Despite the allures of the fast growing Chinese market, issues of intellectual property theft and enforcement remain a critical concern for foreign investors. Since China entered the World Trade Organization, the Chinese government has made strides to strengthen its legal framework, and improve on intellectual property rights.
Focusing on patents, U.S. investors considering entering China should be aware of the patent system made available globally and through the Chinese state. Although there are substantial similarities between the U.S. and Chinese patent systems, here are some notable differences patent applicants should keep an eye out for.
Different from the U.S., China’s patent law has adopted an absolute novelty standard. Like many European countries that have adopted the same novelty standard, China requires absolute novelty of the invention before the filing date. This means that an applicant must keep the invention undisclosed to the public, both in China and globally, before filing the application. Whereas under the U.S. patent system, applicants are given a twelve-month grace period from the time of public disclosure (e.g., trade fairs and presentation) to the date of filing. This difference is important to remember during the early stages of research and development, and may play a role in deciding in which receiving country to file a patent application.
In China, there are two types of patent protection, invention patents and utility model patents (UMP). An applicant may file for both patent types for the same invention on the same filing date. The Chinese invention patent is equivalent to a U.S. utility patent. However, there is no U.S. equivalent to the UMP.
Each patent type has its benefits and drawbacks. With a UMP, the inventiveness requirements are lower than compared to an invention patent, and thus more difficult to invalidate. An invention patent, like its U.S. equivalent, provides a twenty-year term from the filing date and usually takes three to five years to grant. Whereas, a UMP provides only 10 years and takes only three to ten months to grant.
A UMP is more desirable for inventions that are lower in technology and have a shorter commercial life. Whereas Invention patents are better for inventions that require lengthier development times and that expect a longer commercial life. Applicants filing in China can enjoy the benefits of both patent types simultaneously by double patenting the same subject matter under each type.
In the U.S., the patent office examines a filed application once its turn comes up. Whereas in China, after an applicant files an invention patent, the applicant may request examination by the patent office within three years of filing. If no examination request is made within the three years, without legitimate reasons, the application will be deemed as withdrawn. So, applicants in China should be aware of this extra request step to avoid delays and potentially affecting intellectual property rights.
Photo credit: Economy of China Wikipedia