Reduction of China’s Patent Fees Increases Challenges For Patent Quality

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Since 2011, China is the world leader in the number of published invention patent applications (also the number of utility model and design patents is rising). China is in the process of doubling its number of patent applications (from more than 1 million patent applications in 2015). Subsidies and further fee reductions strengthen the incentive to apply for patents, thereby putting more pressure on the State Intellectual Property Office (SIPO) to assess patent quality.

According to China IP News, the Ministry of Finance and National Development and Reform Commission issued the Regulations on Reducing Patent Fees (Regulations) that became effective on 1 September 2016. The budget for the fee reduction is planned to be increased to RMb 4.1 billion per year as of 2016. Compare the budget for 2015 of RMB 3.5 billion.

The rationale behind this reduction is to decrease the threshold for inventors and companies to patent their inventions, and one measure to implement the Promotion Plan for the Implementation of the National Intellectual Property Strategy and acceleration of building an IP powerhouse in 2016, see SIPO’s July announcement here.

 

Article 4 Regulations states that the following groups are eligible for an 85 percent reduction of the patent application fee, excluding announcement printing fee and additional application fee; substantive examination fee for invention patent applications; annual fee for six years from the year the patent is granted; and re-examination fee:

  • Article 3(1) Regulations: Individuals whose average monthly income was less than RMB 3,500 (RMB 42,000 annually) in the previous year;
  • Article 3(2) Enterprises, business units, social organizations and non-profit making scientific research institutes whose corporate taxable income was less than RMB 300,000 in the previous year;

In case two or more individuals or units are co-applications or co-owners of a patent, the fees could be reduced to 70 percent (Article 4 Regulations).

 

Big discounts, big challenges for patent quality

These reductions of patent fees, together with provincial or city subsidies, will lead to an even stronger surge in patent applications and grants, and therefore an even stronger pressure for SIPO to guarantee a sufficient standard of quality.

There probably must be a soft spot between motivating innovators to apply for a patent that without subsidy or fee reductions would never do so, and those patent filers that have claims that are neither novel nor inventive, but try to get a patent anyway. When the SIPO is overwhelmed with patent applications, subpar patents will slip through.

 

“The generosity of China’s incentives for patent-filing may make it worthwhile… to patent even worthless ideas… Patents are easy to file,… but gems are hard to find in a mountain of junk.”Patents, yes; ideas, maybe The Economist, 14 October 2010.

 

See earlier IP Dragon articles about the same topic:

 


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Huawei = top filer PCT applications

Last month WIPO issued its annual report on PCT applications. The top three PCT filers in 2015 were all telecommunication companies.

1. Huawei Technologies Co., Ltd.: 3,898

2. Qualcomm, Inc.: 2,442

3. ZTE Corp.: 2,155

See Annex 2, here.

Is there any wisdom in these rankings, you might ask yourself. First of all, it is about applications and not about granted patents. Second even if it were about granted patents, the quality of many a patent are bad. However, one could argue that it is an indication of innovation, although this indication might be skewed.


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“In Regard to Patent Systems Hong Kong is in the Same League as Fiji and the Seychelles”

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Another panel was discussing “Hong Kong’s Response” on patent reform chaired by Mr. Thomas Tsang (photo: left), Assistant Director (Patents), HKIPD. First speaker of that panel was Ms. Charmaine Koo (photo: right), Partner and Co-Head of Deacons IP Department: She put Hong Kong’s lack of an independent patent system in perspective by remarking that Macao S.A.R. has an independent patent system, and that Hong Kong is in the same league as … Fiji and the Seychelles.

Ms Koo realistically sees many problems but, tried her best to provide the best arguments for the implementation of Hong Kong’s OGP. In general a perception by R&D companies that the level of protection and enforcement in Hong Kong is at a high level is important. In particular to OGP: Singapore’s GDP increased after the implementation of their OGP.

Ms Koo argued that if Hong Kong would do the examination and grant OGPs under Hong Kong law, and not under PRC or EU law, this could be beneficial to the needs of Hong Kong. It would be also interesting if SIPO would recognize Hong Kong OGPs in China. This could distinguish Hong Kong OGPs from Chinese patents by a higher standard in quality.

