When people speak of "patents", the first thing that comes to their mind is often invention patents; in China, designs are also eligible for protection under the patent law. Whether in terms of the number of applications or the enforcement, design patents take an important part of China's patent system. Filing and effectively utilizing design patents can help right holders occupy or maintain an advantageous position in the market.

In China’s Patent Law, the word “design” means any new design of the shape, the pattern, or their combination, or the combination of the color with shape or pattern, of a product, which creates an aesthetic feeling and is fit for industrial application. A design patent protects the appearance of a product, while the size, material or internal structure of a product which does not have any influence on the overall visual effect is not within the protection scope of a design patent. The combination of a graphical user interface (GUI) and a product can be protected under a design patent, if the graphical user interface can realize human-machine interaction and the function of the product (electronic screen wallpapers and startup & shutdown splash screens are not patentable). In addition, unlike the laws of the United States, Europe and other regions, China’s current patent law does not protect partial designs and also does not protect the designs of two-dimensional products which serve only as indicators.

China’s patent system follows the first-to-file rule; that is, the patent right is granted to the individual or entity who files an application first. A design may enjoy a six month priority if the applicant has filed first in a foreign jurisdiction. Any design for which a patent right may be granted 1) must not be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, 2) must not collide with any legal prior rights obtained by any other person, and 3) must not be contrary to social morality or be detrimental to public interest. The term of a design patent is 10 years (which will be extended to 15 years soon). Ten or fewer similar designs of the same product can be protected in a single patent application, and obtain respective protection after grant of a patent.

The examination of a design patent application is relatively simple. In addition to examining whether the application documents meet the requirements on formality, the examiners may also conduct a search to retrieve information about prior art or conflicting application. Generally the examination of a design patent application takes three to six months, and approximately 80 percent of the design patent applications are granted. For comparison, the examination of an invention patent application generally takes three to five years, and the grant rate of invention patent applications is about 50 percent.

After grant, the validity of a design patent can only be challenged through invalidation proceeding. Generally the examination on the request for invalidation of a design patent takes four or five months, and about 42 percent of the design patents are maintained valid. Compared with the six month examination of an invalidation request against an invention patent and the maintenance rate 46 percent of the invention patents (not including those partially maintained or maintained after amendment), there is not much difference.

Where an infringement dispute arises, the patentee of a design patent may seek an administrative or judicial remedy. The advantage of an administrative remedy lies in the shorter time and the lower cost generally associated with administrative remedies. An administrative authority may collect evidence on their own and take measures more proactively according to their powers, but they do not have the power to decide compensation and can only mediate according to the damage claim made by the party concerned. Further, the decision of an administrative authority is not final, and any party may institute an administrative lawsuit with a court if not satisfied with the decision made by the administrative authority.

In a civil infringement lawsuit, although the patentee of a design patent, as the plaintiff, has a heavier burden of proof, it may request reasonable compensation based on its loss it has suffered from the infringement and its reasonable expenses to stop the infringement. Unlike the decision of an administrative authority, the judgment of a court makes can be final and conclusive. According to a comprehensive analysis of patent infringement lawsuits in Beijing, Shanghai and Guangzhou, almost 50 percent of the infringement lawsuits heard in the courts of first instance related to design patents, the trial of a design patent infringement lawsuit generally was finished within six months, and about 80 percent of the judgments determined the infringement (which were in favor of the patentees of the design patents).

Furthermore, it should be noted that, in order to better serve the right holders, facilitate prosecution and save the patentees’ costs, the National Intellectual Property Administration of China has set up several IPR protection centers in recent years for fast examination, enforcement aid, mediation, protection and even judicial adjudication. Design patent applications filed through these centers generally are granted within 10 working days; design patent infringement lawsuits handled by these centers generally are settled through mediation within 15 working days; cases relating to administrative enforcement of law generally are settled within one month from acceptance of the cases.

