According to the latest data published by the World Intellectual Property Organization (WIPO), in 2020 the Chinese Patent Office was the office that received the most patent applications in the world, with 45.7% of the total.
Obtaining exclusivity over the use of an invention in a market with millions of people is business reason alone to internationalise protection in China, but it is not the only one. Today, the People’s Republic has already become one of the world leaders in R&D and international patent applications, which, together with its enormous production capacity, makes it a territory where industrial property (IP) must be protected from a strategic point of view.
In this article we explore the country’s patent system and analyse the many similarities and differences compared to what has been established in the West.
Protection of industrial property in China: late, but quickly evolving
We cannot possibly speak about IP in China without briefly reviewing its history. In the communist country, the first modern patent law entered into force in 1985, which is quite late if we compare it to other countries around the world. The main reason for such late regulation is that for many years prior to the opening up of China’s economy in 1978 and especially during the challenging years of the Cultural Revolution, inventions and the right to exploit them belonged to the State.
Despite the late entry into force of the first patent law, it has since evolved very quickly. In fact, to date the law has already been reformed four times. The most recent reform became effective on 1 June 2021, and it will be discussed later in this article.
Other aspects of IP in China have also evolved at this same rate. For example, the first judicial body specialised in IP was created in Beijing in 2014. Today, only seven years later, this Asian country already has 18 courts and 4 tribunals specialised in IP and, most importantly, a chamber of the Supreme Court that exclusively specialises in this matter. All this translates into administrative and judicial proceedings with much greater rigour and quality for companies that use the patent system.
Another highly visual diagnostic indicator is the evolution of the number of patent applications in China: the 1.3 million applications in 2019 is quite striking compared to the 300,000 applications in 2010. China is also the largest user of the PCT system with 68,720 applications in 2020, well above the USA (59,230) and Japan (50,520).
As can be seen, in the last ten years IP has been exploited in China and it is already recognised as one of the five jurisdictions of reference on this matter, along with the United States, Europe, Japan and Korea. China’s strong commitment to IP definitively breaks away from its questionable reputation of yesteryear.
Industrial property conventions and treaties
China is currently a signatory of the main IP agreements and treaties: the Paris Convention, the Patent Cooperation Treaty (PCT), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Budapest Treaty.
Hong Kong, Macau and Taiwan
It should also be noted that the Chinese patent application, despite having a registry that covers a market of more than one billion people, does not cover three areas of interest for its economic development:
- Hong Kong
- Macau
- Taiwan
Special care must be taken when providing patent protection in Taiwan. Although Hong Kong and Macau can be accessed through a simple extension (administrative procedure) of the Chinese patent application, this application cannot be extended to Taiwan, with the added drawback that Taiwan is not a signatory of the PCT. Therefore, if the Taiwanese market is commercially attractive and there is a desire to protect technology there, such protection must be applied for in this country within 12 months from the filing of the first registration of the patent family (which is usually a Spanish or European application). For example, Taiwan is a world leader in the field of semiconductors.
Terms of protection for Chinese patents and utility models
The term of a patent in China is, like in most countries, 20 years.
However, after the entry into force on 1 June 2021 of the fourth reform mentioned at the beginning of this article, two mechanisms can be applied to extend said term of the patent:
- Patent Term Adjustment (PTA): this applies to any invention regardless of the technical field. This mechanism compensates the applicant for delays in the patent granting procedure that are caused by the Patent Office. Once applied for, the Office can add the days it deems appropriate to the standard 20 years.
- Patent Term Extension (PTE): this is the equivalent to Supplementary Protection Certificates in Europe (SPC, or Certificados Complementarios de Protección or CCP in Spain). It applies to pharmaceutical inventions and its purpose is to compensate for the loss of monopoly time over an Active Pharmaceutical Ingredient (API) on the market which is caused by delays in the issuance of its market authorisation. With this mechanism, protection of the API subject of the patent can be extended to a maximum of 5 years. The patent can be for a product, method or medical use, always related to the API, and it must be the first time that said API has received market authorisation in this Asian country.
In China, like in Spain, there also exists the utility model and its use is very widespread. It also has a term of 10 years, does not cover methods, and like in Spain in the past, it protects engineering, but not science.
