Focus on the Third Revision of Design Patent in China’s Patent Law

Issue 28 China IP,[Patent]


On December 27, 2008, the 6th session of the 11th NPC Standing Committee adopted the decision to revise the Patent Law of the People’s Republic of China. This is the third revision after the last one eight years, which has affected eight articles or clauses involving extensive changes to the design patent and more. The new Patent Law will become effective on October 1 of this year.

The People’s Daily Online IP Salon has invited Zhao Jiaxiang, former Chief of the Design Appeal Section, Patent Reexamination Board (PRB) of SIPO, Zhang Yueping, Deputy Chief of the PRB Design Appeal Section, and Bian Yongjun, Assistant to the Chief of the Design Examination Department. They will examine the revisions of the Patent Law, motivation for the revision, and how the new Patent Law, when effective, will affect design patent applications and reexamination.

Introduction to IP Salon

People’s Daily Online IP Salon, which was created jointly by the IP Channel of People’s Daily Online and China IP, will hold symposiums in 2009. In each symposium, we will invite 3 – 5 experts to have discussions on IP hotspots with ideas or suggestions. We will also invite 15 – 20 guests to join the discussion and exchange ideas with the professionals.
The IP Salon aims to take advantage of both People’s Daily Online and China IP to collect ideas from IP professionals and publicize them to the public in order to enhance the public’s awareness, focus and interaction upon intellectual property. Our principle is to “Focus on Hotspots, Exchange Ideas and Communicate Information”.

In 2009, IP Salon will be held periodically and we sincerely invite you to join us.

The motivation for design patent revision – better quality and more consistency with international trends
Bian Yongjun: Recently, the number of design patent applications and grants has grown by an average of 26.7% annually. In 1984, there were only a few hundred, but by 2008, the number had swelled to 312,904. In terms of numbers, applications and grants in China have reached the No. 1 position worldwide. However, as problems and issues exist behind the numbers and the law of 24 years ago is antiquated, so it has to be revised. Motivations are as follows:

1. The excessive amount of design patents and the low threshold for grants has resulted in lower patent quality.

2. The Outline of the National Intellectual Property Strategy is mostly intended to add momentum to creativity. Thus, effective protection needs more effort in the application and management of intellectual property rights.

First the provision relating to designs is intended to add momentum to creativity. Second, the purpose of “the abstract in such terms as to further specify the scope sought to be protected by the drawing and the photographs” is to establish more effective patent protection. Third, the amendment adds a new requirement to appraisal reports. To exercise their design patent rights, patentees or parties interested are required to file a search report to the relevant agency. A threshold is set up on this search report in infringement litigations.

3. This major revision of design patent is also intended to follow world trends, that is, to show emphasis on industrial design.

The Industrial Designers Society of America (IDSA) has accumulated statistics to show that an input of USD 1 in industrial design results in an increase of USD 2,500 in sales income. Japan has acquired similar statistics: to achieve a sales amount of 100 billion yen, industrial design contributes 51% and technological and functional aspects contribute 26%. The above indicates that these two countries are more inclined to protect their design patent systems during further development and improvement. 

Inventiveness? How to understand the criteria for “invention”?

Article 23 as amended reads, “… A design to be patented shall have obvious distinction over the prior design or designs as combined.” (newly added paragraph 2).

This provision is analogous on its face to the inventiveness requirement for invention and utility model. However, how do we understand implications and its effect on future practice?

Zhang Yueping: Article 23 as amended has a new paragraph 2, which is similar to the provisions on the inventiveness requirement for invention and utility model. But whether it should be called an inventiveness requirement has not yet been decided. This provision is analogized from the TRIPS Agreement, Article 25(1), that “members may provide that designs are not new or original if they do not significantly differ from known designs or combinations of known design features.” In my opinion, the understanding of the inventiveness requirement should cover the following aspects:
1. The requirement for inventiveness should be raised gradually. As I have learned, in Europe, where the design patent originated, there are unique requirements for design patents, but designs do not combine to form prior art (because Europeans believe all designs are formed by combining other designs). Since we are not as developed as other countries, I think it should be our principle: the “inventiveness” should not be too rigid a requirement, and it should be phased in step by step.

2. The technical field for comparison. The comparison of designs should be not only in relevant or analogous fields, but also in other fields. This is a feature of the European design patent practice.
3. This provision mainly applies to the reexamination phase. Inventiveness is not examined during the examination process, as no search results are available yet. Thus, the amendment will directly affect reexamination, leading probably to a surge of invalidation cases.

The change of the Implementing Rules challenges the reexamination commission
Article 23, paragraph 3, of the Patent Law as amended, provides for interference proceeding, which dedicates a separate paragraph in Article 23. Moreover, it changed “prior” to “prior to the application date.”
However, the biggest change does not occur in the Patent Law, but in the Implementing Rules for the Patent Law (draft), which is still under discussion.

