In contrast to the United States, China will grant a compulsory license to non-patent holders if certain conditions are met.  After three years have elapsed from the time a patent is granted, any entity may petition SIPO for a compulsory license.  Generally, there are three instances when a compulsory license will be granted. 

            First, a qualified entity that has made reasonable requests for authorization but has failed to come to terms with the patent holder in a reasonable time.  Second, SIPO may grant a compulsory license in the event of a national emergency, extraordinary state of affairs, or where the public interest so requires.  Finally, a compulsory license may be granted when the exploitation of a later invention depends on the exploitation of the patent right in question.

            A compulsory license is not an exclusive right and does not permit the licensee to further authorize others to exploit the patent right.  In addition, an entity or individual that is granted a compulsory license is required to pay a reasonable fee to the patentee.  The fee should be negotiated between the parties, but failing an agreement, SIPO determines an appropriate payment.  Finally if the patentee is dissatisfied with the grant of the compulsory license, or the licensee is dissatisfied with SIPO's adjudication of the reasonable fee, either party may institute legal proceedings within three months of being notified.

            Designs are one of the three categories of patents along with inventions and utility models.  While all three categories share numerous provisions of the China Patent Law, in some instances designs diverge from the other two, and it is worthwhile to explore designs individually. 

            "Design" in the China patent law is defined as any new design, 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.  As noted previously, the duration of the patent right for a design patent is 10 years.

            Whereas the protection right for an invention or utility model is defined by the claims, designs rely on drawings or photographs depicting the patented design.  The drawings or photographs are limited in size, and may be accompanied by a brief explanation of the design.  An applicant seeking a design patent must submit these drawings or photographs along with a request and the product incorporating the design, and the class to which that product belongs.  The application is limited to one design incorporated in one product.

            Once filed, the application is only subject to a preliminary examination as to compliance with formal requirements.  The preliminary examination is essentially an expedited process to a patent grant so long as the design at issue is not identical with, or similar to any design, which before the date of filing, has been publicly disclosed in publications anywhere, and must not collide with any prior legal rights obtained by any other person.  SIPO will make a decision to grant the paten right for the design, issue the certificate, and register and announce it after the preliminary examination.

            Once granted, a design patent operates much like a patent for an invention or utility model in protecting the rights of the patentee.  No entity or individual may, without authorization of the patentee, exploit the design by making, selling or importing any product incorporating the patented design.

            SIPO receives all Chinese patent applications submitted for examination.  For utility model and design applications China follows a registration system whereby if these applications meet the statutory filing requirements, these patents will generally issue.  Applications for inventions, on the other hand, are subject to China's delayed examination system.  The delayed examination system consists of a preliminary examination, publication of the application, request for substantive examination, and substantive examination. 

            The preliminary examination is a check to see if the application meets the requisite filing standards.  The applicant is notified of any issues after the preliminary examination and is afforded a limited time to correct any errors or omissions.  Once an application conforms to the statutory requirements, the application will publish within 18 months of the filing date, or earlier at the applicant's request.

            Applicants for inventions have up to three years to formally request a substantive examination of the application.  In the alternative SIPO may, on its own initiative choose to substantively examine any application.  Amendments to an invention application may be made at the time of request or within 3 months of the initiation of substantive examination. 

            If, after a substantive examination, SIPO finds that the application does not meet the standards of novelty, inventiveness, practical applicability, or some combination thereof, the applicant is given an additional chance to amend or respond.  After the applicant's response or amendment SIPO will make a final decision to deny or grant the invention patent application.  As noted previously, a denied application may still be appealed to the PRB for reexamination, or the applicant may institute a legal proceeding to review the rejection. 

            Under the China Patent Law, the right to apply for a patent depends on whether the invention is a "service invention-creation" or a "non-service invention creation."  If an invention stems from tasks performed in the course of service to a particular entity, the invention is a service invention-creation.  This rule also applies to invention-creations created within one year of resignation, retirement or change of work, if the invention-creation relates to previous tasks performed for the entity. 

