Foreign filing licence

The new Chinese patent law prescribes that for any invention or utility model made in China, if a patent application in a foreign country is desired, an applicant must request and pass security examination before filing abroad. This is similar to the foreign filing licence provisions in the US. The Implementing Regulations further prescribe that it may take up to six months for a final decision on the request.

However, statistics published in China Intellectual Property News showed that the actual time taken by the China Intellectual Property Office (SIPO) to decide on a request for a foreign filing licence is much shorter than prescribed. Between October 1, 2009 and September 30, 2010, nearly 30,000 requests were processed, with an average of only two weeks from request to decision, and 99.83 percent of requests were approved; 0.16 percent of the requests were deemed to have not been filed due to formal defects and 0.01 percent were temporarily forbidden from filing abroad because the applicants had also requested the applications be processed confidentially due to a possible effect on national security.

In the above-mentioned 12-month period, 60 percent of applicants chose to request a foreign filing licence at the time of filing Chinese patent applications, of which 90 percent received approval, together with filing receipts issued a few days after filing. Ninety-three percent of the applicants that seek a foreign filing licence on or after filing patent applications are Chinese. Separate requests for a foreign filing licence without or before a Chinese filing account for only 1.2 percent of all the requests, and 75 percent are filed by foreign enterprises. The other 38.8 percent of requests for a foreign filing licence are filed as PCT applications, which are deemed to be requests for foreign filing licences.

SIPO may issue an office action asking the applicant to hold off from filing abroad as it needs more time to review the request. When an applicant receives such an office action, and subsequently is granted approval, SIPO takes an average of four weeks from the office action to the final decision.

So far, the foreign filing licence system has worked efficiently and it is reasonable to believe that this provision will be kept in place in future, as China sees this as an improvement and part of the internationalisation of its patent system.

Cross-straits IP agreement

Mainland China and Taiwan signed an agreement on June 29, 2010 on cross-straits intellectual property protection. According to the agreement, the two sides will mutually recognise priority rights on the basis of the first filing date for patents, trademarks and variety rights, and make relevant arrangements to protect them.

On November 22, 2010, SIPO started to accept patent applications from Taiwan applicants requesting priority based on existing Taiwan patent applications. The priority period is the same as that prescribed in the Paris Convention: 12 months for invention and utility model applications, and six months for industrial design applications. On the same day, the Chinese trademark office also started to accept trademark applications from Taiwan applicants based on existing Taiwan applications. The priority date for both patent and trademark applications must be on or after September 12, 2010—the effective date of the agreement on cross-straits intellectual property protection.

This agreement aims to bolster creativity and innovation on both sides of the straits.

All-China Patent Strategy

Two years after the publication of the Outline of National Intellectual Property Strategy (outline), SIPO issued the All-China Patent Strategy 2011-2020 (patent strategy) on November 11, 2010. The patent strategy is designed to improve the nation’s core competitiveness by utilising the patent system and patent resources.

First of all, the patent strategy recognises the significance of the patent regime to economic and technological development. The patent strategy sees patented technology as a strategic resource for a nation’s core competitiveness and the patent system as an important tool for the worldwide industrial landscape. While recognising that the Chinese patent system has greatly improved in recent years, the patent strategy points out that the current patent system has not functioned well enough to promote the innovative ability of domestic industry. It has not linked well with the government’s economic and technology policies so as to formulate an effective incentive and protection system, which has resulted in a lack of core patents owned by domestic industry.

The patent strategy will help the nation to speed up changes to its domestic industrial structure and pattern of economic development so as to cope with worldwide economic and technological competition.

The patent strategy lists 12 strategic aspects of the patent regime’s development: including improving the patent legal system; creating patent-related policies; strengthening the local patent administrative system throughout the country; promoting the ability to create and utilise patents; improving patent examination and protection; setting up an intellectual property review mechanism; improving the distribution of patent information; speeding up the development of a patent-related services industry; building up strong teams of talent in the patent field; building a strong intellectual property culture; and improving international communication and co-operation.

According to the patent strategy, as part of the proposed improvement to the patent legal system, the provisions on inventor-employer relationships (so-called service inventions) will be reviewed to reasonably determine the ownership of patent rights. Research will be carried out on the feasibility of creating a separate law for industrial designs.

To fully use patents in national macro-economical policies, the patent strategy proposes to further improve the patent statistic index system and to introduce it into national economic and technology evaluation system.

The patent strategy proposes to further strengthen the power of administrative offices by authorising county-level (one level below city-level) IP offices to do investigation and make rulings and giving local IP offices the right to enforce their rulings. Currently, only city and provincial IP offices have the power to investigate and rule.

The patent strategy further sets out specific quantitative targets for 2015 and 2020. Specifically, in 2015, the number of patent applications, including invention, utility model and industrial design, should reach two million, which is roughly twice the current figure. 2009 saw nearly 980,000 such applications, and it is reasonable to believe that the figure in 2010 will be higher. Further, the patent strategy says that, in 2015, both the number of patents per million people and the number of patent filings abroad should be twice the current figures and, by 2020, four times the current figures. The plan is for 8 percent of large domestic industrial enterprises to be using the patent system by 2015 and 10 percent by 2020. China aims to be in the top two countries internationally for granting invention patents to domestic applicants by 2015; the monetary value of patent transactions would be Rmb100 billion ($15 billion) by then.

Examination times will come down too: by 2015, substantive examination will be shortened to 22 months for invention applications from the current 25.8 months and to three months for utility model and design applications from the current 5.8 and 5.5 months respectively. The re-examination procedure and the invalidation procedure are to be shortened to 12 months and six months respectively, from the current 7.4 months. With the implementation of an electronic examination system (e-system), many utility model and design applications are already granted roughly three months after filing.

In terms of manpower, by 2015, the number of examiners will reach 9,000, while there will be 10,000 qualified patent attorneys.

Experience shows that once specific numerical goals are determined, they will be achieved. Although it is almost inevitable that government and enterprises may have to do things just to make up the numbers, this exercise will no doubt force the domestic enterprises to become more sophisticated in terms of procurement and enforcement of patents, which will eventually lead to improvement.

It may be years before we see Chinese enterprises own patents on core technologies; however, China’s move towards becoming a true IP giant is unstoppable.