Some Essential Aspects of Utility Model Patents in China

China grants three types of patents: invention, utility model, and design, among which the utility model patent has no counterpart in some other jurisdictions. In 2024, China saw over 3.18 million applications filed and over 2 million patents granted for utility models. The statistics indicate that procuring utility model patents in China is a great attraction. In addition, more utility model patents inevitably lead to more litigation. Therefore, it is essential for multinational companies to understand the advantages the utility model patent possesses and the challenges it may bring about. To this end, this article will briefly explain some essential aspects of the utility model patent under Chinese Patent Law.

Definition of Utility Model

Chinese Patent Law defines utility model as any new technical solution relating to the shape, the structure, or their combination, of a product, which is fit for practical use. Therefore, as far as the legislative purpose is concerned, the utility model patent provides protection for improvements in the shape, the structure, or their combination, of a product.

The shape of a product refers to certain space-shape of the product which can be observed from the outside. The improvement relating to the shape of a product may be the improvement relating to either the three-dimensional shape of the product, or the two-dimensional shape of the product.

The structure of a product refers to the arrangement, organization and correlation of each part of the product. The structure of a product may be either a mechanical structure or a circuit structure. The mechanical structure refers to the relative position relationship, coupling relationship, and necessary mechanical matching relationship and so on of the components or parts of which the product consists. The circuit structure refers to the fixed connection relationship among the components or elements devices of which the product consists.

Eligible Subject Matter for a Utility Model Patent

According to the definition of utility model, the eligible subject matter for a utility model patent shall be a product that at least features an improvement relating to its shape or structure. The product here shall be an object manufactured by an industrial process, having definite shape and structure, and occupying a certain space. Any process is not eligible for a utility model patent.

As for a product having a non-fixed-shape, such as the substance or material in gaseous state, liquid state, powder or particle state, its shape cannot be regarded as the shape feature of the product. However, products having a non-fixed-shape are not categorically excluded from the patent protection for utility model. As expressly indicated in the Guidelines for Patent Examination of Chinese Patent Office (“the Guidelines”), a product may have a certain technical feature relating to a non-fixed-shape substance, such as a substance in gaseous state, liquid state, powder or particle state, provided that the feature is defined by a structural feature of the product. This indicates a feasible way to pursue a utility model patent for a product having a non-fixed-shape. Take, for example, a product relating to a disinfectant in liquid state. The claims of a utility model patent may be drawn to a product that possesses also a feature having a suitable shape, such as a feature describing a container having a volume of some specific shape to contain and thus define the disinfectant, or a feature describing that the disinfectant has been transformed into a solid form of some specific shape which constitutes an improvement relating to the shape of the product over the prior art.

Also as expressly indicated in the Guidelines, a composite layer such as a coating may be regarded as the structural feature of a product. Therefore, a utility model patent can be granted for a product if its improvement over the prior art relates to the following feature(s): (1) the product comprises a composite layer on at least a part of it, while the prior art product did not on the same part; or (2) the product comprises a composite layer on a certain part of it, which composite layer has a different structure, e.g., thickness of layer, number of sub-layers, than that of the prior-art composite layer.  

For the eligibility of a composite layer for a utility model patent, however, there is one rather confusing issue that needs clarification. That is, the chemical composition of a composite layer cannot constitute the structural feature required for a utility model claim. As a result, a product is not an eligible subject matter for a utility model patent if its improvement over the prior art is actually the chemical composition of the composite layer.  

Preparation and Examination of Applications for Utility Model Patent

The application documents for a utility model patent shall include a description and its abstract and appending drawings, and claims. Thus there is no substantive difference in the preparation of the application documents between a utility model and an invention patent.

At present, the examination system of “preliminary examination plus evaluation report” is applied to the grant and the subsequent enforcement of utility model patents. That is, only the preliminary examination is required for the grant of a utility model patent, in contrast to the grant of an invention patent which entails not only the preliminary examination but also the substantive examination.

The preliminary examination of a utility model application is focused on the following items:    

1. whether or not the utility model is contrary to the laws or social morality or that is detrimental to public interest, or falls under the subject matters ineligible for patent protection;
2. whether or not the application documents (including the request, the description and claims) of the utility model meet the formal requirements;
3. whether or not the utility model is obviously not in conformity with the statutory definition of “utility model”;
4. whether or not the utility model obviously lacks novelty or practical applicability; and
5. whether or not the utility model obviously fails to meet the enablement or support-by- description requirement.