From the above, it can be seen that design patents can be a powerful tool to protect innovative industrial designs. In this regard, we will have a detailed discussion through three actual cases.

Case 1 Ansteel Affiliated Enterprise Cold Rolling Economic Trade Co., Ltd. (Cold Rolling) filed a design patent application for a supporting pad comprising fiber materials and a binding belt for storing and transporting circular goods such as steel coils and then obtained the design patent. During the term of this design patent, Shanghai Baodelian Industry Development Co., Ltd. (Baodelian), Grass Products Branch of Baotou Anli Property Co., Ltd. (Anli) and Huang successively filed a request for invalidation against this patent, claiming that this design belongs to a conventional design in the transportation industry (or a broader industry sector) and is not novel compared with prior designs such as hollow wood brackets.

Upon examination, the Patent Reexamination Board held that the closest prior design submitted by the invalidation petitioners does not have the hollow area caused by the binding belt and binding thereof as shown in the drawings of this patent and also does not have the specific appearance formed by the fiber bundle, and thus is obviously different from the design in this patent; since the invalidation petitioners failed to provide sufficient evidence showing that this patented design is constituted only by geometrical shapes or patterns commonly seen in the field of the relevant product and thus is not a patentable subject matter, it was decided that this design patent was maintained valid (Invalidation Examination Decision No. WX6601).

In the subsequent administrative lawsuit, the invalidation petitioners submitted that the fiber materials used in this design patent belong to functional parts and shall not be considered in the comparison. After trials by the Beijing First Intermediate People’s Court and then the Beijing Higher People’s Court, it was finally ruled that although the product incorporating this patented design is made of fiber materials according to its brief description, it is a new design formed by processing and combining a certain number of fibers, but not a design of which the main portion is the original shape, pattern or color of fibers, and therefore, the comparison cannot be made between the prior design and the patented design without the fiber materials which serve as functional parts; thus, the courts upheld the determination on novelty and patentable subject matter made by the Patent Reexamination Board, and made an administrative judgment to affirm the Invalidation Examination Decision, i.e. the design patent shall be maintained valid ((2005) GaoXing ZhongZi Administrative Judgment No. 424).

Cold Rolling then filed a civil lawsuit against Baodelian for design patent infringement in the Shanghai Second Intermediate People’s Court. The Court ruled that Bodleian’s prior art defense was not tenable and ordered Baodelian to pay Cold Rolling a compensation of CNY50,000 for its economic losses ((2007) Hu ErZhong MinWu (Zhi) ChuZi Civil Judgment No. 60).

Although any design of which the main portion is the original shape, pattern or color of a natural object or which is constituted only by geometrical shapes or patterns commonly seen in the field of the relevant product is not eligible for design patent protection, Cold Rolling conceived that if different component materials are used for a product, the design of the product would be significantly distinct from prior designs in overall visual effect, and thus filed several design patent applications. In addition, Cold Rolling also filed a utility model patent application for the product and obtained a utility model patent. Thus, through an ingenious patent strategy, the product obtained comprehensive patent protection. With these patents, Cold Rolling and its patent licensee(s) successfully safeguarded their legitimate rights in several subsequent patent infringement disputes.

Case 2 Jiangmen Dachangjiang Group Co., Ltd. (Dachangjiang) found that the motorcycles sold by Qingqi Group Jiangmen Guangsu Motorcycle Co., Ltd. (Guangsu) might infringe their design patent and registered trademark, and thus filed a complaint with the Market Regulation Administration of Pengjiang District, Jiangmen City. The Market Regulation Administration of Pengjiang District put the case on record on December 29, 2015 and issued an Administrative Punishment Decision No. [2016]30, ordering Guangsu to immediately stop the infringement, confiscating 11 infringing motorcycles and imposing a fine of CNY24,680 on Guangsu. This Administrative Punishment Decision was later used as a piece of evidence in the design patent infringement and trademark infringement lawsuits between Dachangjiang and Guangsu, and helped Dachangjiang receive court judgments in its favor, including the Judgment (2017) Yue 73 Minchu No. 876 made by Guangzhou Intellectual Property Court and Judgment (2018) Yue Minzhong No. 45 made by Guangdong Higher People’s Court.

