In part 1 of this two-part series, I stressed the need for just about any company doing business in China or with China to register their brand name(s) and logo(s) as a trademark in China. My law firm’s China lawyers have considered registering your trademark in China as a no-brainer since we started this blog and the need to register has only increased as trademark enforcement in China consistently strengthens. And, yes, this applies even if you are just outsourcing to China and exporting all you are having made in China.
I ended part 1 by noting how you must register a design patent on your product. This is because if you don’t, someone else will and then you will find yourself having to challenge that patent in China (which is relatively expensive and time-consuming) or just walking away from China.
A design patent in China is generally analogous to a design patent in the U.S. or a Community design in the EU and it covers novel product designs that (1) incorporate shapes, patterns, and/or colors, (2) are rich in aesthetic appeal, and (3) are fit for industrial application. China registers design patents without conducting a substantive examination of the design patent application and so it does not take much at all to secure one. Substantive examinations only occur if a third party challenges a patent’s validity after registration. A design patent applicant need only submit an application to SIPO that satisfies the procedural requirements, particularly with respect to proper formatting of documents and drawings.
Even though many of the design patents in China are nothing more than slight modifications of existing product designs they still can have substantial value because its owner can sue for patent infringement and register the patent with Chinese Customs and have counterfeit or copycat products seized at the border. Even if you do not think your design is novel enough to be patented, there is a first mover advantage to your filing for a China design patent simply because your design patent will be valid until successfully challenged by a third party. A Chinese design patent grants its holder exclusive use of the aesthetic features of a product, not its functioning portion. In other words, the patent is on how the product looks; its external appearance.
What though does it really mean to have a China design patent? The typical design patent cases our China attorneys have recently handled are a good way to answer this question.
The case typically starts with a phone call from a Western company telling us a Chinese company (usually a company it already knows and usually either its manufacturer or a competitor) just contacted the Western company (or the Chinese company that makes the Western company’s product) and said the Western company’s product violates the Chinese company’s China design patent. The Chinese company then threatens to sue the Western company (and/or its Chinese manufacturer) for patent infringement damages and to block any of the Western company’s “infringing” product from leaving China. Needless to say, the companies that call us on these matters are concerned.
Though China customs frequently blocks products from leaving China due to trademark infringement claims, blocking products due to a design patent claim is considerably less common. China customs generally requires a party seeking to block a product from leaving China a block to post a substantial bond, which then becomes available to the party whose product has been blocked by customs. Many companies are willing to bear this risk to stop trademark infringing products from leaving China than are willing to take this risk for a design patent claim.
What’s the best way to nip design patent hijacking? Register your design patent first, before anyone else can do so. And that is why we are adding design patents to our list of the one thing (well, maybe two) you must do if doing business in or with China if your business involves a physical product. If you want to be sure to avoid your products being held up at the Chinese border on an IP claim, you should secure both a trademark and a design patent.