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Patent Issues for Attention on the Exhibition in China

The international exhibitions give enterprises great opportunity to release new technology or new product, which can help enterprises draw much public attentions. While such exhibitions are also annoyed by the patent dispute with damages the enterprises expectations on the exhibition. Today, Bridge IP Law Commentary today will give our analysis on the issues related to the exhibition patent.

I. Showing in an exhibition won¡¯t cause a patent product lossing novelty

The priority of the trademark on the exhibition has been analyzed in our past post, while as to the patent right, the exhibition attendance could not necessarily bring the priority. According to Article 24 of Paten Law in China:

¡°An invention-creation for which a patent is applied for does not lose its novelty where, within six months before the date of filing, one of the following events occurred: (1) where it was first exhibited at an international exhibition sponsored or recognized by the Chinese Government¡±.

Therefore it could be concluded that the patent is also granted the special treatment by law that no lose of novelty.

Moreover, what shall be the attention for the enterprises or inventors is that such treatment is only applicable on the exhibitions sponsored or recognized by the Chinese government. So, it¡¯s suggested and essential for the companies to check with the sponsor if the exhibition is in the above said scope.

Of course, the best solution, as Bridge IP Law Commentary holds, to reduce the risk of invalidity of patent from the exhibition attendance is to apply for the patent approval before the exhibition. The reason is that once the exhibition is ¡°unqualified¡±, the patent will lose the novelty which may lead to the right grant failure, and that is quite different from the trademark in the same situation.

II. The Legal Nature of Patent Infringement on Exhibitions

The patent infringement on exhibitions is clearly verified in China Patent Law, and that is the offer to sale, which is the peculiar infringement provided in Patent Law, and that¡¯s not regulated in Trademark Law or Copyright Law. This regulation just means that the right owner is entitled to file the lawsuit against any infringement to the patent right on the exhibition or in the ads, while there¡¯s no similar regulation in the infringement of trademark or copyright. According to Article 24 of the Several Regulations on the Law Application in Hearing the Patent Dispute by Supreme People¡¯s Court, the offer to sale in the Article 11 and 63 of the Patent Law shall refer to those willing of the product sale by ads, window show or exhibition show. Therefore, the exhibition patent infringement shall be the violation to the offer to sale.

In addition, in general, the ¡°offer to sale¡± will result in the losses to the patentee directly; neither will bring benefit to the infringing party. And for this reason, the court could only fix the compensation sum on consideration in lawsuit, and by the Patent Law such compensation could be as high as 1 million yuan.

III. The handling on the patent infringement on the exhibition

It¡¯s similar to the trademark infringement that, the sponsor of the exhibition will set up a special infringement complaint institution by the Measures to the IPR Protection on Exhibitions. And also the local IPR administration will send staffs to handle the dispute. When detecting the infringement, the patentee could make the complaint directly to the sponsor, who will response the decision of punishment once the claimed infringement is verified, furthermore, the company method is as the same as that of trademark, and you may refer to the detailed procedure from our past post.

In addition to these, to exhibit the patented product on the exhibition has been the infringement against the offer to sale in Patent Law. And we suggest the company to make the notary through the attorney before the compliant, in order to avoid the vigilance of the infringer and evidence collection failure.

At last, Bridge IP Law Commentary would like to remind all the companies tending to participate in the exhibition of the certificate preparation and the entrust procedure to the stationery staffs, by which any unnecessary delay of right protection could be avoided.

Web link: http://www.chinaiplawyer.com/?p=1173

China¡¯s Patent vs. Innovation Dilemma

With a well-deserved reputation for counterfeiting and knockoffs, we have rarely looked to China for innovation and invention. Nevertheless, as an ever-growing giant on the world¡¯s economic stage, China has taken steps to remedy this deficiency. About a year ago, Thomson-Reuters released their second report on the nation¡¯s patent prowess, suggesting that China¡¯s patent will outpace Japan and the United States in 2011, a year earlier than their initial prediction in the first edition of their study in 2008. Although the United States was still the leader in patents by a wide margin in 2010, responsible for over a quarter of all applications, its growth is slowing while China¡¯s is surging. China filed 1.2 million patent applications in 2010, 56% more than the previous year while the number of American applications dropped for the third consecutive year.

Thomson-Reuters¡¯ forecast is supported by the People¡¯s Republic of China State Intellectual Property Office¡¯s National Patent Develop Strategy (2011-2020) (the Strategy), a document that was published November of last year containing tactics to significantly increase the nation¡¯s patent production. The Strategy aims to reach 2 million patent filings per year by 2015 and to double both domestic and overseas applications. The document outlines approaches to achieve this, such as increasing patent examination and approval efficiency by cutting waiting times down to as little as 3 months and doubling patent examiners to 9000, as well as enhancing benefits of utilizing patents and protecting the rights of patent holders by improving patent law and regulations.

The Strategy is certainly ambitious, especially considering that China did not even have a patent law system in place until 1985. Many have noted their skepticism towards this pending patent explosion, expressing concerns that there may be a major quantity versus quality discrepancy.

Firstly, there are three types of patents in China: invention, utility model, and design. Chinese patent law allows double patenting where an applicant is able to simultaneously apply for an invention patent and a utility model patent. The utility model patent, which provides protection for a product¡¯s shape or structure, requires no substantive examination and is typically granted very quickly. In some sense, it acts as a placeholder ¡°mini-patent¡± before the invention patent, which does involve a potentially lengthy examination, is granted. A utility model patent must be abandoned before the invention patent is granted for the same product. These utility model patents are also often used to protect new ideas applied to pre-existing products. Hence, China¡¯s numbers may have been artificially inflated. Three years ago, a legal expert proclaimed that the standard is so low that ¡°at the moment, you could patent a wheel in China, and get it through¡±. Since then, amendments have been made to the law in an effort to raise the quality of Chinese patents to meet international standards but we have yet to see evidence of a genuine technical innovation burst.

The second issue with patent quality is the use of state incentives for filing patents,including cash bonuses, residence permits, tenure, fee waivers, substantial tax breaks, and government contracts. These inducements then trickle down companies to its individual employees as well as to the patent office workers who are paid more if they approve more patents. While these strategies technically work to aggressively increase numbers, they are misleading in painting China as an inventive nation. The problem is that these incentives are granted for patents, and not innovation.

The Strategy suggests that China is aware of these concerns, promising to enhance patent quality, as well as ¡°improve examination efficiency and quality¡±. The approach they appear to be taking is to establish themselves as global patent leaders in numbers first and then gradually refine quality. It is possible that what China will end up with is a mountain of useless patents but some experts believe that China is on the right path to innovation. For example, Chinese technological companies increased their research and development spending by 25-45% in 2009 while American companies made cuts to their budgets.

Web link: http://www.iposgoode.ca/2012/01/china%E2%80%99s-patent-vs-innovation-dilemma/

Lehman, Lee & Xu is a top-tier Chinese law firm specializing in corporate, commercial, intellectual property, and labor and employment matters. For further information on any issue discussed in this edition of China Patents In The News or for all other enquiries, please e-mail us at mail@lehmanlaw.com or visit our website at www.lehmanlaw.com.

© Lehman, Lee & Xu 2012.
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