Number of patent applications in China

I attended a Symposium on China patent law jointly organized by HK and Guangdong Intellectual Property offices. Interesting things were learnt.

In the recent weeks, there were news about the world wide patent applications and the corresponding figures for patent applications filed to State Intellectual Property Office of PRC ("SIPO"). China is very proud of ever increasing number of cases. However, there were other angles to look at these.

We learnt that there were about 9000 staff in SIPO and we don't know how many of them are patent examiners, but it must be less than 9000. The number of practicing patent attorney in China is about 6000. There were 314,573 invention patent applications (commonly known as utility patent in US) filed in 2009. That means on average, each patent attorney handles about 50 patent application in one year. Furthermore, the boss of one agent firm told the Symposium that for a patent attorney to have a reasonable income, they need to handle about 100 cases per year.

I understand that for those patent attorney who handles 100 cases per year, they must be offering a cut-throat price to their customers. How come? I met some Hong Kong inventors recently in the annual meeting of the Hong Kong inventors group, I was told that they were able to get a patent agent to handle: drafting, drawing, filing and official fee of a utility patent (something like provisional patent in US) in China for about RMB2600, in today's exchange rate, is about USD380.

Now you understand why they need to handle 100 cases per year in order to have a reasonable income. Also, you can understand there is always room for price cutting if you want something from China.

Sorry my customers: I don't cut my price to meet my competitor. You can go somewhere else to get a cheaper service, not from me. Also, I strongly advise you not to file utility patent in China, instead you should file an invention patent application (which is more expansive).

Speedy patent application drafting

I think our company break a record. From instruction to filing: Two days.

Meaning we have about 24 hours to handle one patent application.

Of course, it is not started from nothing. We were presented with a filed US patent, foreign filing right will expire the next day. So we still go though the normal process: (1) translate the US (English) Patent Application into Chinese; (2) rewrite the Chinese Patent Application suitable for filing to SIPO; (3) retouch on patent drawing; (4) fill up the right forms and (5) filing the same to SIPO.

And there are still follow-up actions, including the filing of Power of Attorney and the original Priority Certificate.

The only step we skipped is customer confirmation. We cannot wait for client confirmation because of time-zone difference, and we will fix any error later.

And because the client was thinking and thinking whether they should file the US patent to China, it took them 363 days to think, and we have 2 days to work on it.

And we did not charge extra for this urgent work, because this is a good customer who pay us really fast.

The Hong Kong Innovation-Knowledge Enterprise Award

Congratulations to one of my clients, who is one of the award-winners of the “Innovation-Knowledge Enterprise Award” which is co-organized by the Hong Kong Productivity Council and Guangdong Provincial Intellectual Property Office since 2004.

This award is targeted with a view to increase the Intellectual Property (“IP”) management capability of Hong Kong and mainland enterprises. When the enterprises are facing the arising challenges from the Pearl River Delta region due to the economic upsurge, this award serves as a tool to upgrade them from Original Equipment Manufacturer (OEM) to Original Design Manufacturer (ODM) and Original Brand Manufacturer (OBM).

As it is commonly known, or recognized, that there are tremendous infringement products from the mainland China, this award become more important, meaningful and perhaps sarcastic!

My client is a product development and investment company. The main business is to identify product improvement opportunity and invest in the design, whereby intellectual protection is the major vehicle to protect the return on investment.

My client is involved in inventions related to product improvement and new product design. The areas of improvement include improvisation on functionality, durability, cost in production and maintenance. They have the core design and management team resides in Hong Kong and has a manufacturing facility in Dongguan where a team of draftsmen, testing engineers and production workers helps the design, prototyping, testing and pilot run process. With more than 150 workers, the Dongguan factory also produces products that export to North America, Europe and Middle East.

My client has applied and obtained more than 10 patents for design done before 2006. All of these patents are now commercialized and products being sold or licenses granted to US companies. Since 2006, the group has filed more than 15 patent applications per year in the PRC, United States, and European Community. Currently, they own more than 70 patents or patents pending right in these countries/community. Non-exclusive license rights for about one-third of patents pending are granted to companies which expects to market products using these new invention in their respective countries. Of course, we handle most of their intellectual property related work.

Further information about the Award can be found here:

http://www.hkpc.org/html/eng/award_schemes/award_schemes.jsp#awards6

http://www.itc.gov.hk/

http://www.cedb.gov.hk/about/index.htm

Service for inventors in China

Hi, after so many months, I am back. I was planning for expansion of our service offering, so we dont want to limit ourself to handle patent applications in China, Hong Kong, United States and Europe. Let's talk about that later.