            In these circumstances, the right to apply for the patent belongs to the entity, although the inventor creator has a right to be listed as such on the patent document.  The inventor-creator of a service invention creation is also entitled to a reasonable reward to the extent the patent generates an economic benefit for the entity.  However, the China Patent Law does state that an agreement between an employer and employee concerning patent rights will prevail over the default rules.

            For a non-service invention creation, the right to apply for a patent belongs to the inventor or creator.  If a patent is granted, the inventor is the patentee.  Furthermore no entity or individual can prevent an inventor from filing an application for a non-service invention.

            For an invention-creation jointly made by two or more entities or individuals, or made by an entity or individual in execution of a commission for another entity or individual, the right to apply for a patent belongs, unless otherwise agreed upon, to the entity or individual which made, or to the entities or individual which jointly made, the invention-creation. After the application is approved, the entity or individual that applied for it shall be the patentee.

            Finally, a note on agency.  Under the China Patent Law, any foreigner, foreign enterprise or other foreign organization that does not have a habitual residence or business office in China applies for a patent, or has other patent matter to attend to; they must appoint an agent to act on their behalf that has been approved by SIPO.  Domestic applicants, on the other hand, may appoint an agent to handle their patent affairs, but are not required to. 

In order to be eligible for protection under the China Patent Law, an invention or utility model must be novel, inventive and have practical applicability. 

            1.  Novelty

            The China Patent Law adopts a unique definition of novelty, referred to as "absolute novelty."  Under current law, absolute novelty means that before the Chinese filing date, an identical invention has not been (1) published in China or abroad or (2) publicly used or made known by any other means in China.  Thus, absolute novelty is very broad, covering nearly all prior disclosures in China, and all publications abroad.  Notably, the use or sale of the same invention abroad does not bar protection.   

            Absolute novelty is further enhanced by China's adoption of a first to file system.  The filing date in China not only establishes priority of invention among competing applications, but also determines novelty.  Effectively this means that an inventor does not receive a grace period to file his invention after public disclosure, and may bar himself immediately by doing so.  Thus, most inventions publicly disclosed prior to the date of filing fail the novelty test.

            However, this first to file rule is subject to three exceptions.  An invention retains its novelty if filed within six months of being (1) first made public at an international exhibition sponsored or recognized by the Chinese government, (2) first made public at a prescribed academic or technological meeting, or (3) disclosed without the applicant's

consent.  To be eligible for this six month grace period, an applicant must present evidence to SIPO that they qualify for an exception within two months of the filing date.

            2.   Inventiveness

            In addition to being novel, the inventiveness test for patentability in China requires the "invention" have prominent substantive features and represent notable progress.  Meanwhile a "utility model," need merely have substantive features and progress.  Not unlike the test for non-obviousness in the United States, the test for inventiveness involves a comparison of the application to the prior art.  The invention or utility model must have substantive differences beyond the technology existing at the time of filing and beyond the realm of a person of ordinary skill in the arts. 

            3.  Practical Applicability

            Finally, an invention or utility model must have practical applicability.  This prong requires that the invention or utility model can be made or used and produce effective results.  Each application is examined individually without regard to other inventions, and is typically the first hurdle an applicant must clear during examination. 

As referenced earlier, China's general court system is a hierarchy consisting of four levels; The Supreme People's Court, the Higher People's Courts, the Intermediate People's Courts and the Basic People's Courts.  The court system plays a role in both patent prosecution and litigation and works in conjunction with the administrative body SIPO. 

            1.  Courts in Patent Prosecution

            Even after all administrative appeals are exhausted through the PRB, an applicant may still seek judicial review through the Intermediate People's Court in Beijing.  Such an appeal must be filed within three months of receiving notice of the PRB's adverse decision.  Judgments from the Intermediate People's Court in Beijing may also be appealed to the Higher People's Court of the Municipality of Beijing.  Such appeals must be made within 30 days of receiving the Intermediate People's Courts adverse holding.