Processing times
It is very important to keep the processing times in mind so that an efficient strategy for protecting an invention can be implemented. The following table summarises the key deadlines in China.
There are two particular processing mechanisms in China that are not seen in other traditional jurisdictions of reference, such as Europe or the United States, and that are worth noting.
The first is the possibility of extending the deadline to enter the Chinese national phase from 30 to 32 months after the priority date by paying a small administrative fee. Since a national phase entry involves a good number of administrative procedures, including the filing of a Chinese translation of the patent text, this extension can be very helpful when a belated decision, due to business, financial, or other reasons, has been made to provide patent protection in China.
The second is the possibility of slowing down the processing both substantially and in a cost-effective way. There are cases in which this can be an extremely valuable strategic tool, primarily when the applicant does not have high hopes that a patent will be granted. In such cases, the legal uncertainty that an unresolved patent application (i.e., one that has not been granted or rejected) is a significant deterrent for third parties, since said third parties will not attempt to implement the invention subject of the patent application in the market until they have certain guarantees that the patent right will not be granted and, therefore, it will not be infringed. If all the available deceleration mechanisms mentioned above are applied, the applicant can easily find themselves eight years after the priority date without the Chinese Patent Office having resolved the case.
Notable substantive aspects of patentability in China
It is interesting to note here that the Chinese Patent Law, as far as its pre-grant practice is concerned, is modelled on the European Patent Convention. In fact, when the first patent law entered into force in 1985, an agreement was also established between the Chinese Office and the European Office according to which the Chinese examiners could be trained at the European Patent Office. Some 2,000 Chinese examiners took advantage of this opportunity.
We can thus affirm that, in substantive terms, and especially in relation to novelty and inventive step, the European practice and the Chinese practice are quite similar. Although there are slight variations in the areas of science which will be discussed later, the similarities in technical fields with a greater focus on engineering are remarkable. On the other hand, the inventive step analysis follows a scheme that is nearly the same as the European “problem-solution approach”, in which the technical effect discovered by the applicant (and with no other reason) assesses whether there is inventive step. In this regard, the Chinese practice is closer to the European practice than the American practice.
Where there is a discrepancy between the Chinese practice and the European or American practice is in the extent of generalisation of protection permissible. As is known, one of the tasks that a patent attorney has when drafting an application is to claim in a reasonably broad way the specific discovery obtained in the laboratory by the applicant, to thus try to maximise the scope of protection conferred by the future patent. Depending on the country, the extent of generalisation that is considered to be reasonable varies, and in China it is lower than the extent in Europe or the USA. Therefore, it is not uncommon for the Chinese patent to cover less subject matter in one same patent family than the corresponding registration in the aforementioned Western jurisdictions.
Medical and diagnostic uses
As for medical and diagnostic uses, in China the so-called Swiss format is followed; in other words, protection can be conferred to the use of a pharmaceutical ingredient for the manufacture of a product for a specific medical use, and not directly to the medical use of the pharmaceutical ingredient.
Let’s imagine that ibuprofen is already known, but we discover that it can be used to treat diabetes. In China, this new use could be protected with a claim such as “use of ibuprofen for the manufacture of a medicament for the treatment of diabetes”.
Although medical uses are protected by different wording in Europe and the USA, in essence the three jurisdictions allow protection to be conferred to the discovery of using a drug that is already known to fight a new disease.
That being said, the situation changes when the invention does not involve treating a new disease, but rather the so-called additional medical uses. Additional medical use refers to when a certain compound and its use in a specific disease are already known, and the invention relates to some other aspect such as, for example, the group of patients to be treated, the dosage regimen or, even more frequently, the route of administration of the drug.
In Europe and the USA, these inventions are patentable subject matter, but in China there is a subtle difference: for inventions of this type to be patentable, they must affect the manufacturing process, which makes sense if we consider what is ultimately being claimed.
This means that the final form of the product or medicament must be different. In the first two scenarios described above, it is likely that the drug administered with a new dosage regimen (e.g., three times a week) or to a new group or subgroup of patients (e.g., patients with a certain mutated gene) will not vary substantially with respect to the one previously used in the state of the art. In these cases, it will not be possible to obtain a patent in China. In the third scenario referred to above, there are more options for obtaining a patent since the change in the route of administration (e.g., oral administration vs. inhalation) usually entails an alteration in the form of the medicament.