 

Professor Alice Lee, Associate Dean Faculty of law, University of Hong Kong advocated a culture of innovation which should start at school. This is a sound analysis: innovation cannot start early enough. Therefore, rote learning should make place for liberating education, which can lead to environment what provides room for experimenting and can incubate innovation.

Mr. Kenneth Yip, Vice President, International IP Commercialization Council (IIPCC) was looking into the future, and questioned the wisdom to invest into a new OGP system which might takes years, especially since nobody knows what will happen when the “two systems, one country” period of 50 years will expires, now after 32 years. Mr Yip points to the use of patents not for innovation, but for fundraising purposes and grants for professors and other researchers.

Read Mr Yip’s slides here: http://www.lawtech.hk/wp-content/uploads/2015/01/HKU-HK-Patent_conferencen-Kenneth.pdf.

 

Mr. Ronald Yu, Vice President Knowledge Management IIPCC, Lecturer at the University of Hong Kong discussed the freedom of innovation.

On the right hand side of the picture is  Mr Timothy Hancock, President of Asian Patent Attorneys Association Hong Kong Group.

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-worksop/

 


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Prof Yahong Li Provides Overview of How China Put Innovation on Agenda, But “Patent Quantity Does Not Automatically Translate Into Quality Patents”

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Dr. Yahong Li (photo: middle), Associate Professor, Faculty of Law, University of Hong Kong, demonstrated how innovation has been prioritised in the People’s Republic of China during the years.

– National Medium and Long Term Plan for Science and Technology Development 2006-2020, which declared sanguinely that China will become an innovation-based economy by 2020!

 

– The State Council “383” reform plan (2013), “Promoting innovation is one of the eight key reform priorities.”

 

– National Patent Development Strategies (2011-2020), “China will rank among the top two in the world in terms of the annual number of patents for inventions.” The total number of patent applications by 2015: 2 million. “The patent system has not become fully integrated with development of socialist market economy, and its role has not been brought into full play in guiding industrial restructuring and upgrading and promoting China’s innovation capacity.”

 

– Outlines of National IP Strategies (2008): “improving the capacity to create, utilize, protect and administer IPRs, and making China an innovative country.”

 

Professor Li’s conclusion that quantity of patents does not necessarily translate into innovation hits the nail on the head. She argued rightly that “national innovation and competitiveness eventually depend on true innovative culture and comprehensive innovation framework including the effective

mechanisms for tech transfer and commercialization.”

Read here Professor Li’s slides: http://www.lawtech.hk/wp-content/uploads/2015/01/HKU-IPD-IP-forum-2015-Yahong.pdf

 

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-workshop/.

 


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Professor Bryan Mercurio on Patent Law: “One Size Does Not Necessarily Fit All”

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Professor Bryan Mercurio (photo), Vice Chancellor’s Outstanding Fellow of Faculty of Law of the Chinese University of Hong Kong discussed “Amending the TRIPS Agreement to Promote Innovation” and posed some interesting What if… questions.

Professor Mercurio went directly to the point:

Since there is no conclusive answer to the question whether IP stifles or stimulates innovation, scholarship gives a mixed results depending on a multitude of factors, he wisely recommends further research on the correlation or causal relationship between IPRs (particularly patents) and innovation, including indirect benefits for innovation which patent protection may provide.

Professor Mercurio recommends to re-evaluate the purpose of the TRIPS Agreement. Is innovation a core part of the Agreement? And one should consider adding more detail to Article 27 (1) so as to ensure that it compliments rather than hampers innovation.

Professor Mercurio poses the question whether the current scope and duration of patent protection is suitable for all industries and sectors or whether some differentiation would benefit innovation. Professor Rader disagreed and tried to illustrate it with an example about fat cells in your chest and that the invention cannot be caught by one technology but moves across technologies. It seems to me that Professor Mercurio’s one size does not fit all, makes more sense. One could for example make the duration dependent to the redemption date of the investment plus some profit.

Another sound proposal of Professor Mercurio is adding a more direct and enforceable mandate in TRIPS in regards to patent protection, competition and innovation.