Zhang Yueping: Article 23 also provides for conflict of rights. Former Paragraph 3 of Article 65 of the Implementing Rules has been repealed. (If one requests to declare a design patent invalid on account that this design patent as granted conflicts with any prior legal right of another, without filing an effective decision of disposal or judgment that proves this conflict of rights, the case will not be acceptable to the Patent Reexamination Committee.)

Zhao Jiaxiang: The former (Paragraph 3 of Article 65 of the) Implementing Rules provided that to solve this issue (the conflict of rights), the party must first sue for infringement. This would lead to a strange cycle, in which all involved passes the buck, and none wants to take responsibility. Now that this provision has been deleted, I think this issue can be mitigated. Based on the new provision, the public on the whole and the parties concerned can request the Patent Reexamination Committee to declare a patent invalid on the grounds that it conflicts with a prior right.

Zhang Yueping: The former Implementing Rules had a fault, that is, since the revision of 2001, drawings and pictures of designs could not be changed or modified. As a consequence, if the patentee applied for design patent but did not apply it, he could not be sued for infringement because infringing acts were prerequisite for a cause of action, and filing an application in and of itself would not give rise to infringement. On the other hand, without a court’s decision or a law enforcement ruling, there was no basis for petitioning invalidation. For that reason, few cases of interference were ever brought forward.

Now that the former provision of Article 65 of the Implementing Rules is out of the way, the PRB is empowered to adjudicate interferences. This presents us with opportunities as well as challenges, for all PRB examiners handling design invalidation cases must comprehend interferences, which lead to the following issues to be solved.

First, recognition of prior legal rights. The Supreme Court contemplated prior legal rights (Several Rules of the Supreme People’s Court on Law Application Issues in Patent Dispute Adjudication, Article 16), as to include the rights of trademarks, copyrights, corporate names, portraiture right, trade dress and use of well known products. As with technology development, recognition becomes all the more troublesome as do domain names, well known trademarks, not to mention unregistered well known trademarks. Should the PRB also get its piece in certifying well known trademarks? How about copyright, which needs no registration, and is created automatically? Take design, for example. Is it entitled to copyright? Suppose a petitioner says the design interferes with his prior copyright, we will have to see whether he has good copyright. Additionally, there is a trade dress of well known products. How well known is well known? What is a trade dress? These are all the new tasks for the PRB, a lot of work, and a lot of lessons to learn.

Will a Design conflict with an invention or a utility model?

Zhang Yueping: Conflict occurs only with rights of different sources. The Patent Law is the single source for three subjects: invention, utility model and design, which in theory cannot conflict with each other. However, personally speaking, because of the technical nature, some creation could end up as a design, or as an invention patent or utility model. Overlapping rights may result, as an example, between utility model and design. This is a minority view. The majority believe that no conflict will result.

If a conflicting right develops, there must be a way to solve the interference of rights. Why not conflict of rights? Because they are both patent rights and do not constitute a conflict of rights. But they indeed block each other. For example, the inventor of a utility model first applies for a utility model patent and provided a drawing of the utility model. Someone, who perhaps has not seen it, applies for a design patent, which is similar to the utility model. In this instance, if no interference proceeding is permitted, the design patent is legal and valid, and the patentee of the design may hold that its patent has been infringed by the utility model. In fact, as the utility model patent is the prior right, the holding of the patentee of the design is certainly unjustified. The design patent is disclosed later and is not the prior right. However, the circumstance results in unreasonable behavior. Thus, I think that the interference between utility model application and design application should be recognized, but most people do not see it this way.

Bian Yongjun: In fact, this issue can be better understood from the perspective of protection. For example, the extent of protection for invention and utility model is a technical scheme in textual form. It is the textual thinking that appears in the technical scheme and is reflected in the minds of people. However, design, which achieves a visual aesthetic feeling, may have a different extent of protected rights. The different extent of protected design rights may seldom intersect with the extent of other protected patent rights. So, I think conflict of applications should not cover inventions or utility models.
Why may conflict of rights occur between portraiture right, copyright and right to decoration of brand commodities? These rights are all visual, and trademarks are graphics or text perceived by vision. Thus, these rights may interest each other when intellectual property rights are protected. The content of design determines the possibility of intersection. However, although design and utility model may interest each other to some extent (as a design may qualify for either design patent or utility model patent), it is unlikely that they conflict with each other because the contents under protection are different.
Cheng Yigui (A Lawyer at Globe-Law ): But, it is still possible in practice. If a utility model patent may have provided definite drawings at the end of the application, and another person, on the basis of these drawings, applies for a design patent, is the design a prior design?

Bian Yongjun: There is a solution. The two applications have come up one by one. In this case, we should mostly see the figures attached to the utility model application. Can those figures be used as evidence for design patent? Do they clearly show the design? Or, have they been published in an external publication before this application?

