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China and patents II

Written by Tim Mount on 13 October 2008

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China’s combination of the ‘utility model’ patent system - where applications can be granted in under a year giving monopoly protection for 10 years – and a first-to-file approach to inventorship, creates some unfortunate consequences.

As utility model applications receive little to no investigation, search or examination, being assessed for formalities alone the obvious outcome of the above situation is that patents are granted to non-inventors. Say for example that an UK inventor were to obtain patent protection in the UK for an invention but due to low initial start-up funds, fail to file in China. A Chinese company could then easily file for a utility model patent for that invention in China in its own name. Once this has been granted, the Chinese company has monopoly rights to the invention in China, and is even able to exclude the inventor from the Chinese market.

China has a somewhat archaic court system, where for instance all documents used in court must be originals (no emails) and all documents to be used as evidence must be formally notarised. But most importantly the burden of proof lies with the party alleging irregularity. A granted patent is presumed to be valid as in many other systems. Unfortunately this presumption is allied with the less stringent to non-existent examination procedures related to utility model and design patents.

Ways to alleviate or attempt to avoid such problems without filing in China mostly revolve around any Chinese parties the inventor or commercialising company deal with. In the presence of contractual relationships, the Chinese company can be in a sense co-opted to provide protection for the invention and inventor. For example, the contract should definitely stipulate that the Chinese company is unable to file at SIPA for a utility model patent. Or is to police the filing by other companies at SIPA.

It may be possible to prevent others gaining monopoly protection for your invention but it is still the case that the traditional Chinese attitude towards intellectual property is not the same as in the West. Xingguo Fu, the director of the World Trade Organisation’s affairs at the Chinese Ministry of Commerce, admits that there are difficulties. “In China, there is an old proverb that says it is not a crime to steal a book because the dissemination of knowledge is for the good”.

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