Quality Control: Design Patent System Reform Under New Chinese Patent Law

By Jo Xu and Max Lin, Foley & Lardner LLP

The new Chinese Patent Law, effective on October 1, 2009, has made several significant changes that will reform China’s design patent system and influence design patent practice. The following examples highlight changes in the new Patent Law.

Example 1: Beverage Company A plans to apply for design patents on its bottle labels in order to secure quick IP protection for its newly launched products. Can Company A seek design patents to protect its labels?

Under the current Chinese Patent Law, Company A can seek design patents for the bottle labels. However, it will be difficult to obtain design patents on the bottle labels under the new Patent Law if the pattern, colors, or combinations on the bottle labels are primarily used for identification purposes.

Under Article 25(6) of the new Patent Law, a patent design has four elements:

• Incorporated into a product
• Based on product’s shape, pattern, or color
• Creates an aesthetic feeling
• Fit for industrial application

As noted above, the new Patent Law explicitly excludes designs primarily used for identification purposes from patentable subject matter. Based on the current statistics, such design patents enjoy a high rate in China’s patent system. However, in order to control the quality of design patents that shall be functionally value-added to the products and creativity, the new Patent Law no longer protects such designs if they are only for identification purposes.

Example 2: Foreign Company B launched a new clock design in the United States before obtaining any IP rights. The clocks were designed, sold, and manufactured exclusively in the United States, and the new design was never published in China. If Chinese Company C applied for the same design in China, could Company C obtain a design patent despite Company B’s activities in the United States?

Based on the current Patent Law, Company C could obtain a patent on the design because public use outside of China will not preclude design patent protection in China. It would be difficult for Company B to invalidate Company C’s design patent.

Under Article 23, public use or disclosure of a design anywhere in the world will be considered prior art for the designs. The new Patent Law requires a patented design to be substantially different from the prior art. In the above example, Company B could argue invalidity of Company C’s patent based on the public use of the prior design in the United States.

In a related issue, the new Patent Law has adopted an absolute novelty standard such that any prior public disclosure anywhere in the world can be cited as a prior design against the novelty of a design patent application. Furthermore, the new Patent Law provides that conflicting applications will destroy the novelty of a later design patent application.

Example 3: Fine furniture Company D launched a new series of sofas. The sofa designs are slightly different from each other but share the same concept. Can Company D obtain patent protection for its new sofa series?

The current Patent Law would allow Company D to file for a design patent on one of its sofa designs — but not the series. Articles 27 and 31 of the new Patent Law, however, provide for the submission of similar designs for one product in one application. The result is that multiple designs can be protected under one “root” design patent. Applicants applying for a root design patent must submit pictures of all designs and a brief introduction of the series to obtain complete protection. When submitting the application, the applicant needs to point out the root design, and the number of similar designs can not exceed 10 units. These requirements are designed to prevent willful infringement and encourage innovation. In practice, a patent owner should consider assigning or licensing all the designs under the same root patent to avoid potential patent disputes.

Besides the aforementioned revisions, the new Patent Law also confirms the following significant amendments that may influence the general practice.

No First Filing or National Security Review for Design Patent
The current Patent Law requires that all Chinese patent applications filed by a Chinese applicant be filed first in China. The new Patent Law has “waived” the first filing requirement for all applications but requires a national security review prior to the filing of an invention or utility application in a foreign country.

Scope of Protection Broadened
In light of the relevant TRIPs provisions, the new Patent Law extends the scope of design patent protection to cover “offer-for-sale” activity. As a result, such offer-for-sale activities are prohibited without the patentee’s authorization. This revision may provide better protection for the increasing number of Internet design patents.

Prior Design Defense Codified
Under the current Patent Law, two parallel systems handle patent infringement and invalidation proceedings. Practically, the accused infringer will likely file an invalidation petition in order to challenge the patent at issue. This result may not be beneficial to the alleged infringer, especially if the claimed infringement actually falls into a prior design. The doctrine of prior design defense simplifies the infringement proceedings and will be fleshed out and clarified by judicial interpretation. For example, an open issue will be whether a defendant can rely on a combination of prior designs as prior art to defend against an infringement claim.

Conclusion
The new Patent Law has made several significant amendments to the design patent system in China in an effort to raise the standard of design patent protection and to encourage innovation. Many companies, especially in the fast-moving consumer goods (FMCG) and design industries, will be influenced by such amendments. Design patents can no longer be regarded as the fastest way to get IP protection. In the short term, companies may find it more difficult to obtain design patents. However, in the long term, the disputes between trademark, copyright, and other IP rights may decrease as design patents become more effective from an enforcement perspective. The overall implementation and effect of the new amendments will depend on judicial practice and remain to been seen.