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CNIPA’s draft Patent Examination Guidelines – what is coming down the pipeline?

This article originally appeared in IAM here.

By Aaron Wininger, Austin Chang and Carol Wininger

On 3 August 2021 the China National Intellectual Property Administration (CNIPA) released its Draft Revised Patent Examination Guidelines. These update CNIPA’s current guidelines based on the newly amended Patent Law, which came into effect on 1 June 2021.

The guidelines, which are somewhat analogous to the USPTO Manual of Patent Examining Procedure, detail important changes to Chinese patent law. They suggest that in the near future, CNIPA may treat utility models more strictly and offer partial-design protection for graphical user interfaces (GUIs). They also explain what patent-term adjustments and patent-term extensions – two key changes for life sciences practitioners – will look like in the Chinese context.

While currently only a draft, the guidelines offer an invaluable indication of key changes likely to hit IP practitioners working in China.

High grant rate for utility model patents may be a thing of the past

Utility models will be treated more strictly going forward and, in some circumstances discouraged altogether, perhaps due to the record 2.927 million applications for these rights filed in 2020. These second-tier patent rights are granted without substantive examination and have a term of 10 years.

Even though utility models do not undergo substantive examination, applications do receive a preliminary examination for lack of novelty. An amendment is currently being proposed to include an inventiveness examination as well. “At the preliminary examination, the examiner examines whether a patent application for utility model obviously lacks novelty and inventiveness.” Note, the draft guidelines point to Section 4, Chapter 6(4) of the current guidelines for the determination inventiveness, which is the same evaluation used in invalidation proceedings. For searching prior art references, the current guidelines state that examiners should focus on the technical field to which the utility model belongs. Where there is a clear technical teaching – for example, an explicit description in the prior art to prompt a skilled person in said art to look for technical means in a proximate or relevant technical field – the proximate field may also be considered.

Normally one or two prior art references may be cited to assess inventive step. Where the utility model is made simply by juxtaposing some prior art means, the examiner may, according to the circumstances, cite more than two prior art references to make an assessment. But even if the guidelines do provide a clue to the determination of inventiveness, it remains to be seen how examiners interpret ‘obviously’.

Over the past three years, the rate at which utility model patent applications have been granted has risen from 78.9% in 2018 to 90.4% in 2020 – although this is likely to fall again once substantive examination is implemented.

Patent-term adjustments will not be awarded to utility models but will be reserved for invention patents only. However, if an applicant simultaneously files applications for both types of right for the same invention, the CNIPA will not award patent-term adjustments to any resulting invention patent, and will delay examination of the invention patent application for four years.

These changes negate what has been a favored strategy for protecting mechanical inventions.

Under this, applicants would rely on utility models to be granted quickly – due to the lack of substantive examination. They could then use these for rapid enforcement while the invention patent application was still pending. Once the invention patent was granted, the owner could then abandon the utility model due to its shorter lifespan and maintain the invention patent. Alternatively if the invention patent application was not granted, fallback protection was still provided by the utility model.

This particular amendment was likely proposed to reduce the CNIPA’s backlog and to encourage applicants to thoroughly consider which type of patent they would like their inventions to be protected as, rather than allowing them to game the system.

Change in GUI rules could prompt more litigation in the software space

China’s recently amended Patent Law has added partial-design protection for the first time, and the draft guidelines clarify that partial designs are also available for GUIs; whereas previously applicants to have claimed a physical device displaying a GUI and not the GUI software alone.

While this may encourage more GUI applications, it could also spark a surge of GUI software infringement lawsuits. Under the draft guidelines, alleged infringers (often software developers or software companies) will not be able to defend infringement claims by arguing that they do not manufacture or sell hardware with the GUI.

Damages in a GUI related-infringement suit will also likely increase as Article 16 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Disputes states that “if the product infringing a design patent is a package, the people’s court shall reasonably determine the amount of compensation according to the value of the package itself and its role in realizing the profits of the packaged product”. This implies that the court should consider the GUI’s role in realising the profit of the disputed product.

The benefit of this change in the guidelines can be seen by looking at a Google patent for a “display screen with graphical user interface”. In US patent D877,763, Google claimed a GUI only, without any hardware that would display it. However, when Google filed in China, it had to narrow the scope of the claim significantly by adding in a mobile phone to display the GUI. As can be seen in CN 305260747S, Google did this by adding a bezel, two side buttons, a speaker and a top button (see illustration). This would not have been required under the new draft guidelines.

Rights holders will be compensated for examination delays

The CNIPA will grant patent-term adjustments if an invention patent is granted more than four years from the date of the application or three years from the date of the request for substantive examination. However, as at the USPTO “the actual number of days of delay refers to the unreasonable delay time in the process of granting an invention patent minus the unreasonable delay time caused by the applicant”. The CNIPA’s unreasonable delays do not include suspension procedures, preservation measures, administrative litigation procedures or re-examination procedures where the patent right is granted after amendment.

Applicant delays will include those caused by extensions to responding to notices, deferred examination and revival from abandonment.

Unlike the USPTO, the CNIPA will not automatically calculate and grant patent-term adjustments. Instead, applicants will need to calculate the patent-term adjustment and request it within three months of grant, which will incur a fee.

