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IPR: Focus on Chinese Utility Model Patents
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In 2010, over 340,000 Chinese utility model patents (UMs) were granted. However, only about 2,200 of these were granted to foreigners (a UM can be registered in the name of a person or entity). Chinese entities seek to register UMs much more actively than foreign entities, but these can be very valuable. The highest recorded patent infringement compensation awarded by the Chinese People’s Court of CNY 330 million (about 50 million Euros) was based on a UM registration in the case Chint v. Schneider.
 
Who uses the utility model system?
UMs are not unique to China. In fact, there are more countries in the world that have a UM system than those that do not. European Union Member States with a UM system include Austria, Belgium, Denmark, Finland, Germany, Italy and the Netherlands, among others. Notably, the USA and the UK do not have a UM system.
 
Why consider utility model patents in your business strategy?
In addition to being cheaper to register, UMs can be a faster way to protect your inventions. Their primary purpose is to provide patent protection for inventions with a short commercial life. In China, UMs are typically granted 10 to 18 months from the Chinese filing date. This is far quicker than the 3 to 6 years required for invention patents (which are similar to UK patents or European patents).
 
Therefore, a common practice under the Chinese system is the parallel filing of a UM and an invention patent, followed by the abandonment of the UM once the invention patent is officially granted. The applicant can benefit from the early patent protection granted by the UM, as well as the longer term protection granted by the invention patent (once eventually approved). Please note that these parallel applications must be filed on exactly the same day and both applications must be accompanied by a declaration that a parallel filing was made.

 
Utility model patents and invention patents: what’s the difference?
The following are the most important differences between UMs and invention patents:
1) Subject matter – UMs only protect products with new shape/structural physical features. For example, methods of production or chemical compounds are not eligible as they do not have a shape or structure.
2) Inventiveness – although invention patents in literal terms require a higher ‘inventiveness’, in practice there is no difference.
3) Examination – UMs only require the ‘formality examination’ or ‘preliminary examination’, while invention patents require ‘substantive examination’, which takes longer and is much more detailed. Grounds for objections at preliminary examination are also different.
4) Term of protection – the maximum term of protection for a UM is 10 years from the filing date, while an invention patent lasts 20 years.
5) Different filing costs.
Although there are a number of differences, UMs and invention patents share many common features as well, the most important of which are listed below:
 
Protection requirements:
o There are specific disclosure requirements (on sufficiency, support, and clarity)
o Novelty
o Industrial applicability
Scope of protection:
o Interpretation of the protection scope of the patent
o Grounds for invalidation
o The right to forbid any other person from practicing the invention for operation or manufacturing purposes without the patentee’s consent is granted
Enforcement possibilities:
o Compensation for infringement
 
Take-away message
While in principle UMs are extremely similar to invention patents, they can often be a faster, cheaper and easier alternative (if all application requirements are met), but one which offers a shorter IP protection term. UMs are a form of patent in China that is often overlooked by foreign entities, but which can be a powerful tool to protect your IPR when used effectively, usually in conjunction with other forms of IPR such as invention patents. UMs should therefore be considered by SMEs as part of their IP strategy in China.
 
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