Utility models: searching questions

China has, historically, been comparatively weak in the fields of science and technology innovation, not least in the life sciences. The inventions and creations of many small and medium-sized enterprises were of a low standard technically, and the majority were of limited importance.

For this reason, the Patent Law of the People’s Republic of China provided for three different types of patent: invention patents, utility model patents and design patents.

Of these, the initial purpose of the utility model was to protect those small inventions and creations for a minimum of 10 years. Because innovation was comparatively weak, there was a lower standard for novelty and innovation than that set for an invention patent. An amendment to the Patent Law in 2008 raised the standard for novelty to the same level as for an invention patent, but for innovation the lower standard remained in place, as it does today.

Although chemical compositions or compounds as such are excluded from utility model protection, any new technical solution (including medical devices or products) relating to the shape, the structure or its combination can be subject-matter of a utility model according to Article 2 of the Chinese Patent Law.

Article 22 of the Chinese Patent Law provides that “creativity means that, compared with the existing technologies, the invention possesses prominent substantive features and indicates remarkable advancements, and the utility model possesses substantive features and indicates advancements”. Further, the State Intellectual Property Office (SIPO) of the People’s Republic of China’s guidelines state that the assessment of inventive step for utility models should differ from that for invention patents. For an invention, the examiner shall consider not only the technical field to which the invention belongs, but also the proximate or relevant technical fields, and those other technical fields in which the problem to be solved by the invention would prompt a person skilled in the art to look for technical means.

For a utility model, the examiner will normally focus on the technical field to which the utility model belongs (SIPO guidelines, Part IV, chapter 6-4). Also, with regard to the number of prior art references, two or more may be cited for assessment of the inventive step of an invention application, but only one or two may be cited for assessment of the inventive step of a utility model application.

The utility model has been heavily used by Chinese applicants since the establishment of the patent system almost three decades ago. Since then, the number of applications filed for the three types of patents has almost always been evenly distributed. According to Article 40 of the patent law, utility models and design patents must be granted immediately upon preliminary examination if no formal errors are found in the application.

By way of comparison, in Germany there is a limited number of utility models (61,311 invention applications were filed in 2012, while 15,491 utility model applications were filed). In China, there are more utility model applications than invention applications (in 2012, 652,777 invention applications and 740,290 utility model applications were filed). However, this picture looks totally different if we consider the applications filed by foreign companies. Whereas 117,464 invention applications (18.1 percent of the total invention applications filed in 2012) were filed by foreign companies, only 14,205 utility models were filed (0.9 percent of the total utility model applications filed in 2012). It seems that this strong IP tool in China is less well known and even less well used by foreign companies.

Misuse of the law

The legislator’s initial object of providing emerging Chinese enterprises with an incentive to invest in technical development, and the financial support provided in recent years for Chinese enterprises to file more patent applications, were both subject to abuse. Due to the mere formal examination of utility model applications and the lower standard for inventive step, it is very easy for a utility model to be granted, but rather difficult for it to be invalidated. Therefore, utility models became highly attractive to Chinese companies trying to block foreign competitors from doing business in China. Instead of being an incentive to small-scale innovation, utility models became an immoral, but unfortunately not illegal, business tool for many Chinese companies.

To control this abuse, SIPO is trying to reduce such ‘junk’ patents. One of the most recent efforts is the Order of the SIPO No. 67 published on November 6, 2013. This order relates to the amendments to the Guidelines for Patent Examination of which Part I, chapter 2 deals with the Preliminary Examination of Patent Applications for Utility Models.

Section 11 of Chapter 2 deals with the Examination in Accordance with Article 22.2. This section previously read: “In the preliminary examination, the examiner generally does not determine by search whether a utility model obviously lacks novelty, but may determine, based on the information concerning related prior art or conflicting applications obtained otherwise than by search, whether a utility model obviously lacks novelty.

“However, where an irregular application for a utility model is involved, such as an application obviously copying prior art or repeated submission of an application with substantially identical content, the examiner shall judge whether the utility model obviously lacks novelty depending on the reference document obtained through a search or information obtained through other approaches.”

In the amended guidelines, this section reads:

"Instead of being an incentive to small-scale innovation, utility models became an immoral, but unfortunately not illegal, business tool for many Chinese companies."

“In the preliminary examination, the examiner shall determine whether a utility model application obviously lacks novelty. The examiner shall determine, based on the information obtained concerning related prior art or conflicting applications to be examined, whether a utility model application obviously lacks novelty.”

The second sentence of Section 11 remains almost the same.

On comparing the former text with the current text of the guidelines, two differences should be noted. One is that, in the former text, the examiner generally does not—although he may—determine whether a utility model application obviously lacks novelty; in contrast, according to the new text, the examiner must determine whether a utility model application obviously lacks novelty. That means the examination of an obvious lack of novelty is now an obligation of the patent office and the examiners.

The second difference is that, according to the former text, the examiner is not permitted to perform a search when examining whether a utility model obviously lacks novelty. The current text, however, leaves this point open. While the former text explicitly stated “information concerning related prior art or conflicting applications obtained otherwise than by search”, the current text merely states “obtained”, without mentioning how the related information should be obtained.

Since the new amended guidelines entered into force only on October 15, 2013, there is not yet enough information to draw any conclusions concerning how the patent office will implement the new Section 11. Will the examiners be allowed or even prompted to conduct a search in order to examine whether a utility model application obviously lacks novelty? What is the role of “common knowledge” in an examination of obvious lack of novelty? In any case, it will be exciting to observe what kind of impact the new guidelines will have on junk utility model applications in China.

Wolfgang Bublak is of counsel in the Munich office of Bardehle Pagenberg. He can be contacted at: bublak@bardehle.de

Yingkun Brunner is a patent attorney at Bardehle Pagenberg. She can be contacted at: brunner@bardehle.de