This will potentially allow many patentees to obtain longer terms, for example, Ford Global Technologies’ US9,777,516 patent entitled “gesture-activated hood release system” received 129 days of patent-term adjustment from the USPTO, which granted the patent in just over two years. This is in contrast to Ford’s patent in China (CN104271860B), which received no patent-term adjustment, despite the fact that the CNIPA took more than four years to grant it.

Pharma patents – but not medical device rights – set for extended terms

The amended Patent Law also allows patent terms to be extended to compensate for delays that occur due to the regulatory review process for new drugs. Further, if multiple relevant patents exist for an approved drug, only one of those can be extended. Any requests for patent-term extensions must be filed within three months of receiving drug marketing authorization. Eligible patents include those for product patents, preparation method patents and medical use patents of the active pharmaceutical ingredient contained in a new drug.

Patent-term extensions are calculated by subtracting the patent application date (not the grant date) from the date on which the drug marketing authorization is approved, then subtracting another five years. The compensation period cannot exceed five years and the total effective period of patent protection after approval cannot exceed 14 years.

This development could be highly beneficial for pharmaceutical companies, as key patents could qualify for extended terms. However, as medical device patents are not eligible, a patent such as US 7,668,599 covering a “visual prosthesis with (sic) user interface” which received an extension of 870 days in the United States, would receive no extension in China.

In contrast, US 7,709,610, entitled “therapeutic use of anti-CS1 antibodies”, which received an extension of 1,096 days in the United States and none in China as CN1960750B, would be eligible under the newly amended Patent Law and guidelines.

Deadline changes mean docketing systems must be updated

The CNIPA currently provides a 15-day mail delay extension to replies to office notices. For example, the deadline to reply to a first office action would be 15 days plus four months. However, electronically filed applications (ie, almost all applications) will no longer be entitled to the extra 15-day extension, meaning that docketing systems will need to be reprogrammed.

New preliminary examination to check for good faith

The CNIPA has introduced new screening as part of a high-profile effort to weed out what it refers to as ‘irregular’ or ‘abnormal’ applications, in other words, bad-faith applications.

Earlier this year, the IP Office of Jiangsu Province found that 10,495 applicants had filed in bad faith. These applications came from 309 agencies, including 149 patent agencies in the province. The office required the withdrawal of all patent applications that it deemed not to be truly for the purpose of protecting innovation. Similar actions have taken place at local offices across the country, affecting tens of thousands of rights.

The screening introduces a totally new mechanism that may be unique to China. While it is likely to target low-quality domestic applications filed to boost numbers and claim subsidies or other benefits, it is a new part of the examination process that all filers need to understand.

The guidelines set out the requirement of good faith in patent application filings as follows:

Applying for a patent shall follow the principle of good faith. According to Article 11 of the Implementing Regulations of the Patent Law, in the process of applying for a patent, fabricating, forging, plagiarizing, piecing together or other improper acts are violations of Article 20 Paragraph 1 of the Patent Law.

They also provide for a new preliminary examination process:

During the preliminary examination, the examiner shall refer to the provisions of Chapter 1, Section 5 of Part II of these Guidelines to examine whether the conduct in the prosecution of patent application obviously violates the principle of good faith.

According to the guidelines, the obvious violations of the principle of good faith include, but are not limited to:

  • simultaneous or sequential submissions of multiple patent applications that are obviously identical in content or are essentially formed by a simple combination of different features or elements of different inventions;
  • patent applications submitted where the experimental data or technical effects have been fabricated, plagiarised, or are simple replacements or patchworks of existing technologies;
  • where the invention is obviously inconsistent with the research, developmental capacity or resources of the applicant or inventor; and
  • other irregular patent application related behaviours that violate the principle of good faith and disrupt the normal order of patent work.

Applications flagged as being in bad faith face the following procedure:

The examiner shall issue an examination opinion notice, explain the reasons, and notify the applicant to state his opinion within the specified time limit. If the applicant fails to reply within the specified time limit, the examiner shall issue a notice of deemed withdrawal; after the applicant has stated his opinions, the examiner shall make a decision of rejection.

Even if a patent application passes the preliminary examination, good faith will still be considered in the substantive examination. According to Article 20(1) of the Patent Law, a patentee shall not violate the public interest or other individuals’ legal interests.

In a patent re-examination procedure, the examiner has the discretion to challenge an application that may have violated the good-faith principle and reject it if necessary.

Even after a patent application is granted, that patent can still be subject to the good-faith requirement in an invalidation proceeding. In such a proceeding, the patent review collegial panel has the discretion to review the patent and declare the patent invalid if it has reason to believe that the patent violated the good-faith principle, even if the petitioner does not specifically raise bad-faith filing as an argument.

Most likely, the good-faith requirement will be applied mainly against Chinese applicants’ filings to counter irregular activity driven by incentives that are unavailable to foreign applicants, including lower corporate income tax rates and city residency permits.

Accordingly, applicants should not be too worried about the good-faith requirement provided that they have diligently drafted their applications according to the Patent Law and its implementing regulations, and the current guidelines.

Aaron Wininger is the Director of the China Intellectual Property Practice at Schwegman, Lundberg & Woessner

Austin Chang is of counsel at Beijing East IP



Principal, and Director of the China Intellectual Property Practice

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