While we are brain storming and soul searching, we looked at what type of services are being offered for inventors in China and found something interesting. Here is the first one, with the web site called patent-cn.com, this is a site that post descriptions and most likely pictures, so in case you dont read Chinese, you can still enjoy some good looking pictures.

You may wonder that good looking pictures may not be able to reflect a new technology break through. Yes, that is right, as you may know more than 80% of patent applied in China are design patent, so a picture or two will give you good description of the patent.

Visit China Import and Export trade fair

This session I am very busy with various business and personal matter, so have to do the visit on Sunday.

I visited the show because two of our clients asked us to do, to check out if there is any infringing products. I spotted one potential infringement and decided to purchase the product for further analysis. We will have our associated company in China to handle that later.

After doing what I have to do, I also want to see other types of goods, fishing if you like. I saw at least 5 counts of possible infringement, two are design patents, one utility patent. These can be good job to work for their IP owner. As I am not a lawyer in Hong Kong, I have more freedom to cold call custmers!

Aggressive patenting in China.

Chinese New Year holidays came and gone. Busy as hell.

I was doing some search as a background search on an invention patent. I am working on a leisure product which is not common in China until in the past 2 or 3 years, so I don't expected a lot of patent in this area from domestic inventor.

I was wrong.

I found there were quite a large number of Invention or Utility Modle Patent from domestic inventors / applicants, with filing date in or around 2003. Now it is four years after these patents were published but not granted. I also noticed that these patents represent design of a part of the product. I can say that it would be a challenge to get granted, given our knowledge of this product our clients and their competitors make.

Is this aggressive patenting or even patent squattering?

So regardless of whether you sell to China now, if you or your competitor manufacture in China, do get IP protection in China.

Patent Application Grant - Success Rate

I was working before the holiday to update our 'sales material'. I have checked the government information related to the HK Government Patent Application Grant, here is some highlight:

The grant was commissioned in 1997 and started the acceptance of application on Apr 1, 1998, since then, an average of 172 applications per year were received, up to Mar 31, 2006, a total of 1374 applications were received. Out of which 546 applications were approved. The status of the Grant as of 2006 is here.

We are lucky to get involved with some of these lucky applicants and our success rate to get the grant is higher than average. Needless to say, it would be helpful to get professional help to fill up forms and prepare documents about the invention.

Applications from China enter in PCT

I was browsing the web, checking for news. Just read from SIPO of PRC that in 2006, China is the 8th in term of applications for entering into PCT from China. The actual number was 3910, which is an increase of 56.8% over 2005.

 

I have been telling our clients to make use of PCT to extend the time for them to consider whether to apply patent in other countries, and China provides a cheaper alternative when doing local and PCT application. This is good that China provides such a major increase and create more business for patent attorneys in China.

Utility Model in China

You learn new things everyday. Recently I came across more than one person talking about Utility Model in China. In the recent years, for domestic Chinese who apply for patent, number of applications for Utility Model was more than Invention in the year 2006. However, for foreign applicants, more than 85% of applications were for Invention.

 

In case you dont know, there are three types of patent in China: Invention, Utility Model and Design.

 

The one I just learnt in the past week: When filing for Invention Patent, we can also file the Utility Model. Firstly, law will not allow you to own two patent for the same invention, so technically, when the Invention Patent is granted, say, 3 years after application, then you have to withdraw the Utility Model patent. Then why you want to do it?

 

Say two applications were filed at the same time for the same invention in 1st February 2007. The Utility Model patent will be granted in one year time, say 1st February 2008. With that patent certificate, you can go out protecting your patent right. Three years later (starting from today), the Invention patent is granted in 1st February 2010. You throw away the Utility Model patent certificate, and start using the Invention patent certificate to protect your right. So you buy two years of protection by the Utility Model.

 

What is the cost? Quite small as compare to other things. Cost of drafting is zero for Utility Model as you file the same copy as the Invention. Filing fee including service charge is small compared to Invention patent.

 

Bloom of IP business in China

Our firm have quite some works in January, including a few deadlines towards end of January. We got some forms filled and search report answered, some applications filed.

Then we have 5 new inventions in a 2 hours meeting with the client. So I started looking for one more agent firm in Shenzhen. In 2002 there were less than 10 patent attorney firms in Shenzhen, now there are more than 30. Some of the new one are actually started in recent years or months, and they are hunger for business. This is good for pricing but may be bad for quality. I heard that some drafting work were not done professionally and there were a lot of requisition later on, and now the effect is becaming serious, as these new firms have been operating for more than 1 year now.

