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Intellectual property in China: Q&A with Bing Ai

Bing Ai is a patent attorney and principal with Fish & Richardson in San Diego.

How does the Chinese patent process differ from the U.S.?

Current Chinese patent law appears to be modern and is generally in step with the standards of the World Trade Organization. However, China's patent system is different from the U.S. patent system in many aspects. One significant difference is that the U.S. has a first-to-invent system while China has a first-to-file system like most systems in the world. This difference between U.S. and Chinese systems can impact the ownership to a patent independently invented by two parties who filed the patent applications for the same invention at different times.

The U.S. patent system provides a grace period of one year for filing a U.S. patent application after an invention is disclosed to the public. China, like many other countries, instead has a grace period of six months for very limited situations. If you publicly disclose your invention before a patent filing, you basically give up your Chinese patent rights. It is particularly important for U.S. companies to file for a patent application in either U.S or China before any public disclosure to preserve the rights to apply for a patent in China.

Furthermore, Chinese law requires that a patent application for an invention made in China by a Chinese applicant to be first filed in China before filing in another country. This requirement may impact a U.S. company's patent filing strategy under certain circumstances.

Is it difficult to enforce a patent in China?

IP enforcement in China is uncertain and remains a challenge for U.S. companies. However, there has been some encouraging development in Chinese courts on IP cases. 3M brought a patent infringement case against a Chinese company in a Shanghai court, and was able to shut down the production of the infringing products and avoided separate and expensive legal actions against infringers in other countries. 3M would not have had the Chinese patent to sue the infringer if 3M did not have the foresight to file for a patent in China.

China has a unique "two-leg" patent enforcement system. One leg is an administrative proceeding before provincial and municipal agencies designated to handle IP matters. Another leg is the civil court system where a patent case is brought before a panel of judges. There are no jury trials in China and little formal discovery to the parties. The damages are capped around $60,000 in absence of proof of actual damages. These two enforcement systems are parallel. In addition, a patent holder may enforce the patent rights through the Chinese Customs.

IP enforcement systems in China are at their infancy. The biggest challenge for some U.S. companies is that they currently do not have Chinese patents. For these companies, the issues of weak IP enforcement systems in China are not immediately relevant. U.S. companies need to evaluate their technology portfolio and take actions to selectively file patent applications in China because it will be at least three to five years for patent applications to go through the examination process.

Until we have secured patents in China, there will not be an "infringer" in China because a U.S. patent for a technology simply has no legal force outside our borders. A product made in China based on the technology patented in U.S. is completely legal in China and can be freely manufactured, used, and sold in China or any country where there is no patent on the technology.

U.S. companies should carefully evaluate the ongoing changes in China and strategically examine their own business activities and planning with respect to China.

Submitted by Fish & Richardson

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