See Professor Mercurio’s slides here: http://www.lawtech.hk/wp-content/uploads/2015/01/Bryan-TRIPS-and-Innovation_HKU.pdf.

 

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-worksop/

 


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Hong Kong Patent Practitioners Divided Over Original Grant Patent in Hong Kong

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After Dr. Marcelo Thompson (photo), Deputy Director, HKU Law & Technology Center chaired the panel discussing the Worldwide Patent Law Reform. Mr Timothy Hancock, President of Asian Patent Attorneys Association Hong Kong Group looked back the last three decades, when IP in Hong Kong was not the omnipresent field of law as it is nowadays, when Anton Pillar cases were frequent and when UK design rights automatically applied in Hong Kong. Mr Hancock explained that the use of the professional titles patent agent and attorney were controversial and would probably be regulated.

Mr Hancock’s Asian Patent Attorneys Association Hong Kong Group, the Law Society of Hong Kong;

and the Hong Kong Institute of Trade Mark Practitioners do not see a business case for having an OGP system. In contrast, the Hong Kong Institute of Patent Attorneys and the Hong Kong Institute of Patent Practitioners think it is beneficial for HK.

See the opinions of these organisations in the Report of the Advisory Committee on Review of the Patent System in Hong Kong, http://www.ipd.gov.hk/eng/intellectual_property/patents/review_report.pdf.

Dr. Jasemine Chambers (photo: right), Of Counsel, Wilson Sonsini Goodrich & Rosati, P.C., gave an overview of the implementation of the American Invent Act (AIA) which became effective in September 16, 2011 (PL 112-29). Dr. Chambers made clear that the AIA was the most significant patent reform in the U.S. since 1836, or at least the Patent Act of 1952. The AIA transitioned the U.S. from a first-to-invent to a first-to-file country (effective in March 16, 2013), it defines prior art (more broad) and grace period (more narrow). The goal of the AIA is to encourage innovation and create jobs. Dr. Chambers described the difficult creation of the AIA, which took 10 years. See more here: http://www.aipla.org/advocacy/congress/aia/Pages/summary.aspx.

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-worksop/


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Professor Randall Rader Preaches the Blessings of Patents for Innovation at Hong Kong University

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Professor Randall Rader (George Washington University School of Law), former Chief Judge of the United States Court of Appeals for the Federal Circuit, who is now busy working as an arbitrator gave the keynote speech “US Patent System and the Lessons to Hong Kong”.

Professor Rader gave example of the blessings of the patent system by pointing to cancer research. Not only one cannot map the genome of healthy cells but also of cancerous cells. In the latter case there are many anomalies in the cell. Because there are so many, not one single inventor can come up with all medical solutions. Professor Rader argued that the patent system is crucial not only because it is a way for inventors to get a loan at a bank or be rewarded and continue their research, but because of the disclosures intrinsic to the patent system it is the way for other researchers to learn about the research and to collaborate and be linked to other scientists. Therefore the Hong Kong patent system can be a conduit for facilitating this international collaboration.

Most learning, Professor Rader, asserted goes incrementally, little by little. Unlike insights by people like Einstein, who happened to be a patent examiner at the Swiss patent office. Professor Rader pointed out the relation between Einstein’s work to examine the transmission of electric signals and electrical-mechanical synchronization of time, and his thought experiments that led him to his conclusion about the nature of light and the fundamental connection between space and time.

“Maybe the next Einstein was born in Manila or Hong Kong and can be identified by the patent system.”

Professor Rader argued that successful corporations can be identified by their IP. From idle ideas to profit via the patent.

According to Professor Rader Hong Kong is well positioned to a centre for adjudication, since the special administrative region has one foot in common law and one foot in the civil law.

Professor Rader argued that the grant of a patent to the inventor was a fundamental human right: dignity to the inventor for a valuable contribution to society, in many times a life’s endeavour.

