Utility Model Patent system in China and relevant IP strategy
- Invention patents protect inventions, which provide any new technical solution relating to a product, a process or improvement with practical applicability. They provide 20-year protection from date of filing and are subject to substantive examination.
- Utility model patents protect any new technical solution relating to the shape, the structure, or any combination, of a product which is fit for practical use. They provide 10-year protection from date of filing and are not subject to substantive examination.
- Design patents protect any new external features of a product fit for industrial application including the shape, pattern, color or any combination thereof, which creates an aesthetic feeling and is fit for Intellectual Asset management. They provide 10-year protection from date of filing.
The utility model patent system is less common than invention patents, although still widespread in over 70 patent issuing authorities. China’s Patent Law is modelled to certain extent on that of Germany. For product inventions, it provides for utility model patents as well as invention patents. Utility model patents are inexpensive to apply for, are not substantively examined, have lower thresholds for inventiveness, are registered quickly (often nine and 12 months from filing, as opposed to the typical three to four years it takes for invention patents) and enjoy a presumption of validity that makes them hard to ignore. Utility model patents have real significance in China. One well-known case is Chint V. Schneider Electric, which French electrical company Schneider Electric was ordered to pay its Chinese rival Chint Group 333 million yuan (about $45 million U.S.) in damages for infringement of a Chinese utility model patent.
There is however tremendous disparity between the filing rates for foreign and domestic companies for utility model patents in China. According to statistics from State Intellectual Property Office (SIPO), in 2010, Chinese applicants filed 407,238 (99.4%) utility model applications while foreign applicants only filed 2,598 (0.6%). The accumulative numbers from April 1985 to December 2010 are respectively 2,397,523 (99.3%) and 16,801 (0.7%). A possible explanation is that foreign applicants from countries where no utility model system exists, e.g. the U.S., may not be familiar with it. In addition, the uncertainty of the validity of utility models makes it a second tier patent devalued by some practitioners. There may be many reasons for the disparity, but when considering the benefits of utility model patents (many) against the burdens (few), it is clear that foreign businesses are a long way behind the curve in this crucial area. The simple fact is that foreign companies should seriously consider filing utility model patent applications in China for all their significant product developments.
Furthermore, patent law in China allows applicants to file applications for both an invention patent and a utility model patent in respect of the same invention at the same time, a recommended strategy is to file both a utility model patent and an invention patent simultaneously to benefit from the speedy granting of the utility model patent, which can then be abandoned in favor of the longer protection of the invention patent when that eventually grants.
In past 20 years, Israeli entities filed 5,999 invention patent applications in China and only 211 utility model patents. Before 2010, the application of Chinese Utility model from Israel is less than 5 per year. There have been significant increase since 2010 (Fig. 1). The applications are mainly related to the controlling or regulating systems, radiators or aerials for microwave heating et al (Fig. 2).
In summary, utility model patents can be effective, low-cost tool for protecting innovation in China. For foreign companies just starting their business in China, utility model patents are useful for build a patent portfolio quickly and inexpensively. Israeli companies may want to reassess their filing strategies in China and change their thinking of utility model patents.