SIPO's reform agenda

Towards the end of 2014, the State Intellectual Property Office (SIPO) saw a transition in its leadership, with professor Shen Changyu taking over the position of Commissioner from Tian Lipu, who had held the role for eight years. Together, the new Commissioner and the Office must be prepared to meet a wide range of challenges this year.



According to SIPO data, in 2013 the Office received 2,377,061 applications and issued 1,313,000 grants to applications for the three kinds of patents in China – inventions utility models, and designs. Among the three kinds of patents, 825,136 invention patent applications were received, an annual increase of 26.3%, while 207,688 invention patent grants were issued, an annual drop of 4.1%.

In 2013, domestic applications for invention patents surged 31.8% to 704,936, and 143,535 of these were granted, which is more or less the same as the previous year. The share of invention patent applications by domestic applicants rose to 85.5% in 2013 from 81.9% in 2012, while grants to domestic applicants of invention patents increased to 69.2% in 2013 from 66.4% in 2012. Enterprises are becoming the dominant domestic applicants of invention patents. In 2013, applications by enterprises for invention patents amounted to about 427,000, translating to a share of 60.6% against other categories of applicants including individuals, academic establishments, and research institutions. As for grants, about 79,000 invention patents were issued to domestic enterprises in 2013, accounting for 54.9% of the invention patent grants to all categories of domestic applicants during the year.

Strengthening examination powers

To SIPO, the consistent increase in filing volume presents the immediate challenge of maintaining high-quality examination that is also efficient. As a measure to tackle the substantial increase in patent applications, SIPO has added more local coordination centres for patent examination; it has set up seven patent examination coordination centres in Beijing, Guangdong, Jiangsu, Henan, Hubei, Tianjian and Sichuan. All of these centres, except Beijing, have been established within the last three years. In 2014, the seven centres have a recruitment plan of 1,757 staff in total, with 500 of them for the Henan and Hubei centres alone. For the Guangdong and Jiangsu centres, the number of examiners is expected to reach 2,000 by 2015, while that of the Hubei and Henan, and Sichuan centres will amount to 2,000 in 2017 and 2018 respectively. This massive addition of patent examiners inevitably brings the challenge of maintaining examination quality through staff recruitment and training. Ensuring consistent examination criteria across those local examination coordination centres will be another test for SIPO.

For years SIPO has been working hard on achieving consistent examination criteria and enhancing the quality of examination in practice. The Office named 2013 as the Year of Improvement in Patent Searching Capacity with a view to improving examination quality by strengthening patent searching. A variety of activities including IP training, exchanges and competitions were conducted at its local patent examination offices and examination coordination centres during the year. Regarding patent examination criteria, domestic applicants, given their lack of experience with the patent application process, seek more flexibility in policy amendments regarding patent application documents during the examination stage. Specifically, the applicants hope for expanded means of rectifying errors in the preliminary examination, under the limited remedies in existing practice. It is reported that in 2014, SIPO will focus on refining examination guidelines and the examination quality guarantee mechanism by abiding by the three evaluation criteria of novelty, inventive step and practical applicability, as well as assuring reasonable examination pendency.

Domestic compromises

SIPO has to also cope with the shifting role of China's domestic enterprises. Since Chinese enterprises have for a very long time been restricted by foreign patent rights owners and even accused as infringers, they may have been resistant to the patent system. With the surge in domestic filings these businesses have become patent owners themselves and will now seek an application and examination system conducive to the acquisition of patent rights as well as protection for the exploitation of their patent rights. SIPO needs to respond to their needs.

Under the dual protection mechanism of patent rights in China, SIPO has recently worked on increasing the influence of administrative enforcement. To promote this, in 2013 the Office published the Proposal for the Project of Enhancing the Administrative Enforcement of Patent Laws (专利行政执法能力提升工程方案).

Judicial and administrative balance

On a legislative level, the fourth amendment of the PRC Patent Law was initiated in November 2011, with the draft amendment issued by SIPO for public comments in August 2012 and submitted to the State Council of China for review in January 2013. The main objective of this amendment is to strengthen patent protection through administrative and judicial enforcement. For the former, the draft amendment suggests imposing heavier penalties for patent infringement relating to disrupting market order and providing SIPO with the additional role of determining patent infringement damages. As for judicial enforcement, it suggests reinforcing the courts' role in investigating and collecting evidence related to patent infringement litigation. Moreover, in both administrative and judicial proceedings, the draft amendment introduces punitive compensation for intentional patent infringement by allowing up to triple the original damages, taking into account severity, scale and damage of the infringing act.

On February 4 2014, the State Council issued the Opinions on Publishing in Accordance with the Law Administrative Penalty Cases on the Production or Sale of Counterfeit and Substandard Goods and on Intellectual Property Infringement (关于依法公开制售假冒伪劣商品和侵犯知识产权行政处罚案件信息的意见（试行）), which asked administrative authorities to publish information of an administrative case subject to penalty within 20 working days of the penalty announcement. This regulation sets a higher standard for SIPO in terms of administrative enforcement.