For Professor Rader the question whether patents are stimulating or stifling innovation is unequivocally clear: each patent that is granted should by definition be an advance over the prior art. Professor Rader asserted that there is no such thing as the tragedy of the anti-commons in regard to inventions in biomedical research, and, referring to an article by Michael Heller and Rebecca Eisenberg “Can Patents Deter Innovation? The Anticommons in Biomedical Research” Science 280, 698 (1998), https://www.cornellcollege.edu/dimensions/workshops/reading-group-resources/science-280.pdf, said that it could not be proofed. However, I think it was Heller and Eisenberg’s goal to signal potential problems with the patent system. Therefore, one can argue that there is also no conclusive proof that the patent system is only beneficial for the creation of innovation.

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-worksop/


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Hong Kong will probably get independent patent, China’s SIPO will teach HK how to examine

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After some welcome words of Professor Michael Hor (photo middle), the relatively new Dean of the Faculty of Law of HKU, Professor Paul Cheung (photo: right), Associate Vice President, Director of HKU Tech Transfer Office, talked briefly about the relationship of patents and innovation in China. He argued that the growth in the Chinese patents was indicative of the growth in innovation. (I would like to add to Professor Cheung’s words that the lion’s share of the patents or utility model patents and not invention patents, and that the quality of the patents might be very low since provincial and municipal governments provide subsidies for patents. A better yardstick might be the registration of patents by Chinese persons and companies abroad).

Then Ms Ada Leung (photo), the new Director of Hong Kong Intellectual Property Department (IPD) spoke about the 2011 public consultation on plans for the introduction of an Original Grant Patent (OGP) system in Hong Kong. At the moment the IPD can only re-register patents that were examined and granted by the Office for the Harmonisation of the Internal Market (OHIM), United Kingdom’s Intellectual Property Office (IPO) or China’s State Intellectual Property Office (SIPO). Via the public consultation the IPD is listening to the arguments of scholars, practitioners, interested parties and the public to find out the following: – whether Hong Kong IPD should be able to register OGPs, next to re-registering patents that have been granted by OHIM, IPO or SIPO; – and in case the answer is yes, whether Hong Kong should be able to do the examination themselves, which means acquire the knowledge and experience, or outsource it to a place that has the knowledge and experience. Ms Leung announced that in the first half of 2015 a new bill will be announced, which takes into account the comments of the public consultation. It seems that Hong Kong will choose for an OGP system next to the possibility of re-registration and is willing to build up the expertise in examination from scratch. Ms Leung told that the plan is that SIPO will help IPD with building up the expertise. This is a surprising choice given SIPO’s backlog and the alternatives of places that can help Hong Kong up to speed to set high standards of examination so that quality patents will be granted. See more of the Worldwide Patent Law Reform and Hong Kong’s Response Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-workshop/.


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Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop

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University of Hong Kong Law & Technology Centre and the Intellectual Property Department of Hong Kong organized the IP Forum 2015 on 16 January 2015 at HKU.  The topic was “Patent and Innovation: Worldwide Patent Law Reform and Hong Kong’s Response”. The question that would be raised was, and hopefully answered was: “Can patent promote innovation?” Just as the poster announcing the event promised the forum/workshop brought “international and local patent law scholars and practitioners to explore the patent law reform around the world and Hong Kong’s proposed change to introduce an “original grant patent” system, and to discuss how these changes may be conducive to innovation.”

– Hong Kong will probably get independent patent, China’s SIPO will teach HK how to examine

– Professor Randall Rader Preaches the Blessings of Patents for Innovation at Hong Kong University

– Hong Kong Patent Practitioners Divided Over Original Grant Patent in Hong Kong

– Professor Bryan Mercurio on Patent Law: “One Size Does Not Necessarily Fit All”

– Prof Yahong Li Provides Overview of How China Put Innovation on Agenda, But “Patent Quantity Does Not Automatically Translate Into Quality Patents”

– “In Regard to Patent Systems Hong Kong is in the Same League as Fiji and the Seychelles”

 


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Guest Post: International Patent Filing Strategy Survey for Patent Attorneys in Biotech and Pharmaceuticals

By Richard Schurman

 

Dear IP Dragon readers,

 

A Team of law students, who are members of the Intellectual Property law Fellowship at the Thomas Jefferson School of Law in San Diego, California, are working on a Research Project directed toward aiding patent attorneys in developing international patent filing strategies for biotechnology and pharmaceutical companies. With the help of IP Dragon readers, the Team is working to amass statistically significant survey data on the countries patent attorneys are filing patents in for their biotechnology and pharmaceutical clients most often, and the factors considered when making the decisions to file.

