New Procedures Point out China’s Patent System is Now Targeted on High quality, not Amount, of Patents

New AIA Rules Level the Evidentiary Playing Field Pre-Institution

As is so often the case in China, a critical change to the IP system has taken place without the publication of any new law, but with an internal administrative document hidden on a government website. In an administrative circular issued on January 27, 2021, the Chinese IP bureau is rewriting the rules that have led Chinese companies to subtly file inferior patent applications (a / k / a junk patents) over the past decade Change of the scope of the legal regulations for the examination of utility models and designs. The ultimate goal is another implementation of an old Marxist rule, namely the transformation from quantity to quality.

On January 27, 2021, the Chinese Intellectual Property Agency (CNIPA) published the “Circular to Further Strict Regulation of Patent Applications” (Notice on Further Strict Regulation of Patent Applications, National Intellectual Property Administration).[2021]1 号), which came into force on the same day. The circular is the updated version of “Several regulations from the State Intellectual Property Office to standardize patent filing activities” (关于 规范 专利 申请 行为 的 若干 规定), originally adopted in 2007 and revised in 2017 (hereinafter “Regulations 2017”). ).

The circular is one of the latest regulatory initiatives by the Chinese government aimed at moving China from a country dependent on “imported” patents (ie patents filed by foreign companies) to one with great indigenous creativity. The stated aim of the circular is to reduce or eliminate fraudulent and substandard patent applications while improving the quality of patent applications. Although this circular is only an internal administrative document, it could have a groundbreaking impact on the examination of national applications for utility models and design patents.

Content of the circular

Expansion of the categories of irregular patent applications

The circular contains a list of so-called irregular registration behaviors that the CNIPA would like to monitor in order to create incentives for real and good registrations. To this end, the circular expands the list of irregular filings included in the 2017 provisions.

The 2017 Regulations identified three main cases of irregular patent applications that were subject to revocation actions and fines: (1) The same applicant files multiple patent applications with apparently similar content or instructs others to file those applications. (2) the same applicant files multiple patent applications relating to obviously plagiarized and existing technologies or designs, or instructs others to file such applications; (3) Applications according to (1) or (2) that are filed by patent agencies as applicants.

The circular adds the following six new types of irregular patent applications:

  • the applicant intentionally files related patent applications in separate applications;
  • The applicant files patent applications that appear to be incompatible with his research and development capabilities.
  • the applicant abnormally resells the patent application (s);
  • Patent applications filed by the applicant have technical solutions that implement simple functions with complex structures, or use conventional or simple combinations of features and other behaviors that are obviously not in line with common sense of technological improvement.
  • other acts that violate the principles of good faith set forth in the Chinese Civil Code and do not comply with the relevant provisions of the Patent Law that disrupt the order of administration of patent applications.

The first case seems to be concerned with design applications for multiple designs. The third concerns the practice of patent occupation, or so-called non-use preventive filing. The second and fourth cases appear to elucidate these issues further and deal with several patent applications apparently relating to plagiarized and existing technology or designs.

According to the circular, CNIPA will continuously monitor, evaluate and identify the irregular patent applications and notify the local intellectual property office of these applications. The latter then asks the applicants to withdraw the applications. If applicants are rejected, the local Intellectual Property Bureau will send the relevant information to the Market Control Administration (MSA), Public Security Bureau (PSB) or Credit Monitoring Department for further processing, including administrative and / or criminal prosecution.

The circular takes stock of the current filing practice of local Chinese applicants, who typically use the online patent filing services at the local IP offices in their province and county rather than filing them at the CNIPA central office in Beijing. The provision also takes stock of the fact that most of the applications that would fall under any of the irregular applications listed are utility models and designs, the content of which is not examined for content under Chinese Patent Law.

The supervisory authority and the expansion of the types of irregular filings in the circular give the CNIPA a full supervisory role, at least on paper, that can be performed along or even before the application is assigned to an examiner. In view of the list of irregular registrations, it could be argued that the CNIPA could conduct a “quasi” comprehensive examination of utility models and design patents filed after January 27, 2021. However, the examination of the CNIPA and the order to remove the irregular registration are not legally binding on the subsequent examiner, the latter is inevitably influenced by a discovery of irregularities, in particular by an application that plagiarizes or copies the state of the art.

Questions remain. Will CNIPA monitor applications before assigning them to an examiner? Will the monitoring include novelty searches? If patent searches were allowed, CNIPA could conduct a full examination of utility models and designs against provisions of the Patent Act that only provide for formal examination.

Is this a harbinger of an upcoming amendment to the patent law in relation to design and utility model testing? Much will depend on the technology that CNIPA can use to sift through thousands of utility model and design patent applications. AI technologies can increase CNIPA’s analytical capabilities and make the implementation of the circular of great practical importance.

Additional measures against irregular patent applications

Not only can CNIPA order the removal of an irregular patent application, but it can also issue orders that affect the value and marketability of the irregular patent. Such orders may exclude the application from eligibility to receive a discount or waiver of patent fees, or from receiving awards or counting in official statistics. Most importantly, the irregular filing can be deprived of the right to receive financial assistance and subsidies, or they are required to return those previously received. In cases where financial assistance or incentives have been obtained through fraudulent activity and the circumstances are serious enough to constitute a criminal offense, the applicant will be reported to the Public Security Bureau for criminal investigation.

It is evident that this wide range of penalties, added to the main withdrawal power, can be a welcome filter against junk patents. It remains to be seen whether and how the CNIPA will implement this consistently and effectively.

Exit from patent subsidies

Even before Xi Jinping came to power, former leaders and governments introduced subsidies and tax breaks to encourage Chinese companies to familiarize themselves with intellectual property and apply for it. Most of the subsidies were given at the provincial or even local level so that these administrations could tailor them to their local development needs.

The vast majority of these guidelines were in favor of filing by local Chinese companies. Foreigners could only enjoy such benefits if they transfer or license their intellectual property to their Chinese subsidiaries. In most cases, foreign rightholders were reluctant to transfer their intellectual property to their Chinese subsidiaries for various tax and administrative reasons. More importantly, patent subsidies have sparked a flurry of junk and low-quality patent applications filed by Chinese companies with the sole intention of obtaining such subsidies.

Aware of the poor quality of most patent applications, CNIPA responded to the Communist Party Central Committee’s call to move China from a quantitative to a quality patent application system, and with the same circular launched an exit from the current system of incentives for Chinese patent applications Applicant.

In particular, the circular calls on the central and local governments to:

  • Completely remove financial support for patent applications before the end of June 2021;
  • Completely eliminate financial support for granted / registered patents by 2025;
  • Amendment of the Chinese Patent Law Implementing Rules to include the irregular patent filings in the intellectual property credit monitoring system;
  • Improve the monitoring and regulation of patent transactions in China, including increased monitoring of the registered patent assignment and license; and
  • Strengthening cross-departmental information communication and in particular the obligation of the local intellectual property offices to report the irregular patent applications to the technology management departments to ensure that these applications are not used to obtain national preferential guidelines like the status recognition of high-tech companies.


If implemented consistently, the circular will help promote higher quality patent applications and reduce the phenomenon of junk and stolen patents in China. This benefits foreign rights holders who do not have to invest time and money to invalidate such junk patents and who are not exposed to patent and extortion actions from patent thieves. The extensive monitoring of utility model and design applications by CNIPA may also herald further changes – including a desirable revision of the merely formal examination system for patent applications and a switch to a comprehensive examination as in most Western countries.

Copyright 2021 Squire Patton Boggs