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Linda Liu & Partners

 
Utility model system, one of the important intellectual property systems, can be traced back to a century ago. Up until now, over sixty countries around the world have established utility model systems. Most of them require a utility model to refer to a novel and useful improvement on a shape or a configuration of a product or device, with differentiating characteristics. Since utility model system in China took effect, applications and patents for utility model have always been numerous, as acting as a noticeable role in encouraging invention-creations and promoting the development of science and technology. With the third amendments to the Chinese Patent Law, utility model-related provisions including those on an evaluation report on a utility model patent and “two applications for one invention-creation” have been perfected. Utility model system in China is drawing wider attention from Chinese and overseas applicants due to its short examination time requirement, low application fees and a high grant rate.

The following sections present an introduction to the characteristics of utility model system in China on the basis of relevant provisions in Chinese patent system. They also include some suggestions derived from our experiences, which we think may be helpful for readers to know and make use of the utility model system so as to benefit.
 
I. Brief introduction to utility model system in China

1. Briefing

Utility model system in China was set up concurrently with Chinese patent system in 1985, and decided by the imbalance in China’s economic development at the time. Although China consulted the relevant regulations of Germany and Japan, countries with established utility model or similar, in detailing its utility model system, utility model system in China has its own features. In the two decades the system has been in practice, an increasing number of applicants have benefited. It has also improved IP awareness, especially for individuals and small and medium-sized enterprises in China.

Through repeated amendments to the Patent Law, the system has been improved to adapt to China’s economic development. Meanwhile, utilization has also been developing rapidly.

2. Definition

It is stipulated in Rule 2.3 of the Patent Law that “utility model” means any new technical solution relating to the shape, structure, or combination thereof of a product, which is fit for practical use.

The shape of a product means a definite spatial shape observable externally. The structure refers to the internal structure of a product, namely, its constituent parts located in fixed spatial positions and connected to one another in a certain mode to constitute a whole.

Since only products having a definite shape are protected by utility model patents and the inventiveness requirement for utility model patents is lower than that for invention patents, utility models are sometimes referred to as “small inventions”.

3. Examination

In China, a utility model application only needs to go through a preliminary examination. Specifically, a utility model application is granted a patent right so long as its application document is complete, the formality requirements are met and there are no obvious substantive defects, without having to fulfill novelty, inventiveness and other patentability requirements. The preliminary examination of a utility model application, compared with the simple formality examination, ensures a certain level of quality and takes less time than a substantive examination of an invention application, so it achieves a balance between examination quality and speed.
 
II. Characteristics of utility model system in China

The table below shows the advantages of utility model system through a comparison between utility model and invention patents.
 

 

The following section elaborates on the above comparison.

1. Inventiveness requirement

There is a provision on the inventiveness requirement for utility model patents in chapter 6 of part IV of the SIPO’s Guidelines for Examination, which prescribes that the inventiveness requirement for a patent for utility model shall be lower than that for a patent for invention. The lower requirement is a result by the prior art taken into consideration and the number of the cited reference documents in the assessment of inventiveness. In other words, a technical solution low in inventiveness but different from the prior art in its technical features or effects may not fulfill the inventiveness requirement for invention patents but may fulfill the inventiveness requirement for utility model patents. Hence, for an invention-creation with low inventiveness to be protected by patent, the inventor can choose to apply for a utility model patent.

2. Protection term

The protection term of a utility model patent is relatively short. In light of the fact that a utility model patent usually protects an invention-creation with a short commercial lifetime and a low level of inventiveness, the protection term of 10 years should be sufficient to satisfy patentees’ needs.

3. Fees

The tables below show the typical fees for a utility model patent and an invention patent for prosecution and the grant of patents.

Invention patent


 

 

Utility model patent
 

 

As shown above, the cost of obtaining and maintaining a utility model patent is much lower than for an invention patent. With enterprises combating vigorous competition by reducing costs, it is strategic for them to apply for a utility model patent instead of an invention patent for an invention-creation.

4. Examination duration

As mentioned above, in China, a utility model application goes through a preliminary examination while an invention application is published at an early date but examined as to substance at a relatively later date. Apart from the time from filing to publication, it also takes a rather long time to complete the substantive examination of an invention application. In contrast, the examination duration for a utility model application is much shorter. For an applicant wishing to get a patent as soon as possible without the need of a long protection term, a utility model application is a more suitable choice.

