Despite recent headlines emphasizing "nearshoring" and long-term demographic issues, China remains a manufacturing powerhouse and a large market. In view of this, non-Chinese companies commonly partner with Chinese companies to manufacture products for worldwide distribution and to gain access to the Chinese market. Often, those non-Chinese companies find that their IP is misappropriated in various ways relatively shortly after entering the Chinese market. For example, their products may be counterfeited, and malicious actors may even apply to patent those products in China for themselves.

Standard utility patent protection may not be well suited to address these problems given its cost to prepare, file and prosecute, in addition to the length of time it can take to grant. China offers a second type of patent protection, the utility model, which can be used to offset some of the shortcomings of its better-known sibling, the utility patent.

Characteristics of Chinese utility models

Like utility patents, utility models are a type of IP right that provide its owner with the right to exclude third parties from making, using and selling inventions. However, they are distinct from utility patents in several ways:

  • Utility models are directed primarily at mechanical inventions, in contrast to utility patents that can be used to protect mechanical as well as other types of inventions, such as methods and compounds.
  • While a utility patent takes on average two to three years from filing to grant, utility models typically grant six to 10 months from filing.
  • Prior to grant, an examiner's primary task in examining a utility model is to ensure that the utility model complies with the Chinese Patent Office's rules on format and form. While an examiner may conduct a prior art search during utility model examination, this is relatively rare. In contrast, utility patent applications are thoroughly vetted for novelty and inventiveness.
  • The inventiveness requirement for utility models is easier to satisfy than the analogous requirement for utility patents. Consequently, defendants typically need to show stronger evidence of obviousness to invalidate a utility model during litigation as compared to a utility patent. For example, it may be more difficult for a defendant to combine several references or rely on common general knowledge to invalidate a utility model.
  • The term of protection of a utility model is 10 years from filing, as opposed to 20 years for a utility patent.
  • Prior to enforcing a utility model, a court may require the plaintiff to obtain a positive opinion on the model's novelty and inventiveness from the Chinese Patent Office. This contrasts with a utility patent, which is enforceable without further examination from grant.

Using utility models strategically

Compared to utility patents, utility models offer mechanical subject matter a form of patent protection that is relatively quick and easy to obtain and that may be more difficult to invalidate.

One strategy for leveraging Chinese utility models is to file one as or shortly after the first filing for an invention. For example, commonly companies file a US provisional application to obtain priority rights, subsequently file a Patent Cooperation Treaty (PCT) application to reserve international rights, and from the PCT application file a Chinese utility patent application to obtain enforceable Chinese rights. This typically results in a delay of at least three to four years from the first filing to enforceable Chinese patent protection. During this period, a nefarious actor may counterfeit the invention or attempt to patent the invention themselves.

Filing a utility model application as or shortly after the first filing may help to mitigate these risks. Instead of waiting three to four years for Chinese patent protection, an applicant will likely be able to get some form of patent protection within six to 10 months. The utility model's claims can be drafted relatively narrowly to lower the likelihood of substantive examination prior to grant, and to increase the likelihood that the claims will be found inventive should the model be enforced. A pending utility model application may also be found by a Chinese patent examiner should a third party attempt to patent the applicant's invention in China in bad faith. The applicant can still file a Chinese utility patent application, such as a national phase application, with a broader and more comprehensive set of claims in due course. Should the utility patent application grant, the applicant can surrender the utility model application to avoid double patenting. Consequently, a company can use a utility model application as a backstop while pursuing broader, more comprehensive utility patent protection.

Conclusion

Companies making or selling mechanical inventions in China often fall victim to third parties who may make counterfeit products for the Chinese market or even attempt to patent the companies' inventions for themselves in China. Utility models, strategically applied, are well suited to mitigating these risks.

Read the original article on GowlingWLG.com.

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