In the process of globalization, those Chinese enterprises who previously attached importance to their domestic patent rights are paying more attention to overseas patent rights. However, due to the diversity and severity of the international market, Chinese enterprises are significantly reducing their budgets for intellectual property (IP) activities, rather than arbitrarily increasing the number of countries where they have patent rights.
For inventions made in China, Chinese companies usually apply for patent rights in foreign countries under the Paris Convention. However, in recent years, the number of Patent Co-operation Treaty (PCT)-based international applications by Chinese enterprises has been increasing drastically, because PCT applications have an advantage in terms of costs.
The costs in the initial stage of a PCT application, such as translation fees, are lower than those for applications under the Paris Convention. In addition, the priority period of an application under the Paris Convention is limited to 12 months, which makes it difficult to accurately evaluate the invention within that period. However, the deadline of a PCT application to enter into the national phase is limited to 30 months from the filing date, which makes it more possible to determine precisely the necessity of obtaining a patent right, and direction of its implementation, within the 30-month period in certain countries.
One advantage of applying a PCT application is that the applicant can utilize the International Search Report (ISR) issued by the International Searching Authority (ISA). According to the rules of the World Intellectual Property Organization (WIPO), ISR is helpful in obtaining patent rights in PCT countries.
However, if ISA is different from the country conducting the examination – for example, the ISA acting for the China National Intellectual Property Administration (CNIPA) – the examination opinions or cited relevant documents can be found different from those issued in the examination procedure of the national phase of a foreign country from time to time, and thus as a prediction of examination result in a foreign country, the positive/negative comments on the ISR from the ISA/CNIPA may not be fully utilized.
However, the ISR can be useful information when the applicant makes decisions on which member countries his PCT application shall enter the national phase in. After a PCT application is applied, in principle, it is beneficial to bring the PCT application into more countries. If the chance of obtaining a patent right is low when the ISR is referred, the applicant can make revisions according to article 19 or reduce the number of countries to be entered.
On the contrary, when cited relevant documents that influence the prospect of obtaining a patent right are not found, the applicant may consider bringing the PCT application into more countries. So, are Chinese companies effectively using the ISR to carry out their overseas patent-related activities and cost control of intellectual property rights?
If the evaluation results of the ISR are utilized as a feedback to determine whether or not to invest further on patent rights, then the number of countries to be entered should be determined based on the positive or negative results in the report. Otherwise, we may conclude that the results of the ISR are not taken into account or utilized effectively.
In this paper, the author surveyed China’s two largest PCT applicants in the electronic communications industry, Huawei and ZTE. The author conducted spot checks on PCT applications in recent years with the CNIPA as receiving office (RO), and utilized the WIPO’s patent scope to analyze the situations for which these PCT applications entered into the national phase, in comparison with the results of the ISR evaluations.
The ISR evaluations are classified in relation to claim 1 of applications for which X documents are searched (referred as an X evaluation), X documents not searched but at least two pieces of Y documents searched (referred as a Y evaluation) and only A documents searched (referred as an A evaluation).
The result showed that there is no correlation between ISR evaluations and the number of countries entered. For the positive evaluation (A evaluation), the number of countries entered is not large; for the negative evaluations (X evaluation and Y evaluation), the number of countries entered is not small. In addition, concerning the countries entered, both electronic communications companies focused on CN, US and EP, but were not proactive to enter JP, KR, IN and RU.
The Chinese enterprises did not apply the ISR results of PCT applications effectively to develop an ideal international patent application strategy, with ISR being utilized only as a deadline-delaying method in choosing the target countries for the PCT applications.
In the future, as the number of PCT international applications of Chinese companies increases significantly, the author expects that they can effectively utilize ISR results to develop their patent strategies, for example, in developing countries.
Qi Yongqiang is a partner at Corner Stone & Partners
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