No granting of marker-type plain prints – What lies behind

Article 25 of the new Patent Law has added Clause (6): Patent is not granted to “designs that are made of patterns or colors or both of plain prints and that work mostly as markers”.

Bian Yongjun: This new clause has three points. The first point is about the plain prints, mostly bottle labels or tags. (This is so provided) because a patent is intended to encourage creativity. The second point is that designs that involve patterns or colors or both are still defined in terms of plain prints. However, shapes are excluded from this combination of patterns and colors. The third point is about the marker function, which is very important. As we can find in trademark rights, one function of a trademark is to designate the origin or nature of commodities. Such designs as logos which are only patterns on plain prints; names of products; indicative markers, such as traffic signs; or designs that indicate an activity are not protected under design patent.

Take this pictured bottle label as an example. In fact, it may not function just as an indication of the origin of this commodity. It is added with many decorative elements, the label decorations for example. This decorative function is much different from the marker function. We have stereoscopic designs and plain designs. Plain designs that do not function as markers should be protected under patent.

Thomas Pattloch (IP Officer, EU Delegation Beijing): In my opinion, this new clause intends to prevent many people from applying for both trademark protection and design patent protection. However, it contains many issues of definition. What is “decorative”? What is “marker”? When does a design indicate the origin of a product? These questions are troublesome during adjudication.

Bian Yongjun: The idea for this change originated from suggestions of some courts and enterprises. Conflicting opinions existed regarding this clause. An extreme opinion suggested a clean cut, which meant that, any plain prints, whether decorative or otherwise, would be excluded from patent protection. They could be protected under trademark or copyright. Later, the legislation abandoned this opinion, but added the three limiting conditions. Now, this clause needs to be detailed. The excluded items will be further listed though operational practice.

Ma Xiaodong (Grandall Legal Group Beijing): As I have learned, this new clause was added not because of design patent conflicts with trademark right, but because, as perceived, the implementation of the Patent Law is made less meaningful or insignificant due to the occurrence of a large number design patents, especially plain design patents. Will it be better to have a “clean cut” as you have mentioned?

Zhang Yueping: I think the existence of every thing is justifiable. Why are there many design patents of plain label? If the Unfair Competition Law is used to protect them, the protection will not be particularly strong. It is an issue on how to determine “famousness”. The conditions to judge a special package decoration are rigorous. Trademark by which protection and the distinctiveness of trademarks make it impossible to apply for registering this bottle label. In my opinion, for the applicant, design patent application is easier and provides stronger protection.

Affiliated Design - Joint Application, Wholesale Transfer and Individual Nullification
Paragraph 2, Article 31 of the old Patent Law has changed to: “One design patent application shall be restricted to one design. Two or more similar designs on the same product, or two or more designs that are applied in the same category and sold or used as a whole set, may be filed in one application”. The above is one of the essential revisions in the new Patent Law. It has now been called the “affiliated design” clause.
The appearance of affiliated design brings an issue with the relationship between the affiliated designs. Can one of the affiliated designs be transferred separately? Will the other affiliated designs remain valid, if one affiliated design is nullified? 

Zhang Yueping: In foreign countries, this circumstance is called “affiliated application”. But, personally, I do not think “affiliated application” is appropriate, because they are separate applications. In China, strictly speaking, it is called “affiliated design”. This clause is intended mostly to solve the following issues: the same applicant may receive repeated grants on a single application; the joint application is impossible as it does not meet the singularity requirement; and the applicant may choose only one application to be protected.

Article 31 provides that the brief explanation shall designate one fundamental design, and that as many as 10 designs may be filed in a joint application. It requires only that the other nine designs are basically similar to the designated fundamental design. This can be compared to a garlic bulb – the fundamental design is in the middle and affiliates are peripheral. The provision is actually intended to strengthen the protection over design patent. The protection for 10 similar designs is certainly more powerful than that of only one design. This helps protect the style of design and brand of the applicant. For example, when we talk about an electric shaver made by Philips, we all think of the shape of the shaver handle. 

In my opinion, if a number of designs are filed in a joint application, none of them should be separately transferred. They should be transferred in a wholesale transfer, so that the rights will remain stable and chaos will not result. For instance, if you transfer one “clove” to A and another “clove” to B, it will cause confusion as the two “cloves” are similar. This is only my personal point of view.

However, the subsequent nullification process is different from transfer. The transfer must be a wholesale transfer. Then, will all the patents be invalid if one of them is nullified? Though bundled together, the patents are independent from each other. Even if the fundamental design is nullified, the remaining patents can still be bundled together. The provision of affiliated application deals with the issue of joint application. As long as the conditions are satisfied, two or more designs can be filed in a joint application. Even if the fundamental design is nullified, the remaining designs can exist separately. The singularity requirement is not a condition of nullification.
Ge Qiang (Wan Hui Da Intellectual Property Agency): Is it contradictory if the design patents are nullified one by one but transferred in a wholesale transfer?