 

As China institutes the universal healthcare program and modernizes its economy, the demand for biotech and pharmaceutical products will likely increase. With increased demand, the market competition and incentive for companies to patent their research and products will likely increase as well. Once the results of the survey are published, policy makers will have more information on the factors patent attorneys from different countries consider most important when making their filing decisions. The results will also give Chinese patent attorneys better information as to where in the world they can promote their legal services and partner with foreign law firms for patent applications being filed in China. Responses from Chinese patent attorneys will be particularly valuable to see where the growing life sciences sector in China intends export its new products.

 

The survey is open to patent attorneys from any country who prosecute patents in the biotechnology of pharmaceutical sectors. The survey can be found by following the hyperlink below. All personally identifiable information will be kept confidential. It should take approximately 15 minutes to complete. As a token of our gratitude for completing the survey, respondents have the voluntary option of entering in their email address to receive the survey results when they are released, and to be considered in a drawing for one of several gifts.

 

Survey Link: http://edu.surveygizmo.com/s3/1465783/WHERE-TO-FILE-A-Framework-for-Biotechnology-and-Pharmaceutical-Companies-to-Develop-an-International-Patent-Filing-Strategy

 

If you would like more information or have any questions about this project please visit: http://www.tjsl.edu/news-media/2013/10478 or email one of the team members directly at: schurmrh@tjsl.edu. The results of the survey will be released on April 11, 2014, in San Diego, at a public seminar event with panel discussions on the evolving field of international patent law.

 

Thank you for your time and thank you to IP Dragon for allowing this guest post.

Richard Schurman


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Prof. Mercurio: In Analyzing IPR in China One Should Distinguish Between Trademark, Copyright and Patent Law

Professor Bryan Mercurio, specialist in international economic law, with particular expertise in WTO law, free trade agreements and the intersection between international trade and intellectual property law and Associate Dean of Chinese University of Hong Kong, has written an interesting brief: ‘The Protection and Enforcement of Intellectual Property in China since Accession to the WTO: […]

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Intellectual Property Bank in Taiwan and China (But Very Different)

Public sector The China Post reports that the Ministry of Economic Affairs is setting up an IP bank: “The intellectual property bank is scheduled to be set up in June under the supervision of Taiwan’s semi-official Industrial Technology Research Institute (ITRI). The bank will provide “protective shield” for Taiwan-based firms, especially those in the areas […]

Your Opinion On Draft Regulations on Patent Agency Please

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Taylor Wessing Global Intellectual Property Index and China: The Last Shall Be The First

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“A new dawn for the China health-care or… Grand theft IP?”

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How to Protect Traditional Chinese Medicine?

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The Future of Innovation in China: “China Will Overtake Position Germany in 20 years” Or “Not in Our Life Time”

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The Importance of ‘Practical Applicability’ in China’s Patent Law

Ms Ester H. Lim (Finnegan Shanghai) and Ms Angela Y. Dai (Finnegan Washington, D.C.) wrote a nice article about their take on IP in China for the WorldTrade Magazine called ‘Policy Perspectives: The Current Reality with IP in China’. It includes a discription of the case Merck & Co. versus Henan Topfond Pharmaceutical Co., about […]

Hong Kong’s Top e-filers of Patent, Trademark and Design Right Applications

According to the Intellectual Property Department (IPD) of the Hong Kong Government the top e-filers of all e-transactions in 2008 were: Ranking Firms 1 UNDISCLOSED 2 DEACONS 3 WILKINSON & GRIST 4 JSM 5 BAKER & MCKENZIE 6 SIT, FUNG, KWONG AND SHUM SOLICITORS 7 CLT PATENT & TRADEMARK (H.K.) LIMITED 8 CHINA.HK INTELLECTUAL PROPERTY […]

China’s Third Patent Amendment: Curb Your Enthousiasm

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