5. Subject matters

An invention patent provides protection for both a product and a process, whereas a utility model patent only protects a product. That is to say, a utility model patent covers a smaller variety of subject matter. Thus, an applicant should select an appropriate type for his invention-creation and not blindly pursue the advantages of a utility model patent.

6. Right stability

Since a utility model patent is not subject to substantive examinations as to its novelty and inventiveness aspects, its stability is much lower than an invention patent despite being higher than a patent undergoing a simple formality examination. This can be seen from the fact that invalidation requests for utility model patents accounted for 50 % of all invalidation requests between 1986 and 2007 in China, compared to less than 30% for invention patents.

7. Feature summarization

As a result of the above, it is favorable for an applicant to apply for a utility model patent for an invention-creation that is low in inventiveness, has a short commercial lifetime and aims for a quick rights exercise. When confronted with current strong market competition, market preemption is important to all enterprises. By obtaining a utility model patent, an applicant can stay ahead of the game in publicizing his product, exposing consumers to their technology, preventing rivals from counterfeiting, etc. Utility model patents, as an IP strategy, are like the cornerstone of an enterprise’s competitiveness and ready for subsequent market development.

To fill in the gap between a utility model patent and an invention patent regarding rights stability, the applicant should attach importance to the first-phase preparation and the draft of the application document of a utility model application with a view of getting a patent with higher stability. The SIPO has always been active in improving the utility model system through amendments and other means discussed below.
 
III. First-phase preparation and draft of the application document

Although less time is needed for the examination of a utility model application and a patent can be readily obtained after the preliminary examination, applying for a utility model patent is by no means an easy job. On the contrary, we have found from our experiences that peculiar difficulties exist in applying for a utility model patent in comparison to an invention patent if the applicant wants to have a right with high stability and practical value.

According to the Implementing Regulations of the Chinese Patent Law, the sole opportunity for voluntary amendments to a utility model application is within 2 months after the filing date. This means that unlike an invention application, a utility model patent cannot be revised several times by replying to office actions. Thus, substantive and formal defects which may affect the stability of a utility model patent must be eliminated before filing the application. To this end, the applicant should undertake the following measures to the best of his ability:

(1) Perform a sufficient prior art search and analysis himself or through a competent organization so as to ensure novelty and a certain degree of inventiveness of the utility model patent;

(2) Guarantee high-level translations of the application document with respect to technology and law to eliminate mistranslation; and

(3) Try to discover all substantive and formal defects in the application document prior to filing the application, including subject matters excluded from patentability, insufficient disclosure of the description, claim’s lack of support by the description and ambiguity of claims. This measure decreases the possibility of notifications issued such as notifications of rectification and office actions, thereby helping the applicant reduce the time and money spent and ultimately strengthening the stability of the patent.

Our firm has rich experiences and unique methods in dealing with utility model applications. In addition to offering high-level retrieval and translation services, we have created Confirmation Sheets for Assessing and Amending Utility Model Applications which are specially used for communication with clients before filing utility model applications in order to ensure quality. In using such sheets, our attorneys will check the application document of a utility model application item by item, discuss with the applicant upon finding defects and amend the application document accordingly. In this way, defects that could possibly affect the stability of a patent are eliminated before the filing date, so that the applicant receives a relatively stable patent right, can fully exercise a patent right as forceful as an invention patent and gain strong defense power in potential lawsuits.

We enclose herein the aforementioned sheets for the readers’ reference only. Any comments on the sheets are more than welcome.
 
IV. The system of two applications for one invention-creation

“Two applications for one invention-creation” means one invention application and one utility model application are filed with the SIPO for the same invention-creation. This system is established in consideration of China’s reality and the applicant’s actual needs and has been improved as the Patent Law had been amended several times. Under this system, if the invention application meets the patentability requirements and the applicant has received a utility model patent for the same invention-creation, the applicant can obtain an invention patent by abandoning the utility model patent or obtain two patents by amending the invention patent application to the extent that it is different from the utility model patent in terms of the scope of protection.

