1. Chinese Utility Model and Design Patents as Shields … and Swords Chinese Utility Model and Design Patents as Shields … and Swords Managing Intellectual Property Intellectual Property in China Thomas T. Moga May 2, 2013

2. Patents in China Chinese approach: Utility model first, then design, with invention patent Experienced Chinese applicants know that utility model and design patents are typically easier to obtain in China than elsewhere and can be granted for a broader variety of inventions Chinese approach: Utility model first, then design, with invention patent Experienced Chinese applicants know that utility model and design patents are typically easier to obtain in China than elsewhere and can be granted for a broader variety of inventions

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4. Patents in China Foreign, particularly US, approach: Invention patent first, then design, then, far behind, utility model Even experienced US applicants aren’t aware of flexibility of design patents in China and are even less familiar with utility models; but some of those who know about them are reluctant to use them Foreign, particularly US, approach: Invention patent first, then design, then, far behind, utility model Even experienced US applicants aren’t aware of flexibility of design patents in China and are even less familiar with utility models; but some of those who know about them are reluctant to use them

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6. Foreign Perspective: Utility Model vs. Invention While file a UMP application? Low cost Quick file-to-grant cycle May be suited for lower level invention (lower threshold for “inventive step”) Unlike Design patent, scope of protection is defined by claims, like an Invention patent Can be filed at same time with invention patent Overall allows for easy development of patent portfolio for cross-licensing and other commercial purposes While file a UMP application? Low cost Quick file-to-grant cycle May be suited for lower level invention (lower threshold for “inventive step”) Unlike Design patent, scope of protection is defined by claims, like an Invention patent Can be filed at same time with invention patent Overall allows for easy development of patent portfolio for cross-licensing and other commercial purposes

7. Foreign Perspective: Utility Model vs. Invention Why the US practitioner does not file a UMP application American practitioners unfamiliar with UMP Subject matter not suitable for product line of every American company (e.g., can’t be used to protect methods of producing pharmaceuticals) Short term is not suitable for product line “Productizing” invention doesn’t happen fast for all companies, so fast grant, short term isn’t justified Since is not substantively examined the American company doesn’t know how much the patent is worth Why the US practitioner does not file a UMP application American practitioners unfamiliar with UMP Subject matter not suitable for product line of every American company (e.g., can’t be used to protect methods of producing pharmaceuticals) Short term is not suitable for product line “Productizing” invention doesn’t happen fast for all companies, so fast grant, short term isn’t justified Since is not substantively examined the American company doesn’t know how much the patent is worth

8. No US Parallel to UMP But Advantages of UMP May Still be Achieved The US has a parallel with China’s Invention Patent (Utility Patent) and with China’s Design Patent –Main difference: Design patents in US are substantive examined, so pre-filing search is important The US has no parallel with China’s UMP –But measures can be taken to speed up prosecution and reduce costs Undertake proper pre-filing search Proper initial claim scope Interview – a matter of right The US has a parallel with China’s Invention Patent (Utility Patent) and with China’s Design Patent –Main difference: Design patents in US are substantive examined, so pre-filing search is important The US has no parallel with China’s UMP –But measures can be taken to speed up prosecution and reduce costs Undertake proper pre-filing search Proper initial claim scope Interview – a matter of right

9. Design Patents Design Patent Protection in China is: –Relatively inexpensive –Relatively easy to obtain –Relatively valuable Design Patent Protection in China is: –Relatively inexpensive –Relatively easy to obtain –Relatively valuable

10. What Is A Design Patent In China? Definition –A "design" in the Patent Law refers to "any new design of the shape, the pattern or their combination, or the combination of the color with the shape or pattern of a product which creates an aesthetic feeling and is fit for industrial application." (Rule 2, Implementing Regulations of the Patent Law of the People's Republic of China) Definition –A "design" in the Patent Law refers to "any new design of the shape, the pattern or their combination, or the combination of the color with the shape or pattern of a product which creates an aesthetic feeling and is fit for industrial application." (Rule 2, Implementing Regulations of the Patent Law of the People's Republic of China)