However most of the raise in patent applications are utility model for domestic applicants.

HKSAR Intellectual Property Department Open Day

The Hong Kong Intellectual Property Department is going to have an Open Day on 9 Feb this week, however, I only knew this from one of an association as a member. In the official web site of IPD, this event was not listed.... Well, that seems a good invitation to this event.

Web site of the Intellectual Property Department of HKSAR

Please check that out on the official web site:
http://www.ipd.gov.hk

So I will give you my non-official view on the HK Patent later.

Definition of Patents in Hong Kong

I have been very busy in January. Not that I have finished my work now, I just do this during lunch for an reply to one of the reader. Will tell that works in January later.

A reader asked about what is the definition of Patents in Hong Kong. I am not adding value to cite you the law, as law are easily accessed via the web.

Hong Kong was under British ruling for more than 150 years, so law and regulation related to intellectual property protection pretty much follows British system and that has not been changed since China took over, excepted for some operational aspects.

Now the fine print: legally Hong Kong has an independent legal system, meaning patent needs registered in Hong Kong before it got protection. For example, if a patent is registered in China, it won't get automatic protection in Hong Kong.

Then what is the patents application system? There is no examination system but only a registration system. The Hong Kong Intellectual Property Department doesn't have a group of engineers and attorneys to examine patent applications. They rely on the respective 'central government' patent office(s), this is not a political correct statement but will give you the idea. Before 1997, legal owner of a patent can apply for registration in Hong Kong if the same have been granted in U.K. Since 1 July 1997, legal owner of a patent can apply for registration in Hong Kong if the same have been granted in China, U.K. OR the European Patent Office (designating U.K.).

I want to add that there are two types of patent in Hong Kong and there is a time schedule when to file registration.

More questions before you read this? Guess so, let me put some more Hong Kong patent related issues in future blog.

In search of French and Spain patent agent

I have urgent need to find a good French and Spain patent agent, any recommendation? I have English (and Chinese) version of patent application ready and need to file application in France and Spain. In a hurry. Any reader have recommendation or directory to search, please drop a word.

Be a local or foreigner to apply patent in China?

In China, there are many ways to classify patents, one of the way is the nationality of patent applicant (owner). The first difference is the application fee. A local Chinese citizen or company enjoy a much lower application fee, while a foreign resident or company have to pay a higher fee for the patent application, both governmental fee and handling fee charged by patent attorney. There are two sides of a coin. For example, a customer had companies registered in Hong Kong and China, we recommend the customer to use the Hong Kong entity (regarded as a non-domestic under Patent system) as the applicant. Why pay more for a foreign status?

In the Chinese socity, government is like the grand parents, and the local government officials are the parents, so we have the old saying of "father-and-mother-officials", these officials are the fathers and mothers of the countrymen. The central government actually represent the heaven. So much so for the history, nowadays goverment officials still want to protect their people like parents taking care of children, in particular against some bad-faith foreign business man.

Now, a Chinese inventor, after all the hard work and went though the patent application process, eventually got something valuable, decided to sell the patent rights to an investor in Europe, say for USD200,000. The parent(s) may step in and say, look, the international market value of such piece of work should be USD500,000. The inventor may say "my price is the best I can bargain for." Well, in the transfer of patent right process, the government have the right to look at such transfer and make requistion, and in the end, the tax man will charge tax based on the USD500,000 value estamted.

However, a Hong Kong inventor may sell the patent to a US company and such transfer of right only calls for a simple registration. No question asked.

So pay more for the foreign status and less trouble when such transfer is required in the future.

There are tax implication even before such transfer, so talk to your accountant as well as the patent attorney.

In search of Patent Attorneys in China - Part 2

We need to find one or more Patent Attorneys in China as an association to get our business started.

Apart from the smaller firms, there are national firms. National firms may have one office in Beijing and branches in cities of their choice. A national firms with offices close to us are important. It is the Chinese traditions to deal with some one you met before, not some one you talked over the phone or communicated by email. By simple logic, a large firms have a more diverse field of expertise. Be it chemical, electronic, mechanical, and even legal. That may be useful for us, so that when we expand beyond the first customer. In house attorney at law would take up the legal fight for IP protection in China. That was not part of our initial reuirement for association but nice to know our potential partners have attorney at law when we need one.

Interesting enough, there were large and small firms who charge US rate, at the same time, there are large firms who charge less then US rate. So high price is not a guarantee of professional service.

