10 Advantages Of Chinese Utility Model Patents.

18 July, 2016

 

Many countries have a system for the protection of minor inventions including Australia, Germany, Japan and Korea. In China, this has been implemented via the patent law through utility model patents. Although the system is intended to protect relatively small advances over existing technology, utility model patents can actually be an important weapon in a company’s arsenal since they are quick and easy to obtain but carry the same remedies as invention patents, including substantial fines and injunctions. However, as with design patents, although utility models have been extremely popular with domestic applicants, they have been sorely neglected by foreign applicants. According to SIPO, of the 1,127,577 utility model patent applications in China in 2015, only 7,863 were filed by foreign applicants.

 

Many foreign businesses are not familiar with the utility model patent system or are suspicious of the real value of a utility model patent registration. Whilst it is understandable that there are concerns about abuse of the system by domestic applicants and the enforceability of utility model patents, there is no doubt that if used properly, utility model patents can be an effective and valuable part of a company’s patent portfolio.

 

The Advantages

 

1. The speed and simplicity of registration

 

There is no substantive examination which means that if there are no formality objections, the registration of a utility model patent can proceed to grant within 6-12 months, compared with the 2-5 years that it can take for an invention patent to issue. This quick file-to-grant cycle makes the regime ideal for products that will be entering the market quickly.

 

2. Perfect for products with a short commercial life or lesser inventions 

 

The shorter term of protection is suitable for manufacturers with wide product ranges with short life-cycles. Utility model patents are particularly well suited to protecting improvements or adaptions of existing products which may not necessarily satisfy the requirements for obtaining an invention patent.

 

3. Lower requirement for inventive step

 

Although the novelty requirement is the same, the standard of inventive step required for a utility model is lower than for an invention patent. For a utility model, the invention must possess “a substantive feature and indicates an advancement”, which is in contrast to an invention patent which requires “a prominent substantive feature and indicates remarkable advancements”.

 

4. Cheaper than invention patent applications

 

Maintenance costs are also lower.

 

5. Suitable for SME’s

 

It can be a useful tool for emerging SME’s with less sophisticated technology to build a portfolio quickly and cheaply.

 

6. Prompt enforcement

 

Rapid registration means the possibility of prompt enforcement against infringement which is critical if a product launch is imminent, or in industries with constantly evolving product lines, or products that may be easily copied/reverse-engineered.

 

7. More enforcement venue options

 

A utility model patent is enforceable in both administrative and civil proceedings.

 

8. Dual-filing system

 

It is possible to file an invention patent application and a utility model patent application simultaneously for the same subject matter. The utility model patent will normally be granted quickly. If the invention patent is subsequently granted for the same subject matter, the applicant will then have to abandon the utility model patent for obtaining grant of the invention patent. The patent owner can enjoy the benefits of the fast issuance of the utility model patent, as well as the advantage of the longer term protection of the invention patent.

 

9. More difficult to invalidate

 

The lower inventiveness requirement means that utility model patents may be easier to register but at the same time, they can actually be more difficult to invalidate than an invention patent.

 

10. Utility model patents can be really effective

 

The protection granted is the same as invention patents since it allows the right holder to prevent others from commercially using the protected invention without authorization. The basis for claiming damages for infringement is also the same. It should be remembered that the famous Chint v Schneider case in 2007, which was widely reported because the Chinese plaintiff was awarded around US$45 million damages for patent infringement against the French defendant, was based on a utility model patent.

 

Conclusion

 

The Chinese utility model system is one of the most used avenues of protection under the Patent Law. Its popularity is a doubleedged sword and the debate over the quality of Chinese utility model patents is likely to continue. In the meantime, whilst there is clearly still a lot of room for improving the system, if used carefully, a utility model can be a very useful right either alone, or to complement an invention patent.

 

Also, given the number of utility model patents filed in China annually, the growing challenge for foreign companies may not be that Chinese companies will infringe the foreign companies’ IP but that the foreign companies will infringe Chinese-owned IP. Therefore, it is important for companies to understand the strengths and weaknesses of the system and to build their own utility model portfolios.

 

It is crucial to have a thorough understanding of the system in order to devise an appropriate filing strategy. For example, China has strict double patenting provisions and filing restrictions on national phase entry via the PCT. An applicant wishing to obtain patent protection in China based on a PCT application must choose either an invention patent or a utility model patent application, but not both, at the time of national phase entry. An applicant wishing to pursue both a utility model patent and an invention patent for the same invention, may consider bypassing the PCT route and file utility model patent and invention patent applications on the same day, and claim priority from the same priority applications. A holistic approach would be required prior to the convention deadline in order to achieve the best protection.