On August 26, 2010, China's State Intellectual Property Office (SIPO) issued its new Regulation on Patent Pledge Registration (Regulation), effective October 1, 2010. The Regulation provides detailed practice guidelines for registering patent pledge agreements with SIPO.

Patent Pledge Contract

Under the Regulation, the pledgor and pledgee shall first enter into a written contract for a patent pledge. The pledge contract can be either a separate agreement or a clause in a master agreement. Notably, the patent pledge contract will not become effective until it has been registered with SIPO.

Further, the pledge contract shall include certain mandatory provisions such as 1) type and amount of collateralized debt; 2) terms of fulfilling the debt; 3) number of patent(s) and details of the patent(s), such as title, patent number, application date, and grant date; and 4) extent guaranteed by the pledge.

In addition, consensus among co-owners shall be required for pledge of co-owned patent(s).

Registration of Patent Pledge Contract

The following documents shall be submitted for registration of a patent pledge contract with SIPO:

  1. Application form for patent pledge, signed and sealed by the pledgor and pledgee
  2. Patent pledge contract
  3. Documents certifying the legal status of both contracted parties to the contract
  4. Power of attorney executed by both parties
  5. Other documents such as evaluation report if available

Except for item 3, above, all the documents shall be in Chinese. If item 3, above, is in a foreign language, a Chinese translation is required.

SIPO will, within seven working days after receipt of the registration materials, examine the materials and decide whether the registration shall be approved. Upon approval, SIPO will publish the patent pledge in patent journals, including the name of the pledgee and pledgor, IPC classification number, patent number, date of grant, and date of pledge registration.

SIPO will reject a patent pledge application under any of the following circumstances:

  1. Pledgor(s) is different from the patentee(s)
  2. The subject patent(s) has expired or been invalidated
  3. The patent application(s) is still pending and has not yet been granted
  4. Annual fee is overdue
  5. The subject patent is being subjected to an invalidation petition or the ownership is in dispute
  6. The debt performance period exceeds the patent term
  7. Both parties agree in the patent pledge contract that the pledgee shall own the subject patent(s) at the end of pledge term if the pledgor fails to fulfill its payment obligations
  8. The contract fails to include all the mandatory provisions
  9. Pledge of co-owned patent lacks consents from all the co-owners
  10. The subject patent(s) has been pledged previously and is still in the pledge term

Post-Registration

Upon expiration or invalidation of the subject patent(s), SIPO will revoke the patent pledge registration and notify the parties.

During the patent pledge term, transfer, licensing, or surrender of the subject patent(s) shall require the pledgee's pre-approval.