11. Why Are Foreign Design Patent Applicants So Far Behind? Inside information? –Experienced Chinese applicants file about ten times as many design patent applications in China compared with foreign applicants –They know that design patent protection is typically easier to obtain in China than elsewhere (e.g., the U.S.) and can be granted for a broader variety of inventions US design applications undergo substantive examination and may take 1 to 2 years Inside information? –Experienced Chinese applicants file about ten times as many design patent applications in China compared with foreign applicants –They know that design patent protection is typically easier to obtain in China than elsewhere (e.g., the U.S.) and can be granted for a broader variety of inventions US design applications undergo substantive examination and may take 1 to 2 years

12. Differences Between Chinese and Foreign Design Patent Prosecution Ease of registration –In China, "[a]ny design for which patent right may be granted must not be identical with and similar to any design which, before the date of filing, has been publicly disclosed in publications in this country or abroad or has been publicly used in this country…" (Article 23, the Patent Law of the People's Republic of China) Ease of registration –In China, "[a]ny design for which patent right may be granted must not be identical with and similar to any design which, before the date of filing, has been publicly disclosed in publications in this country or abroad or has been publicly used in this country…" (Article 23, the Patent Law of the People's Republic of China)

13. Differences Between Chinese and Foreign Design Patent Prosecution Ease of registration (continued) –Given grant without substantive examination, China's system for granting design patents is closer in practice to the system of copyright registration in the U.S. Ease of registration (continued) –Given grant without substantive examination, China's system for granting design patents is closer in practice to the system of copyright registration in the U.S.

14. Differences Between Chinese and Foreign Design Patent Prosecution Greater variety of inventions covered –Foreign applicants are constrained by their own experiences and, as a result, anticipate not only large prosecution bills but also limitations on what can be protected –Thus, design patent protection in the U.S. is limited to protecting a thing having an ornamental appearance (that is, the design elements must be ornamental and not functional) Greater variety of inventions covered –Foreign applicants are constrained by their own experiences and, as a result, anticipate not only large prosecution bills but also limitations on what can be protected –Thus, design patent protection in the U.S. is limited to protecting a thing having an ornamental appearance (that is, the design elements must be ornamental and not functional)

15. Differences Between Chinese and Foreign Design Patent Prosecution Greater variety of inventions covered (continued) –In China, the range of items that have received registrations is broader and includes design patents granted on vehicle exhaust systems, alternators, electrical components, and gear boxes These "design inventions" would not be good candidates for patent protection in, for example, the US Greater variety of inventions covered (continued) –In China, the range of items that have received registrations is broader and includes design patents granted on vehicle exhaust systems, alternators, electrical components, and gear boxes These "design inventions" would not be good candidates for patent protection in, for example, the US

16. Differences Between Chinese and Foreign Design Patent Prosecution –Advantages High speed grant, generally in a few months As the design patent is based on drawings and since there is no substantive examination the cost can be very low May offer wider spectrum of coverage than design practice in the US Again, allows for easy development of patent portfolio –Advantages High speed grant, generally in a few months As the design patent is based on drawings and since there is no substantive examination the cost can be very low May offer wider spectrum of coverage than design practice in the US Again, allows for easy development of patent portfolio

17. Differences Between Chinese and Foreign Design Patent Prosecution –Disadvantages American practitioners familiar with design patents (based on US experience) but not with Chinese practice (low cost, broader coverage of designs) Confusion remains as to drawing requirements (line vs. CAD vs. photos); more than inconvenient, can be fatal Confusion remains as how much “function” can be represented in design Enforcement requires “exact copy” and is thus frustrating to rights holders Registering with Customs Office is itself inadequate - must register with Evaluation Report from SIPO –Disadvantages American practitioners familiar with design patents (based on US experience) but not with Chinese practice (low cost, broader coverage of designs) Confusion remains as to drawing requirements (line vs. CAD vs. photos); more than inconvenient, can be fatal Confusion remains as how much “function” can be represented in design Enforcement requires “exact copy” and is thus frustrating to rights holders Registering with Customs Office is itself inadequate - must register with Evaluation Report from SIPO

18. THANK YOU ! E-Mail: tmoga@shb.com Phone: 001-202-639-5622 E-Mail: tmoga@shb.com Phone: 001-202-639-5622