Much has been written about the Chint vs. Schneider case, in which a Chinese court awarded the largest ever amount of damages for a patent infringement lawsuit in China. The fact that this well-reported case was built upon a Chinese utility model patent certainly has aroused great interest in China's utility model patent system, especially among foreign entities. In fact, many overseas practitioners now actively promote obtaining utility model patents in China. In 2010, there was a 30 percent increase on the previous year in terms of the number of utility model patent applications filed by foreign entities in China. Nevertheless, due to differences in patent drafting and certain specific issues with respect to Chinese utility model patents, careful review of the PR C utility model patent application may be required if the application is based upon an earlier foreign patent application.
Utility model vs. in vention patent
There are two types of utility patents in China, namely, invention patents and utility model patents. Under the Chinese patent law, a utility model patent means new technical solutions proposed for the shape or structure of a product, or a combination thereof, which are fit for practical use. There are certain restrictions on a PRC utility model patent as compared to an invention patent. For example, a utility model patent has a relatively short protection period of 10 years, as compared to the 20 year term for an invention. Another example is that processes and composition of matter may not be the subject of a utility model patent, but may be the subject of an invention patent.
The most attractive factor in favor of utility model patents is that it they are generally issued much quicker than invention patents. This is because utility model patents undergo formal examination but do not undergo substantive examination. Even though this may result in a higher likelihood of staying the infringement proceeding (if the infringement action is based upon a utility model patent), time wise, a utility model patent may still offer a quicker patent protection as compared to an invention patent.
Furthermore, by their nature, utility model patents are expected to have a lower patentability standard ( ie inventiveness), than invention patents.
A second look at the PRC utility model patent
Nevertheless, due to the lack of substantive examination, PRC utility model patents may encounter some unexpected hurdles. Many practitioners assume that the formal examination of utility model patents is limited to purely formal matters, such as submission of power of attorney and priority documents. While this is generally the case for invention patents, for utility model patents, formal examination can be rather strict. In particular, the examiner may examine a few issues that would be considered during the substantive examination phase for an invention patent, such as clarity and lack of support. For example, one common issue for a utility model patent based on an earlier foreign application relates to the functional language set out in the claims. Bearing in mind that a PRC utility model patent only protects the shape and/or structure of a product, some patent examiners would consider functional language to relate to the product's functions, but not to its shape or structure. Official objections on such grounds would inevitably result in significant delays in the issuance of a utility model patent.
Another potential risk comes from the fact that the patentability of a utility model patent is not tested until its validity has been challenged. However, at the invalidation stage, the patent owner may make only very limited, if any, amendments to the claims to overcome the patentability challenges. This limitation certainly makes utility model patents more vulnerable to invalidation attacks, despite the fact that a relatively low inventiveness standard applies to utility model patents.
Conclusion
In many ways, the PRC utility model patent scheme can be beneficial to parties seeking patent protection in China. However, careful review of the application should be undertaken prior to filing to ensure that the application conforms to local practice and to confirm that the claims are well structured and crafted in anticipation of possible future invalidation challenges.
Partner Yan Zhao, based in Shanghai, specialises in patent prosecution and litigation work as well as other general IP work. He is admitted as a lawyer in China and New York and as a patent attorney in China and Singapore. You can reach him at yan.zhao@dlapiper.com
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