Patent Law was made.

January 1, 1994
China became a member state of the Patent Cooperation Treaty (PCT).
State Intellectual Property Office of the People's Republic of China (SIPO) began to serve as the Receiving Office, International Searching Authority and International Preliminary Examining Authority.

August 25, 2000
The second amendment to Chinese Patent Law was made.

July 1, 2001
The second revised Chinese Patent Law entered into force.

December 1, 2001
China became the 143rd member of WTO.

The official name of Chinese Patent Law Patent
Law of the People's Republic of China
Inventions, utility models, and designs are included in the word "patent".
The concept of the word "patent" is the closest to the word "patent" in the US Patent Law, which protects both inventions and designs.

2. Model Law of Chinese Patent Law (1)
The model law of Chinese Patent Law is the laws of former West Germany, as is the case of Japan.
Former West Germany greatly supported an establishment of patent systems, inviting 20 Chinese to West Germany each year and training them as Patent Specialists at national budget.
These trained people have occupied the main positions in the Patent Office of the People's Republic of China (renamed to State Intellectual Property Office of the People's Republic of China in 1998) and so on since the enforcement of Chinese Patent Law.

3. Change in patent applications for patents in China (2)
In the year 1985, when Chinese Patent Law was enforced, 14,372 patent applications were received. According to the statistics of the year 2001,a total number of domestic and foreign applications received in China exceeded 200,000. Patent rights were granted to more than 114,000 out of those applications.
The number of court cases concerning patent rights received from 1985 to 2000 by courts of all levels was up to 10,000 and 90 percent of them were completed.
As mentioned above, the protection of intellectual property by Chinese patent systems has been developed steadily under the principle of equivalent for Chinese and foreign people. However, domestic industries in China are in trouble taking disadvantage against their foreign counterparts, although this is something expected.
For instance, the number of patent applications filed in China by Japanese major electronic companies has far exceeded 2,000, which is the number of Chinese patent applications filed in foreign countries, and reached more than double of the number in recent 10 years.
Further, 70%, 61%, 87% of patent applications received by China between 1994 and 1998 in the fields of computer, medicine, and biology, respectively were filed by foreign applicants.
Facing this, Bureau of Chinese intellectual property started up "Patent strategy promoting project" in 2002 and began instructional supports for developing ability to use patent system and to protect patent rights and trainings of specialist of patent strategy.

