With a population of 1.3 billion, China is the world's second-largest economy and represents an exciting developing global market. International entities are increasingly establishing a footing in the Chinese market, as evidenced by the number of Chinese patent applications filed by non-Chinese foreign entities. Last year, a total of 148,187 invention patent applications were filed by foreign entities, which is about 10% of the total number of invention patent applications filed in China. In the same year, 7,260 applications for utility models were filed by foreign entities, which is just less than 0.5% of the total number of utility model applications filed in China. Compared to invention patents, utility models are massively under-utilized in China by foreign entities and therefore present an opportunity for foreign entities to better protect their IP in China.

What Are Utility Models?

Similar to Australia, Germany, Japan and Korea, China offers three types of patent rights: invention, utility model and design. A utility model is sometimes referred to as a "small invention" in China because it involves a lower level of inventiveness, has a shorter term of protection, and costs less to acquire than an invention patent. Because utility models are not available in North America, many Canadian companies are unfamiliar with them, and may not even know that such protection exists.

A utility model protects any new technical solution relating to the shape of a product, structure of a product, or a combination thereof, which is fit for practical use. In other words, utility models do not protect (i) merely decorative features, (ii) compositions of matter, (iii) methods, processes or improvements in such, or (iv) a product with an unfixed shape, for example materials in powdered or liquid state.

The term of protection for utility models is 10 years.

Utility models are typically issued without substantive examination. However, substantive examination is important to creating enforceable IP rights. Substantive examination can be requested by the owner of a utility model or any interested third party after the utility model is registered. During substantive examination, the Chinese National Intellectual Property Administration conducts prior art searches and issues a patent evaluation report analyzing whether the issued utility model is valid. Such a patent evaluation report may be required by the People's Court or the IP Administrative Authority as evidence in a utility model infringement lawsuit. Additionally, to block the export of potentially infringing products abroad, the patentee needs to record the relevant utility model and its corresponding patent evaluation report with the Chinese General Administration of Customs.

What Are Some Advantages of Utility Models?

a) Useful for Inventions with Marginal Inventiveness

Utility models can be particularly useful for inventions with marginal inventiveness, where invention patents may be unavailable or difficult to obtain.

A utility model requires a relatively lower level of inventiveness than an invention patent. Chinese patent law defines "inventiveness" in the context of an invention patent as "the invention has prominent substantive features and represents a notable progress". In contrast, "inventiveness" in the context of a utility model is defined as "the utility model has substantive features and represents progress", thereby only requiring merely some degree of progress over the prior art.

Utility model and invention patent applications can be filed for the same invention. As discussed above, a utility model is typically obtained without substantive examination and it provides enforceable IP rights (subject to substantive examination prior to successful enforcement). This can be especially helpful if an invention patent application does not mature into a granted patent after substantive examination for lack of inventiveness.

b) Less Expensive to Prosecute and Quicker to Obtain

Utility models can also be useful where there is no significant budget for a Chinese invention patent application and/or where IP rights need to be quickly obtained.

Utility model applications are less expensive to prosecute and proceed more quickly to grant than invention patent applications. Chinese patent law does not require substantive examination of utility model applications before they proceed to grant. This allows the cost of substantive examination to be deferred until such later time as it becomes desirable to enforce rights in the utility model, for example once it is known that the utility model is valuable.

However, a utility model is not merely a formal registration and the application undergoes a preliminary examination during which formality and claim language, among other things, are examined. It is not atypical for a utility model application to receive an office action. Nonetheless, utility models can be obtained quickly, i.e. typically within one year. A utility model can provide quick, short term IP protection in China to prevent competitive manufacturing during the time when a corresponding invention patent application for the same invention remains pending, which is typically two to three years.

c) Longer Protection

When both utility model and invention patent applications are filed for the same invention, the relatively quick time from filing to grant of a utility model combined with the longer-term of an invention patent (20 years) leads to an extended period of protection as compared to filing for either type of protection alone.

When both utility model and invention patent applications are filed for the same invention, the utility model application usually proceeds to grant first. When the invention patent application later proceeds to grant, the utility model must be abandoned and the invention patent will continue to protect the claimed invention, thereby leading to an extended period of protection than relying solely on an invention patent.

To view the full article please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.