Such an examination system, on the one hand, ensures that a utility model patent can be issued quickly, generally in 6 to 8 months after the application is filed. On the other hand, it inevitably renders the grant of some low-quality utility model patents which should be non-patentable for obviousness, even though a lower inventiveness standard is applied to a utility model than an invention under Chinese Patent Law. Actually, an increasing number of low-quality utility model patents give rise to growing concern over patent abuse, especially in some emerging industries. Recently, a member of Chinese People’s Political Consultative Conference (“CPPCC”) presented a proposal entitled “To Regulate the Market Order of Lithium Battery Industry and Avoid Malicious Competition by Abusing ‘Problematic Patents’”, explicitly expressing such concern over abuse of low-quality utility model patents in the lithium battery industry. To the proposal, Chinese Patent Office replied that stricter standards would be taken for the primary examination of an application for utility model patent, including the examination of prima facie obviousness of a utility model. Also, Chinese Patent Office has suggested adding the examination of prima facie obviousness in the preliminary examination of an application for utility model patent, among others, in the proposed draft amendment to the Implementing Regulations of the Patent Law, demonstrating its commitment to actively reform the utility model patent system.

Enforcement of a Utility Model Patent

Under the “preliminary examination plus evaluation report” system, after a utility model patent is granted, the patentee or an interested party involved in a dispute over patent infringement may request Chinese Patent Office to make an evaluation report of patent right, which will list relevant prior art references and set forth examination opinions on the patentability (i.e., novelty and inventiveness) of the utility model. In patent infringement litigation, the evaluation report is required to be submitted as a preliminary evidentiary document. In the event that the report shows unfavorable opinions on the patentability of the utility model patent-in-suit, it is highly likely that the judge will suspend the patent infringement lawsuit, awaiting the outcome of the administrative proceedings for confirming the validity of the patent-in-suit¹.    

Except for the evaluation report, the enforcement of a utility model patent is substantially the same as an invention patent. In particular, the liabilities and remedies for infringement of an invention patent and a utility model patent are substantially the same, including pretrial and permanent injunctions, preservation measures, and compensation standard for damages. It is notable that up to now, the highest damages for patent infringement awarded by Chinese courts is RMB 330 million in CHNT vs. Schneider Electric SA. In this case, CHNT, a domestic manufacturer for electrical switches and sockets, sued Schneider Electric SA for infringing its utility model patent, claiming RMB 330 million patent infringement damages which was then supported by the district court.

Another controversial issue concerns the construction of a utility model patent claim containing a feature that is not relating to the shape, the structure, or their combination, of a product (“non-structural feature”), such as a feature describing materials of the product or a functional feature that defines a part of the product by what the part can do. With such a non-structural feature, the question is how to consider its role in the evaluation of novelty and inventiveness and in the determination of patent infringement. The Supreme Court basically addressed this issue in Hu Xuehui vs. Yue Xia by holding that (1) any non-structural feature of a utility model patent claim should be limiting in the determination of patent infringement, and as for a functional feature, it should be narrowly interpreted as being limited to the embodiment(s) of structural features indispensable for implementing the function as disclosed in the description; and (2) the non-structural feature should not be weighed as a substantive feature which novelty and inventiveness of the utility model relies on.

With this in mind, be very cautious when drafting a utility model patent claim by introducing a functional feature. The best practice is probably to pursue an invention patent rather than a utility model patent if it is indeed necessary to include functional feature(s) in the patent claims in order to broadly claim your invention.  

Unique “Double Filing” Strategy in China

Chinese Patent Law provides that an applicant may file on the same day applications for both utility model patent and invention patent on the identical subject matter, and the applicant may declare later to abandon the utility model patent just before the invention patent is granted to avoid double patenting. The provision allows for the unique strategy usually referred to as “double filing of applications for both utility model patent and invention patent”.

The advantages of the “double filing” strategy are evident. Imagine an applicant files on the same day two applications for both utility model patent and invention patent on an electrical device. Then the utility model patent will be granted in about 6 months from the filing date. The patentee can enforce the utility model patent immediately even though the application for invention patent is still pending. By enforcing the utility model patent, the patentee may exclude its competitors from making and using the patented electrical device. The quickly granted patent right thus is highly desirable because the patented electrical device may be such a kind of products that have a short product life cycle. The patentee can maintain and enforce the patent right for utility model until he or she declares to abandon the utility model patent for the grant of the invention patent. It is clear that the “double filing” strategy can advantageously enable the quickly granted utility model patent to fill the gap of protection before the grant of the invention patent, which generally spans more than 2 years.

Because of the above-mentioned advantages, the “double filing” strategy has been extensively used to patent those products that have a relatively short life cycle or may be easily copied and marketed. In order to suppress an overflow of double filings, the Chinese Patent Office now is taking the following measures: holding off the substantive examination of any application for an invention patent filed in the doubling filing till the end of four years from the filing date, and barring such an application for an invention patent from any expedited examination procedure.

Finally, the “double filing” strategy can apply for patent applications under the Paris Convention, but not patent applications under the PCT.

By Dr Jian Li, Qiang Lin and Dr Xiaobin Zong

Footnote

1. China adopts a split system which is like the Germany patent system and under which patent infringements are determined by courts in civil proceedings, while invalidity challenges are heard by CNIPA’s Patent Reexamination and Invalidation Department and then reviewed by the specialized courts in administrative proceedings. ↩︎