Another challenge that SIPO has to overcome concerns its differences with the courts over how to define infringement. In September 2013, the Beijing Higher People's Court published and implemented the Guidelines on Determination of Patent Infringement (北京市高级人民法院专利侵权判定指南). In the same month, the Office issued the Guidelines on the Criteria for Determining Patent Infringement and Criteria for Determining the Passing off of Patents (Draft for Comments) (专利侵权判定标准和假冒专利行为认定标准指引 (征求意见稿)) for public comments. Although the two documents have similar angles, there are certain discrepancies in key issues such as means-plus-function claims. According to SIPO's interpretation, functional features should cover all manners of implementation which are capable of carrying out the relevant functions. However, the Beijing Higher People's Court believes they should cover only the specific manners of implementation or its equivalent(s) in accordance with the functions or effects depicted in the specification and drawings of the patent application.

In a high-profile patent infringement case heard before a people's court of Shanghai in 2013, it was decided that in means-plus-function claims, the scope of protection, and thus whether the defendant had infringed the patent right of the plaintiff, was unable to be determined. However, the means-plus-function has long been a common format adopted by patent applicants in the field, and has been accepted by SIPO in patent applications and examinations.

This court decision revealed the discrepancy between the courts and SIPO, which creates uncertainty patent applicants, who may fail to protect their own patent rights and suffer substantial loss as a result. This discrepancy may also render the public unable to reasonably anticipate what constitutes patent infringement. The fourth amendment of the Patent Law, if approved, will reinforce SIPO's authority over administrative enforcement. Better coordination between SIPO and the judicial authority to close the discrepancy will then become an urgent issue.

Meeting global standards

Understandably, SIPO needs to play a big role in realising China's strategy to build an innovative nation. The tasks of SIPO include, but are not limited to, guiding domestic enterprises toward strengthened patent management according to the Guidelines on Enterprise Intellectual Property Management (企业知识产权管理规范), uplifting the quality of patent applications, promoting patent monetisation and industrialisation, enhancing domestic enterprises' utilisation of IP assets, strengthening patent valuation, supporting new IP financing services, underpinning IP pledge financing, nurturing the patent insurance market, and fostering the development of patent transaction and industrialisation platforms.

In recent years, SIPO has been busy forging ties with the world's other major patent offices. To date, it has entered into mutual agreements on conventional Patent Prosecution Highway (PPH) pilot programmes with patent offices in five countries: Germany, Poland, Canada, Singapore and Spain. In addition, it has launched pilot conventional and PCT (Patent Cooperation Treaty) PPH programmes with patent offices in nine countries: Japan, the US, Russia, Finland, Denmark, Mexico, Austria, Korea and Portugal. The pilot PPH programme with the UK is also in the pipeline for operation on July 1 this year. Most recently on January 6, the three-year long pilot IP5 PPH programme came into operation. The participating parties were SIPO, the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), and the US Patent and Trademark Office (USPTO).

The rapid development of the global PPH network calls for internationalised examination criteria to facilitate mutual recognition of examination results across patent offices. It is essential for SIPO to narrow its gap with international examination criteria and elevate the quality of patent examination in order to maintain an important role in the increasing standardisation of patent examination.

From the implementation of the pilot PPH programmes over the past couple of years, the discrepancy between SIPO and its international counterparts in examination criteria has become more evident. An interesting phenomenon has arisen, where domestic applicants have rarely used the fast track as opposed to foreign applicants, who have been keen on taking advantage of the pilot programmes to accelerate entry into China.

As admitted by some of the domestic applicants, the trend can be attributed to the overly strict application of examination criteria in practice at SIPO. In the majority of cases, domestic applications under the PCT are outbound, but the written opinions, issued by SIPO as the international searching authority and preliminary examining authority of PCT applications, are often especially harsh. SIPO examiners have sometimes applied the criteria for substantive examination to domestic patent applications, resulting in negative comments in the international search reports. This has discouraged the domestic applicants from using the PPH programmes, regardless of the platforms' obvious benefits. Patent examination at SIPO, compared to that of general international practice, also tends to over-emphasise formality issues, lack search coverage, and neglect supplementation of data during the examination process.

While it is impractical to strip itself of its present examination practice and wholly adopt the US or European examination criteria, SIPO must nevertheless prioritise tackling the issue of meeting domestic needs for patent examination while developing examination criteria aligned with international practice.

Such formidable challenges will surely test SIPO. The next few years will be a crucial time for the Office, especially with its recent transition to new leadership, to concurrently juggle legacy and newly-emerging issues, on both international and domestic fronts, toward the next chapter of development.


Tina Tai, China Patent Agent (HK), Beijing


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