Confidentiality Review for Foreign Patent Filing Out of China

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(Author: Harris Gao; Source: Morrison & Foerster)

Before the Third Amendment to the Chinese Patent Law (“Third Amendment”) took effect on October 1, 2009, whenever a Chinese entity or individual intended to file a patent application in a foreign country for an invention made in China, it or he was required to file an application in China first. The Third Amendment removed this “first filing in China” requirement, but it also added a new requirement of confidentiality review. An applicant now must submit a request for confidentiality review by SIPO before filing overseas. This confidentiality review requirement applies to all inventions made in China. Failure to comply with this requirement would result in the loss of the right to patent in China.

Whether it is practical to directly file patent applications overseas depends largely on how SIPO implements the confidentiality review. In particular, people are interested in knowing how long it takes SIPO to conduct the confidentiality review. On January 18, 2010, the State Council released the Revised Chinese Patent Law Enforcement Regulation (“Revised Patent Regulation”), effective on February 1, 2010. The Revised Patent Regulation addresses some of the practical issues underlying the confidentiality review, and lays out detailed procedures for confidentiality review.

The Confidentiality Review Process

Under Article 8 of the Revised Patent Regulation, an applicant must request a confidentiality review before filing a patent application in a foreign country for an invention made in China. This would include all inventions in which “the substance of the technical solution was completed in China.” The request may be filed separately, or in conjunction with a patent application filed in China. If the request is filed separately, it must include a detailed description of the technical solution provided by the invention.

Under Article 9 of the Revised Patent Regulation, upon receiving such a request, SIPO shall “promptly” send the applicant a notice of confidentiality review if SIPO determines that the invention could possibly be related to national security or the national interest such that there might be a need to maintain its confidentiality. If the applicant does not receive a notice of confidentiality review within 4 months of the request, the applicant can file the patent application overseas. On the other hand, if SIPO decides to conduct a confidentiality review, it should “promptly” notify the applicant once it completes the confidentiality review. If, within 6 months of its request, the applicant does not receive a decision that its invention needs to be kept confidential, the applicant can file the patent application overseas.

Under the Revised Patent Regulation, SIPO will conduct two types of reviews: (1) an initial review to determine whether a further confidentiality review is warranted for an invention; and (2) a further review to determine whether the invention needs to be kept confidential, and thus is not eligible for foreign filing. If an invention passes the initial review, SIPO will notify the applicant that the invention is cleared for foreign filing. On the other hand, if an invention fails the initial review, SIPO will conduct the further review.

The First Three Months of Confidentiality Review at SIPO

SIPO has been conducting confidentiality reviews since the Third Amendment took effect on October 1, 2009. According to data provided by SIPO, the vast majority of the inventions will pass the initial review. During the first three months (October, November and December of 2009), 92% of the total requests passed the initial review, and only 1 percent of the requests did not pass the initial review (the rest of the requests were deemed to be not submitted due to formality issues).

Also according to data provided by SIPO, it will not take very long for the vast majority of the inventions to pass the initial review. If the request for confidentiality review is filed with a Chinese patent application, SIPO will send the applicant the result of the initial review at the same time as the official receipt of the patent application. During the last three months of 2009, where the request was filed separately or after the filing of a Chinese patent application, it took SIPO an average of 27 days to notify the applicant of the result of the initial review.

Thus, for the vast majority of the inventions, one should expect to receive an approval for foreign filing within about a month. It will be longer for the small minority of inventions where a further confidentiality review is needed, but in any event no more than six months. To prevent a significant loss of priority, an applicant who received a notice of confidentiality should consider filing a corresponding patent application in China immediately.

Direct Foreign Filing Is an Option in Limited Circumstances

The Third Amendment, as implemented by the Revised Patent Regulation, does give applicants the option of filing directly overseas; but exercising that option has its cost. During the last three months of 2009, that cost was generally the delay of about 1 month in priority. For many applicants, this delay in priority may make it inadvisable to file directly overseas. Instead, these applicants should consider filing a Chinese patent application or a PCT application in China first.

On the other hand, if the applicant is only interested in filing in the United States, direct filing can be a viable option. The United States is a first-to-invent system, so it is less important to have the earliest filing date. What is more important is to have the earliest invention date. Since the applicant needs to submit a detailed description of his technical solution in the request of confidentiality review, it should be feasible to use the confidentiality review request to establish an invention date that is no later than the request date, and the delay in filing date caused by the confidentiality review should not have much impact on its patentability in the United States.

Conclusion

The Revised Patent Regulation lays out a fairly well-organized confidentiality review process, and filing directly overseas now is an option for a small number of applicants whose primary interest is to obtain a U.S. patent.