Among roughly 120 countries or regions having a utility model system or the equivalent, China is unquestionably the most attractive for utility model filers. According to data provided by China National Intellectual Property Administration, or CNIPA, there were roughly 2.27 million utility model applications filed with CNIPA in 2019, contrast to 1.40 million invention patent (equivalent to utility patent of U.S.) applications.
So why China is that attractive for utility model filers? Basically, there are the following 4 reasons.
1. quite large chance of grant
Basically, a utility model application will be granted once it passes a formality examination, without going through a substantive examination. For this reason, there is a very large chance for a utility model application to be granted. In previous years, the grant rate of utility model applications was up to 90%, nowadays, although the grant rate for utility model applications has decreased relatively, it is still as high as 75%.
2. significantly shorter examination period compared with invention patent applications
Utility model applications are subjected only to a formality examination, and mature into utility model patents after passing the formality examination. On average, it takes roughly 7 months for a utility model application from filing to allowance. In contrast, it may take 3 years or more for an invention patent application from filing to allowance, as the invention patent application has to undergo both formality examination and substantive examination.
3. basically equal protection to invention patent
Although patentability requirements for utility model applications are lower than that for invention patent applications, efficacy of the two types of patent are almost the same.
Article 22 of the Chinese Patent Law reads: inventiveness means that, as compared with the prior art, the invention has prominent substantive features and represents a notable progress, and that the utility model has substantive features and presents progress. In terms of the omission of “prominent” and “notable” from the clause for utility model, the inventiveness requirement for utility model is relatively lower than that for invention patent.
On the other hand, utility model enjoys basically the same protection as invention patent. The Chinese Patent Law does not differentiate between invention patent and utility model in terms of infringement damage, and in practice, there is no significant difference between damage awarded in patent infringement litigations regarding invention patents and utility model patents. In particular, some utility model patents obtained very high damage.
In 2009, CHINT, a Chinese company, sued Schneider for infringement of its utility model patent involving a circuit breaker, with a damage of 334.8 million CNY (roughly 48 million USD) decided in the first instance, which was a record high amount in the IP history of China. This case ultimately ended in a settlement, with Schneider paying 157.5 million CNY (roughly 22.5 million USD) to CHINT.
In 2015, in the case Hangzhou Naide vs. Dongguan Chuangheng for Utility Model patent infringement, Shanghai IP Court decided a damage of 1 million CNY based on statutory damage, which is the cap of statutory damage.
4. no restriction on enforcement of utility model patents
Since utility model is granted a patent right without going through a substantive examination and therefore technically the utility model patents are in uncertain situation, some countries pose restrictions on enforcement of utility model patents.
In Germany, the patentee of a utility model patent shall, if the utility model patent is invalidated by another one, bear the official fees and attorney fees connected with the invalidation.
In Japan, anyone can request the patent office to conduct a patentability evaluation on a utility model patent, and if the patentee of a utility model sues or warns another one for infringement and ultimately the utility model patent is revoked, the patentee has to compensate the sued or warned one for any loss caused thereby.
Differently from Germany and Japan in this respect, China poses no special restriction on utility model patents. Although patentee of a utility model patent may be required to furnish an evaluation report of the utility model patent to initiate a litigation process, he is not accountable for any expense or loss brought about to the defendant if the utility model turns out to be revoked.
There is yet another advantageous aspect of the utility model, the so-called “dual application” approach. One can file an invention patent application and a utility model application simultaneously for a same invention. The utility model application will be granted shortly, as it does not need to undergo a substantive examination, resulting in a potentially unstable patent right. On the other hand, it will take a rather long time for the invention patent application to go through the substantive examination to be granted, but resulting in a fairly stable patent right. In this way, the applicant may acquire and enforce the utility model patent shortly after filing the applications, and when the invention patent application is afterwards granted, the applicant may choose to abandon the utility model patent and keep the invention patent, i.e., the substantively examined, stable patent right. In such a “dual application” approach, one can take advantages of both utility model and invention patent, i.e., quick grant of patent application and stability of patent right.
For those reasons, the number of utility model applications in China kept to increase. A surprising fact is that the applications for utility model in China accounts for roughly 95% of the globally overall number, which situation has invoked some rethinking in the administrative and academic circles. Some voice said there is a serious mismatch between the number of patents and the country's scientific and technological strength, and some voice said the utility model patents include too many “low-quality” patents.
In this context, CNIPA is gradually tightening its examination criterion for utility model applications.
As of October 2013, the Chinese patent office introduced an “obvious novelty examination” to utility model applications. From then on, the examiner had to determine whether a utility model application is obviously lack of novelty on a random basis, i.e., a randomly chosen part of utility model applications went through such a novelty examination, which involved prior art search. For facilitating this novelty examination, the CNIPA developed an AI-based searching system, which can search prior art documents close to an application and present them to the examiner in a quick and convenient manner. The CNIPA further developed a system for automatically detecting formality defects in a utility model application, which is much more efficient than human examination.
There used to be incentives provided by local governments to patent filings, however, in this trend of “improve patent quality”, such incentives for utility model filings have been ceased.
In addition, the CNIPA applied a restriction to the “dual application“. As afore-mentioned, one can file an invention patent application and a utility model application simultaneously for a same invention. But according to the latest examination practice of CNIPA, for such a dual application, the examination of the invention patent application will be postponed.
In this trend of “improve patent quality”, the grant rate for utility model applications decreased over years. According to statistic data from CNIPA, in 2016, the grant rate for utility model applications was 90%, which means in 100 utility model applications, 90 of them were granted, and 10 of them were ultimately rejected. This figure decreased to 75% in 2019.
Nevertheless, despite of the above restrictions applied, the advantageous aspects of utility model are not substantially impaired, utility model application is still a considerable option, especially for foreign applicants.
However, a fact is that foreign applicants are not so keen on filing utility model application in China. In recent years, the yearly number of utility model applications filed by foreign applicants in China remained at the order of 7000, accounting for roughly 0.4% of the yearly total number of utility model applications field in China. In contrast, the yearly number of invention patent applications filed by foreign applicants in 2019 accounted for roughly 12% of the total number. To some extent, it can be said that utility model is overlooked by foreign applicants. It is considerable to file a utility model application in China in the case that a quick grant is preferred and a long protection period is not desired.
Finally, before deciding to apply for a utility model in China, there are some factors needed to be taken into consideration.
1. Utility model patent have a protection period of 10 years, counting from the filing date. In contrast, the protection period is 20 years for invention patent. Therefore if it is desired to obtain a protection for more than 10 years, utility model is not a good choice.
2. China’s utility model protects only inventions related to shape or structure of a product, methods or processes are not protected by utility model. Therefore for inventions involving new method, new material, computer program, etc., there is no choice but to apply for an invention patent.
All in all, it is a considerable option to file a utility model application in China for foreign applicants.