Zhang Yueping: No. The confusion that the transfer causes is an infringement issue. If separate transfer were allowed, it would be very chaotic if every one sues for infringement. The nullification process does not have this problem. Though in the set, the designs are independent from each other. The nullified designs are null and the remaining continues as before.

The appraisal report faces three challenges

The former Paragraph 2 of Article 57 has been changed into Article 61 as follows: “If a patent infringement dispute involves invention patent for a manufacturing method of a new product, the unit or individual who manufactures the same product shall provide proof that the manufacturing method is different from the patented method”.

“If a patent dispute involves a utility model or design patent, the people’s court or the agency that administers the patent work may request the patentee or the party interested to provide an patent appraisal report produced by patent administration under the State Council after this patent administration has searched, analyzed and appraised the relevant utility models or designs, and use this patent appraisal report as evidence to adjudicate and dispose of the patent infringement dispute”.

Zhao Jiaxiang: The design patent appraisal report was never called the “search report”. According to the new Patent Law, when one asserts his patent rights, the appraisal report may be used as preliminary evidence for a valid patent. However, it may probably face some issues.

First, the time issue. An appraisal report may need several months to complete. Thus, a shorter time limit, two months for example, should be required.

Second, as an advantage of the search report, the searching agency will search a wide range of information. For utility models, the agency may search information on invention patents in China, as well as in Japan or the EU. But, this is not so for designs. The extent of a search directly determines the validity of the report. Thus, the databases for searches are a key. Currently SIPO is doing research on the issue.

Third, although provided by law, the authority of the appraisal report will be challenged if the court treats this report only as a reference and simultaneously accepts other evidence from the applicant.
Moreover, the appraisal report works not only at the adjudication phase in court, but makes up for a fault with design patent—the design patent undergoes a preliminary examination but not a patent search. It provides a reference to the patentee or party interested.

The brief explanation on design emphasized—key points of protection
The former Article 27 has changed to the following: “To apply for design patent, the applicant shall file the application, the figures or pictures of the design and a brief explanation of the design”.

“These figures or pictures that the applicant files shall clearly show the design for which patent protection is required”.
The former Article 56 is now Article 59 in the new Patent Law: “The extent of protection for invention or utility model patent shall be determined by the terms of the claims, and the specification and appended drawings may be used to interpret the claims”.

“The extent of protection for design patent shall be determined by the product design shown in the figures or pictures, and the brief explanation may be used to explain the product design shown in the figures or pictures.”

Bian Yongjun: The brief explanation is provided in Article 27. It has changed from being an unnecessary document to a necessary one. It explains the design. Now, as a preliminary requirement, the fundamental design of affiliated applications must have a brief explanation. The product name must be included in the brief explanation, and the intended purposes of the product, as a reference for product categorization, must be included. Also, the clear design points must be included, which are essential for the subsequent procedures, including the determination of infringement by the court. However, it needs to be further detailed on how to write the design points, because it is very difficult to describe a graphic matter using words. It requires one to transform their thinking.

Currently, an additional sketch map is required for the brief explanation. For example, if you want to have a drawing protected, you provide a plain and stereoscopic drawing. However, someone may not use a brief explanation to explain the drawings or designs to be protected. When the court determines whether infringement has occurred, no clear definition will be available as to customary design or key points of design. So, these should be further explained in the brief explanation. Another important issue is about the change of the gazette for design patent. Now, if a stereoscopic product has many drawings, each and every drawing has to enter the gazette. (To satisfy this requirement), a kind of abstract drawing is used. A drawing may be designated as the fundamental drawing, which best represents the key point or idea of design. The fundamental drawing may be published, together with a detailed text. In this method, the design is specified.

Ge Qiang (Wan Hui Da Intellectual Property Agency): We used visual observation and judgment before the addition of brief explanations. It is useful to have brief explanations, but some are worried that we may walk backwards to the mode of essential parts judgment which we have given up.

Bian Yongjun: To judge infringement, some have said that the statement of the nullification process was different from that of the infringement process. The issue is that we have to accept some things and reject others. For this, the writing of design points must be comprehensive to some extent. It should give an advantage to both the title affirmation process and the infringement process. Different products are covered by different categories, or by categories that you determine upon a comprehensive analysis of the possible extent of infringement. As we have mentioned during the topic research, the more advantageous the overall judgment is, the more general the explanation should be. For example, you can use more general wording if a design point falls on a drawing or a large part. If the category concerns or the extent of protection involves a number of customary designs and the design point is very specific, you can use more detail in the explanation, for example, when you explain a certain part on one side of a refrigerator.

 (Translated by Ren Qingtao)

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