The system is beneficial to applicants in need of obtaining patents for important technological achievements and bringing them to market as early as possible while still receiving long term patent protection. Applicants can take advantage of the system by protecting the achievements in the short term through a utility model patent, abandoning the utility model patent at the time when an invention patent is to be granted, and protecting the achievements in a long term through the invention patent. On the other hand, different technologies may be renewed at different speeds, and the market can only determine the importance of some technologies and the time when they will be obsolete. In other words, it is impossible to determine the protection term for the technologies before patent applications are filed. In that case, the applicant can use the strategy of “two applications for one invention-creation”, and create a synthetic option with a precise target after the market competition decides the viability of the technology, in order to reduce the enterprise’s high expenditure incurred by IP rights protection.

With the third amendments to the Chinese Patent Law, the provisions regarding the system of “two applications for one invention-creation” have become more reasonable, thereby solving many practical problems. The amendments involve the following:

1. Filing date

To solve the problem double patenting leading to a total protection term of more than 20 years, which is caused by the original provisions, it is stipulated in Article 9 of the Patent Law that where the same applicant applies for both a patent for invention and a patent for utility model for the same invention-creation, both applications must be filed on the same date. Thus, under the provision, the applicant should take care to notify the agency of such situations so that it can take coordination and monitoring measures to guarantee simultaneous submission of the two applications.

2. Declaration at the time of filing

To facilitate the subsequent examination as to double patenting, it is stipulated in Rule 41 of the Implementing Regulations of the Chinese Patent Law that the applicant shall declare that it is applying for both an invention and utility patent in each application. This way, the examiner will be aware of the utility model application when he is about to grant the patent right to the invention. If he finds that the utility model patent has been granted and the patent is still valid, he will ask the applicant to file a declaration to abandon the utility model patent or to amend the invention application in such a way that its claims cover a different scope of protection from that of the utility model patent. Otherwise, no patent will be granted for the invention. Because of this stipulation, double patenting will be avoided to the utmost extent.

It is to be noted that only when the applicant has made the respective declarations when filing the applications can the invention be patented by abandoning the utility model patent. For this reason, an applicant entrusting a patent agency should let the patent agency know the “two applications for one invention-creation” situation so that it can prepare declaration documents.

3. Announcement of the declaration

To make the “two applications for one invention-creation” situation known to the public, it is stipulated in Rule 41 of the Implementing Regulations of the Chinese Patent Law that the declaration filed with the utility model application shall be announced along with the announcement of the grant of the utility model patent.

4. Effect of an abandonment declaration

Before the third amendments, the utility model patent was deemed to be abandoned from its filing date when the invention patent is granted. This means that the utility model patent was deemed to be non-existent from the beginning. The consequence of this was equivalent to the invalidation of the prior patent which caused problems concerning how to treat remaining valid rights relevant to the utility model right, such as an exploitation fee. To solve such problems, Rule 41 stipulates that the utility model patent shall be abandoned as of the date when the grant of the invention patent is announced, and the abandonment of the utility model patent shall be announced along with the announcement of the grant of an invention patent.

This provision fills the gap between the abandonment of the utility model patent and the grant of the invention patent. In practice, an applicant shall have correct knowledge of the valid periods for the utility model and the invention in order to exercise his rights in the proper periods.

5. Another condition for abandoning a utility model patent for the purpose of obtaining an invention patent

To ensure the public’s right to know the status of a patent of interest and the public’s benefits against impairment, the Patent Law stipulates that “the previously granted utility model patent has not expired” as one more condition for the grant of a patent for the subsequent invention. In practice this means that if an applicant files an invention patent and a utility model patent for an identical invention-creation on the same day and the utility model patent expires before the invention patent is granted, the applicant will not be able to obtain an invention patent for the identical invention-creation. Hence, the applicant must ensure that the utility model patent is invalid before the grant of the invention patent.

It is suggested that an applicant apply the system of “two applications for one invention-creation” to his practical cases, thereby reducing fees (including only filing fees and a service fee for the utility model application (because no additional translation fee is incurred by the same specification) while enjoying the advantages of both a utility model patent and an invention patent.

V. Evaluation report on a utility patent right

In China, merely conducting a preliminary examination of utility model applications is a reasonable approach considering the large amount of applications that are filed. However, this results in low stability of utility model patents, and thus may cause complications to the exercise of the patent rights and judicial procedures. Previously, a utility model patent without sufficient stability generally had a low economical value. At that time, a court handling cases regarding utility model patent infringement usually had to suspend the trial, waiting for the Patent Reexamination Board’s decision on the validity of the utility model patents, which severely dampened the court’s work efficiency.