4. Particulars of Chinese Patent system (3)
Three main principles of Chinese Patent Law are "Right (right to obtain a patent belongs to an inventor)", "First to file system", and "Substantive examination system" and these are common to Japanese Patent Law in principle. Particulars that should be notified on planning patent strategy in China are referred to hereinafter.
(1) Handling inventions completed in China (3)
(i) Where any Chinese entity or individual intends to file an application in a foreign country for a patent for invention-creation made in China, it or he shall file first an application for patent with the Patent Administration Department under the State Council (an upper organization of the Patent Office of the People's Republic of China), appoint a patent agency designated by the said department (equivalent to a patent firm in Japan) to act as its or his agent (Article 20, Chinese Patent Law).
Accordingly, an application should be filed in China first for an invention completed by Chinese employees employed by Japanese local corporation or an invention completed by a local corporation which is authorized concerning technical developments.
Meaning of "entity" in Article 6 of Chinese Patent Law Article 6 "... For a service intention-creation, the right to apply for a patent belongs to the entity. ..."
Although Japanese counterparts for "entity" include corporation, organization, entity, group, none of them means "entity" exactly. The word "entity" is defined as "an organization or group, or each department belonging to one organization or group" in "Modern Chinese Dictionary" (4).
*A former regulations stating that in the case a patent application is filed for an invention completed in China, a Chinese entity or individual should file a patent application for the invention with National Patent Administration Department was deleted in the second amended law enforced on July 1, 2001 in order to simplify the procedures.
(ii) Any assignment, by a Chinese entity or individual, of the right to apply for a patent, or of the patent right, to a foreigner must be approved by the competent department concerned of the State Council(Article 10, Chinese Patent Law).
(2) Applying more than one patent applications for an invention and for a utility model (4)
In China, a patent application for an invention and a patent application for a utility model may be filed for an identical invention-creation.
However, for any identical invention-creation, only one patent right shall be granted (Rule 13, paragraph 1, Implementing Regulations). Therefore, the applicant who filed two or more applications for patent for the identical invention-creation shall receive an instruction from the Patent Administration Department under the State Council to select one patent application.
Where it is found after preliminary examination that there is no ground for rejection of the application for a patent for utility model or design in requirements for description of claims, requirements for laid-open of specification, definition match of utility model and so on, the patent administration department under the State Council shall make a decision to grant the patent right for utility model or the patent right for design, issue the relevant patent certificate, and register and announce it without examination as to patent requirements of novelty, inventiveness, and applicability (Article 40, Chinese Patent Law).
A period required for a utility model patent right to be granted is said to be about 9 to 10 months from filing date.
A utility model patent right remains in force for ten years from filing date.
Contrary to this, a period required for a patent application for invention to be granted is said to be about 3 to 4 years from filing of a request for substantive examination on average, and more than 6 years from filing of a request for substantive examination in the field of electronic technique.
In this circumstance, there is an opinion saying, "the effective way to protect inventions in China is to file both an invention patent application and a utility model patent application for one single invention and to obtain early protection of an invention by a utility model patent right that is granted without examination until an invention patent right is granted." (4) This seems to be worth considering.
It should be noted that method inventions, use inventions, articles having no defined forms are unprotected as utility model rights.
A search report system, which is equivalent to Written Technical Evaluation Report in Japan, was introduced in a revised law that took effect in 2001 for ensuring legal stability of the rights. It is important to take into consideration the use of this system.
It is not allowed to change the type of an application between an invention patent application and a utility model application.
(3) A filing date cannot be secured by filing applications in foreign languages (5).
Any document submitted to State Intellectual Property Office of the People's Republic of China shall be in Chinese (Rule 4, Implementing Regulations).
This means that it is impossible in China, unlike in Japan, to secure a fling date by filing applications in English.
Accordingly, a PCT application should be filed for securing a filing date when it is impossible to prepare applications in Chinese in time.
State Intellectual Property Office of the People's Republic of China serves as the Receiving Office and receives PCT applications in Chinese and in English.
(4) Limitations concerning timing and contents of amendments to patent applications
Limitations concerning timing and contents of amendments to patent applications were revised in the second revised Implementing Regulations that took effect on July 1, 2001.
The most outstanding difference made by the revision is that an amendment in a response to an office action issued after a substantive examination is limited to claims indicated by examiners.
This aims to prevent longitudinal examination period.
To minimize undesirable results caused by this revision, claims should be reviewed thoroughly with examination result etc. of corresponding foreign applications taken into consideration "within the time limit of three months after the receipt of the notification of the entry into examination as to substance of the application for a patent for invention" as stated in Rule 51 ‡@ of Implementing Regulations.
(Rule 51,Implementing Regulations)
(i) When a request for examination as to substance is made, and that, within the time limit of three months after the receipt of the notification of the Patent Administration Department under the State Council, the application has entered into examination as to substance, the applicant for a patent for invention may amend the application for a patent for invention on its or his own initiative.
(ii) Within two months from the date of filing, the applicant for a patent for utility model or design may amend the application for a patent for utility model or design on its or his own initiative.
(iii) Where the applicant amends the application after receiving the notification of opinions of the examination as to substance of the Patent Administration Department under the State Council, he or it shall make the amendment as required by the notification.
(iv) The Patent Administration Department under the State Council may, on its own initiative, correct the obvious clerical mistakes and symbol mistakes in the documents of application for a patent. Where the Patent Administration Department under the State Council corrects mistakes on its own initiative, it shall notify the applicant.
(5) Any person may request for trial for invalidation
(Article 45, Chinese Patent Law; Request for the Patent Reexamination Board)
Where, starting from the date of the announcement of the grant of the patent right by the patent administration department under the State Council, any entity or individual considers that the grant of the said patent right is not in conformity with the relevant provisions of this Law, it or he may request the Patent Reexamination Board to declare the patent right invalid.
Unlike in Japan where only interested parties are allowed to request for trial for invalidation, any person may request for trial for invalidation as stated in the above article in China. Accordingly, requesting trial for invalidation is easy to be employed and likely to play an effective strategic role.
Inventions, utility models, and designs are included in "patent right" stated in Article 45 of Chinese Patent Law.
The system of post-grant opposition was abolished in the second revised Patent Law that entered into force on July 1, 2001.

[Reference]
(1) Guidance of Patent System in China
written by Fumio Sato, published by Japan Institute of Invention and Innovation
(Hatsumei Kyokai)
(2) China became a member state of WTO by implementing its "Intellectual Property Strategy"
China Net 2002.03.15
(3) Protection of intellectual property in Asian countries -Asian super manual of intellectual property-
published by Institute of Intellectual Property
(4) Revised Chinese Patent Law for becoming a member state of WTO
written by Etsushi Kotani, published by Japan Institute of Invention and Innovation (Hatsumei Kyokai)
(5) Movement of intellectual property in China -Current transaction for obtaining patent rights in China after becoming a member state of WTO-
written by Tatsuya, Kansai patent information center promoting meeting news vol. 12