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Shenzhen Proposes Ending Patent Grant Subsidies Two Years Early

On September 26, 2023 the Shenzhen Municipal Administration for Market Regulation released the Operation Rules for Special Funds in the Field of Intellectual Property Rights of the Shenzhen Municipal Administration for Market Regulation (Revised Draft for Comments) (深圳市市场监督管理局知识产权领域专项资金操作规程(修订征求意见稿)) proposing to eliminate financial subsidies/rewards for grants of both Chinese and foreign patents by the end of 2023. However, other local and national market distorting incentives remain.

On January 27, 2021, the China National Intellectual Property Administration (CNIPA) announced in the “Notice of the CNIPA on Further Strictly Regulating Patent Application Behavior” (国家知识产权局关于进一步严格规范专利申请行为的通知) the end of all patent subsidies by 2025. Subsidies for patent application filings and other stages of the patent prosecution process (e.g., requesting exam) will end by June 30, 2021. Only subsidies for granting of patents (including foreign patents) are allowed for now but local governments must cancel them by 2025.  Shenzhen is proposing to end them by the end of 2023.

Specifically, Shenzhen is proposing to cancel Articles 6 and 7 of the Shenzhen Municipal Administration for Market Regulation Special Fund Operation Procedures in the Field of Intellectual Property” (Shenzhen Supervisory Regulations [2022] No. 10) (深圳市市场监督管理局知识产权领域专项资金操作规程) which provided 1,500 RMB for Chinese invention patent grants, 17,000 RMB for European Patent Office (EPO) patent grants, 4,500 RMB for a United States or Japanese patent grants, and smaller amounts for other jurisdictions, up to 10 million RMB per year per entity.

However, rewards remain to “promote the cultivation of high-value patents” including 500,000 RMB annual awards for entities.  High-value patents have been previously defined as in the 14th Five-Year Plan Notice on Intellectual Property as:

1. Invention patents for strategic emerging industries;

2. Invention patents having corresponding foreign patents;

3. Invention patents maintained more than 10 years;

4. Invention patents with a relatively high pledge financing amount (mortgage);

5. Invention patents that obtained the National Science and Technology Award and the China Patent Award.

In addition, Shenzhen is retaining funding of up to 2 million RMB for entities that receive national or provincial patent awards. For example, Shenzhen will provide a one-time supporting reward of 300,000 RMB for winning the Gold Guangdong Provincial Patent Award or Outstanding Inventor Award. This increases to 2 million RMB for winning the Gold National Patent Award.

The proposed changes do not affect national-level incentives such as the High and New Tech Enterprise (HNTE) program that provides for lower corporate income tax rates based partly on patent ownership.

The full text is available here (Chinese only). Comments are due by October 31, 2023.

Principal, and Director of the China Intellectual Property Practice

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