We ended up using one national firm and one local firm in our first year of operation. However, we only gave one job to the local firm in Guangzhou and switched to another national firm, making two national firms as our partners.

Patent Application Grant - some body else pay for it

In parallel with the experience of the start up of our company, I also want to share some experience with current customers. Dont be excited, nothing confidential.

A Hong Kong customer engaged us for about one year. The customer has Small and Medium Enterprise (SME) status in Hong Kong. The current definition is on the number of staff. A manufacturing company with less than 500 staff, or a non-manufacturing company with less than 50 staff is an SME. The Hong Kong SAR Government may grant a fund of HKD100,000 (about USD12,800) for the application of patent in countries of the SME's choice, when certain conditions are met.

The company runs his management, design and engineering office in Hong Kong. Manufacturing are being done in China with customers in US. They engaged us in doing trademark work and had some discussion on patent works. So we had an early start on their patent process and adviced them of this governmental funding scheme. We worked with the company for filling up the grant application about three months before the patent application was ready. The grant got approved in mid-2006.

The China Patent Application (Design Patent, equivalent to Utility Patent in US) was ready and waiting for the paper work for the grant, when the grant was approved, the Application was filed within the week. Then we did the translation back to English and get ready to file the US Patent Application after this New Year holiday. This patent would claim the China Patent filing date as priority and so no time was lost. Later on, we will file for Hong Kong Standard Patent.

It is so nice that 90% of all these worked are paid out of the HKD100,000 grant. So a Hong Kong company is on his way of protecting his intellectual rights of products he sells in US.

In search of Patent Attorneys in China - Part 1

In Oct and Nov 2001, we launched a major China expedition, that included Shenzhen (just across the broder), Guangzhou (2 hours by train) and Beijing (4 hours by plane). We planned our trip with internet search, referral by other law firms, etc. We visited a number local and foreign patent attorney firms and see how we can team up our association.

Those we called foreign firms, they have local staff who can handle both English and Chinese work, no problem in working with us for any patent applications coming from our US customers. They have engineers from different fields, including biochemical, electronic, mechanical... So we would be very comfortable working with these people. What is the catch? We would price ourself out of the market. These firms were charging US rate, that us USD5,000 and up for standard process utility patent.

Then there were a large number of local and national firms. Local firms with one office in their city of operation, among other things, are likely to be small firms with one or two experience attorneys. Again, some of these firms were a special products in China.

Years before, China have a very large government structure in the local levels that duplicated Central Government. That means as there was a Patent Office in the Central Government level, they had a similar offices in province, county and city levels. For some of these officies, they were actually an office with many plates, that is, one small office taking care of a lot of different areas of trade, commerce, manufacturing, etc. For some of the local governments that really need to govern local activities that were related to intellectual property protection, then a number of local government officials were handling patents and related matters. Then cames 1990s, to downsize government and drive privatization, some of these local goverment officials were asked to leave the government and set up their own Patent Attorney business. They had their local government and business connection. This was good for them to start off their business.

However, some of the local and national firms were charging US rate. With that knowledge we would wish them luck and said goodbye.

One customer who got we started

In mid-2001, a customer who needs about 10 China patent applications per year approached us, see what we can help. We took off as a practice to enlarge our coverage of legal and consultancy services. We also need to see what additional resources we need in order to provide values to this and other customers.

We need technicians for drawings, we need experience patent attorney to handle China filing, we need to plan to expand after this customer. We did feasibility study and a simple business plan with financial projection, and we kicked off.

First we decided to have associates in China to handle patent filing, we leveraged on one of our sister company who have draftmen in China. The small office was based in Hong Kong to work with customers in US and Hong Kong. This was the plan and we need to execute it quickly for the first batch of works.

How we started our business

In late 2001, a group of IT, Electronic and Mechanical engineer, together with a lawyer came together, spent a few nights together, and then get hold of a customers who need a lot of patent protection in China. Then a company was formed to handle this.

Why a bunch of HK professionals can be a middle man between a customer and China Patent Office? What do we offer? Will tell you more…

The begining of a patent agent

I would like to start a blog, as a patent agent living in Hong Kong. I want to share my experience, from the very beginning, when I started this business.

I manage patent application since 2002, I did patent application in China, for customers mainly based in Hong Kong and US.

I found this challenging because I did a lot of translation: Translate technology ideas into 'people with suitable training' can understand essay; Translate English into Chinese; Translate business requirement into tasks list; Translate Intellectual Property into property protection strategy...