Guangsu was ruled to stop manufacturing and selling the infringed products and pay Dachangjiang a compensation of CNY 100,000 for its economic losses and reasonable expenses caused by the infringement. In April, 2018, Dachangjiang reported the infringement committed by Guangsu to the Ministry of Industry and Information Technology, and in June, the Ministry of Industry and Information Technology made a punishment decision and published the full text of the decision (GongXin Zhuang Fa [2018] No. 008) on its official website, ordering Guangsu to stop manufacturing and selling the infringed products and rectify the situation within three months, during which the upload of requests for new product identification and product qualification certificates of Qingqi Group, i.e. the parent company of Guangsu, would be suspended.

When encountering infringement, the right holders may choose appropriate measures to safeguard their rights based on a comprehensive analysis of the purpose of the protection, the particulars of the case, and the difficulty in collecting evidence, etc.

Case 3 In a dispute between Panasonic Corporation (Panasonic), Zhuhai Kingdom Electrical Appliance Co.,Ltd. (Kingdom) and Beijing Likangfuya Trading Co., Ltd. (Likang) concerning infringement on a patented design named “beauty equipment”, the Beijing Intellectual Property Court held that, the difference between the accused infringing product and the patented design in dispute does not have any substantive influence on their overall visual effects and the two belong to similar designs; Kindom manufactured, sold and offered to sell the accused infringing products without the permission of Panasonic; Likang sold and offered to sell the accused infringing products without the permission of Panasonic, and as the seller, Likang still did not stop the infringement after having known about this lawsuit and thus shall assume joint liability for the cost in this lawsuit; thereby, the court approved Panasonic’s claim for damages, ordered Kingdom to pay a compensation of CNY 3 million for Panasonic’s economic losses, and ordered Kindom and Likang to jointly pay a compensation of CNY 200,000 for Panasonic’s reasonable expenses ((2015) Jing Zhi Minchu Zi No. 266 Civil Judgment).

Unsatisfied with the first-instance judgment, Kindom and Likang filed an appeal. The Beijing Higher People’s Court held that the accused infringing product falls within the protection scope of the design patent in dispute. Regarding the amount of compensation, the notarized evidence submitted by Panasonic shows that a total of 18,411,347 products with the same model number as the accused infringing product had been sold on some e-commerce platforms at an average price of CNY 260 per product and, according to the result of multiplying the total amount of the sold accused infringing products by the average selling price of the product (which nearly amounted to CNY 5 billion), even if the reasonable profit of each product is considered to be relatively lower, the total profits are still much higher than CNY 3 million; therefore, the damages of CNY 3 million claimed by Panasonic was very reasonable, and the approval of this claim in the first-instance judgment had factual and legal basis. The Beijing Higher People’s Court finally ruled to dismiss the appeal and uphold the first-instance judgment.

In determining the amount of patent infringement compensation, the actual losses suffered by the patentee from the infringement would be given more consideration. Where the actual losses cannot be determined, the amount of compensation may be determined according to the benefits obtained by the infringer from the infringement. Where both the losses and the benefits cannot be determined, the amount of compensation may be determined with reference to a reasonable multiple of the royalties. Where any of the above cannot be determined, the statutory amount of compensation may be within an applicable range from CNY10,000 to CNY 1 million (this range will be adjusted to “from CNY100,000 to CNY5 million” in the future). When it comes to the compensation for design patent infringement, it is certainly not the case that a lower amount of compensation will be directly applied just because a design is relatively simple comparing with an invention or a utility model.

This article was first published in the June-July 2019 issue of Asia IP.