Following practices of foreign countries, the provision on furnishment of a search report on a utility model patent right was added to the Patent Law in the second amendments to the Patent Law in 2001. This provision allows a people’s court or an administrative authority for patent affairs to ask the patentee to furnish a search report made by the SIPO in handling cases regarding utility model patent infringement. However, the search report related only to the assessment on novelty and inventiveness and had no explicit legal force, and thus failed to raise the stability of utility model patent rights resulting from the absence of substantive examination.

To address the above problems, the third amendments to the Patent Law renamed the search report as an “evaluation report on a patent right” and augmented its contents to include not only an assessment on whether the utility model is novel and involves an inventive step but also a comprehensive analysis and evaluation of whether it fulfills other substantive patentability requirements. To be specific, an evaluation report on a utility model patent right covers all of the grounds for invalidation (including novelty, inventiveness and other substantive patentability conditions such as whether the description sufficiently discloses the invention-creation, whether the claims are supported by the description and whether amendments go beyond the scope) except for those regarding the secrecy examination as provided for in Article 20.1.

The prevailing Patent Law clarifies the nature and legal force of an evaluation report on a patent right. That is, it can be used as evidence for a court trial and the handling of patent infringement disputes. During the practical trial and handling of a patent infringement dispute, an evaluation report serves to help the court estimate the stability of the patent right in order to decide whether to suspend the relevant proceedings if the alleged infringer has made a request for invalidating the patent. If the report concludes that the patent right does not meet the patentability requirements, and the alleged infringer makes a request for invalidating the patent within the lawsuit defense time limit, the court will suspend the lawsuit or the handling of the infringement dispute and wait for the result from the invalidation proceedings. On the other hand, if the report concludes that the patent right does not violate the patentability requirements, that is, the patent right is relatively stable, then the court will not likely suspend the lawsuit or the handling of the dispute even if the alleged infringer makes a request to invalidate the patent. This improves courts’ work efficiency and standardizes the exercise of utility model patent rights.

In addition to assisting courts in determining whether to suspend a lawsuit or the handling of an infringement dispute, an evaluation report on a patent right is able to (1) help the patentee recognize the legal stability of his patent right and avoid improperly exercising the patent right, thereby avoiding damage to the benefits; (2) help other entities or individuals recognize the legal stability of a relevant patent for a utility model and avoid a fruitless exchange, such as signing an assignment contract or a license contract, accepting a patent right as capital stock, etc., thereby safeguarding against damages to the interests of the public.

An evaluation report is placed in the patent file wrapper to serve as evidence for the public to refer to freely and only one evaluation report is made for one patent right, so the patentee should be cautious in requesting the SIPO to make an evaluation report. It is better for the requester to invite a professional agency to make a “pre-evaluation report” which can give a comprehensive and objective evaluation on the patent right and predict unfavorable factors that may potentially appear in a future evaluation report, serving as grounds for the patentee to decide whether to request the SIPO to make an evaluation report.

In short, the current requirement for an evaluation report on a utility model patent right almost completely solves the problem that it is difficult to exercise a utility model patent right because of its low stability and now renders utility model patents exercisable rights of great value. In this sense, applicants, especially foreign applicants, can attach more importance to the utility model system and use it more effectively so as to gain more benefits by reducing costs.

VI. Conclusion

Utility model system in China has evident advantages after its deficiencies reduced by the several modifications in the amended Patent Law. The amended system consisting of a preliminary examination and an evaluation report retains advantages such as short examination duration, low fees and capability of providing protection to invention-creations with low inventiveness while significantly raising the legal stability of utility model patents and shortening the time taken by judicial judgments and invalidation proceedings concerning utility model patent infringement. As a result, the system achieves the goal of providing real protection to utility model patents under the Chinese Patent Law.

Alongside continuous adjustments according to practical problems, the utility model system will play a bigger role in Chinese patent system and display more vigor. Recently, some of our clients paid more attention to the system and applied for more utility model patents to meet their actual needs. Hopefully, more applicants, from home or abroad, will also make proper and full use of the system and benefit from after becoming more knowledgeable.

（2010）