            2.  Courts in Patent Litigation

            As noted earlier, SIPO and the PRB provide an administrative outlet to handle patent litigations.   Alternatively, a patent litigant may utilize the court system to adjudicate the dispute.  To initiate litigation, a party files a complaint through a local Intermediate People's Court.  Many of the Intermediate People's Courts and Higher People's Courts rely on Intellectual Property Tribunals to handle these disputes.  In addition to having jurisdiction to hear litigations in the first instance, the Intermediate People's Court also serves as an appellate court for decisions rendered by the PRB on the administrative side.    

            A decision at the Intermediate People's Court can be appealed to the Civil Division of the supervising Higher People's Court.  Finally, in recent years, the Supreme People's Court, Higher People's Courts, and a number of Intermediate People's Courts have established an IP Litigation Division that specializes in IP matters.  The IP Litigation Division is stocked with judges and professionals whom have both the technical education and professional experience to preside over the trial.

            The next post in the series will cover statutory requirements for patent eligibility in China.  

            The State Intellectual Property Office (SIPO) is the patent office for China.  SIPO was founded in 1980 and is responsible "for patent work and comprehensively coordination of the foreign related affairs in the field of intellectual property."  More specifically, SIPO examines patent applications, grants patents, regulates the quality of patent examiners, implements regulations, and occasionally revises the Chinese Patent law. 

            While SIPO is the central office responsible for patents in China, there are a series of similar systems at various levels of local government.  These "local" Intellectual Property Offices are established in a number of provinces, autonomous regions, districts and municipalities across China.  The local offices are responsible for managing the administrative work regarding intellectual property, and may also have jurisdiction over patent infringement matters.

            1.  SIPO, the PRB, and Applicants; Prosecuting Patent Applications

            SIPO and the associated local Intellectual Property Offices initial role is to receive and examine applications for patents.  Similar to the United States Patent and Trademark Office, SIPO may first issue a rejection of the application, but provide the applicant with an opportunity to respond.  SIPO will review the response from the applicant, and if not satisfied, will then issue a final rejection.  An applicant may submit an appeal to the Patent Reexamination Board (PRB) within three months of receipt of the final rejection. 

            The PRB is an extension of SIPO and consists of a number of examiners experienced in both technical and legal matters.  The PRB will review an appeal and determine both patentability and validity.  The PRB may provisionally withdraw, non-provisionally withdraw, or sustain the final rejection.  The decision by the PRB essentially exhausts an applicant's administrative remedies.  However, judicial remedies may still be preserved. 

            2.  SIPO and Adverse Parties; Litigating Patent Disputes

            The administrative arm of the Chinese patent system also assists in the protection of patent rights.  While an aggrieved party may also seek judicial remedies, administrative proceedings are often preferred in order to conserve judicial resources.  To initiate a litigation proceeding on the administrative side, a complaint is filed at a local intellectual property office in an appropriate province.  The administrative agency will attempt to mediate the dispute before any additional legal proceeding, and may issue fines or seize property. 

            Notably, the administrative agency cannot award damages to a wronged party.  Administrative orders may be appealed to the Administrative or Civil Divisions of the Higher People's Courts, which generally supervise administrative agencies for patent litigation disputes.  While a litigant could bypass the administrative track altogether and directly file a complaint in court, most civil patent litigations proceed first through the administrative process due to the lower cost. 

            3.  SIPO, the PRB and Third Parties; Invalidation Proceedings  

            According to the China Patent Law, once SIPO grants a patent right, any individual who disagrees may request an invalidation proceeding before the PRB.  An invalidation proceeding may apply to all or only part of a patent right.   A person initiation an invalidation proceeding must submit a detailed request along with all necessary evidence for the proceeding.  The PRB has discretion to accept or deny a request for invalidation. 

            If an invalidation request is accepted the petitioner may submit additional evidence.  The patentee may also attempt to narrow the scope of protection by amending the claims.  Either the petitioner or the patentee may further request an oral hearing before the PRB.  The PRB will reexamine the application in light of the additional evidence, amendments and/or oral hearing and render a decision.  The PRB may declare the patent invalid as a whole or in part, or sustain the patent right based on the evidence.

            The next post in the China Series will cover Judicial Patent Proceedings within China.