Provision of post-filing experimental data
It is common to provide experimental data obtained after the patent application has been filed to defend its grant, especially in the scientific field. This matter is so important that it was one of the main points discussed in the Trade Agreement reached between China and the USA just before the pandemic.
The reason for this is that in China, historically, such post-filing data was not accepted or it was only accepted under very strict circumstances. Both China’s position, based on the obligation to have the patentable discovery and supporting evidence at the time of applying for a patent, and Europe or the USA’s position, which is more flexible with the applicant, are based on complex technical, legal and socio-political criteria that go beyond the scope of this article.
As a result of the aforementioned agreement between China and the USA, in January 2021 the Chinese Examination Guidelines were amended and the examiners were subsequently required to study additional trials so that the applicant can demonstrate descriptive sufficiency or inventive step. The wording of the Guidelines, however, cleverly gets around this obligation “imposed” by the Agreement and requires that the objective technical problem to which said new experimental data relates must be described very concisely in the original text. This requirement is, in practice, almost impossible to fulfil because at the time of filing the patent application, the researcher will not have been able to foresee this technical effect and, therefore, will not have been able to describe it.
As a point of comparison, the European Examination Guidelines state that the objective technical problem to which the new experimental data relates must be implicit or related to the technical problem suggested in the patent text.
Returning to the previous example, imagine that we discover that ibuprofen can be used to treat diabetes and the patent text only talks about this activity. In China, it will be virtually impossible to achieve patentability through trials filed a posteriori which demonstrate the lower toxicity of ibuprofen compared to related drugs, since the original patent text did not mention toxicity. In Europe, it would be possible to base patentability on the lower toxicity, since it is understood that pharmaceutical activity and toxicity are aspects that a person skilled in the art would always analyse in the context of a new medical use.
Ultimately, our recommendations for patent protection in China remain the same as always:
- include all possible trials in the original patent text; and
- at the time of drafting the text of the application, provide the patent attorney with whom you work with any indication of a technical advantage, offering as much detail as possible so that it can be reflected in the patent text.
Post-grant proceedings
Unlike Europe, China does not have an opposition proceeding before the Patent Office and another invalidity proceeding before the courts, but rather everything is unified under one single invalidity proceeding before the Re-Examination Panel of the Patent Office. This panel is an independent technical-judicial body, similar to the Board of Appeals of the European Patent Office. There is no time limit for starting the invalidity proceeding.
Another interesting aspect is that, unlike in Europe, it is very difficult for a patent holder to limit their own claims after the grant. The only way to limit these claims is when a third party initiates an invalidity proceeding against the patent, but the claims are only amended if it responds to an objection from the third party and only if it involves eliminating or combining the claims granted.
Therefore, even in this scenario, there is very limited room for manoeuvre.
Regarding the observations of third parties, they do exist in China, but only during the processing step and not after the grant. The objections, nevertheless, are not limited to certain pre-established patentability requirements like in other countries; instead, they can be brought against any aspect of the law that the third party believes is being violated.
Enforcing Chinese patents: is it hard to do?
We can certainly say that compensation for the infringement of third-party industrial property rights was inexpensive in the past. However, in recent years the possibilities of enforcing Chinese patents are similar to those of other Western jurisdictions.
For example, it is worth mentioning that compensation for the infringement of IP rights has grown exponentially in the last ten years and, moreover, calculating the compensation paid by offenders has also changed. Previously, to determine the amount of compensation, Chinese judges listened to the parties and made an estimate. However, nowadays the Chinese court system can require the alleged offender to undergo an accounting audit which will be used to assess the economic benefit that they have obtained and, if they refuse to do so, the position taken by the court will be to grant the compensation claimed by the patent holder.
We believe that both aspects overcome the old idea that applying for a Chinese patent is a waste of time because it is very difficult to enforce industrial property rights in that country. The truth is that China is no longer a country that copies others, but rather it carries out research and, moreover, it strives to be at the forefront of innovation. It knows that without a solid IP system it will never be able to achieve international recognition in this regard.
In short, taking into account the meteoric evolution of the Chinese IP system in the last decade, applying for a patent in this country is practically essential for many sectors.
