[Depth]The Protection of Industrial Design in China PART2
(Author: Dr. Paolo Beconcini; Source: Carroll, Burdick & McDonough LLP)
III.PATENTABILITY AND GRACE PERIOD
For a design patent to be valid, it must be “novel,” that is: (a) it cannot be a design known to the public in and outside China at the time of filing, (b) before the filing date no entity or individual have filed an application with the Chinese Patent Office, and (c) no entity or individual have recorded any such design on patent-related documents officially published and announced after the filing date (again, the first to file rule!). Furthermore, in order to be valid, a design must be distinctively different from existing designs for the product in question, and must not be in conflict with any rights already obtained lawfully by another party before the filing date (i.e., trademarks and copyrights). 
Novelty is lost if the product’s shape is disclosed by the right holder before having filed a patent in China. Novelty is not lost if the right holder can prove that the disclosure was done by a third party without his consent.
The novelty-destroying disclosure by the European right holder is a very common occurrence, especially because of the variations among different national legislations as to the recognition of a grace period for certain types of disclosure/use of an invention before its filing date. A European company developing a design concept for a product is allowed to use and market that product for 12 months. After that period, the user can decide whether to obtain design protection for that product. In this way the law in the EU allows the inventor to test the design in the market and then decide whether it is worth seeking IP protection. Prior use and disclosure of the design will not automatically lead to a loss of novelty if a design application is filed within 12 months from the first date of use. However, if the same owner decides to file that design in China (claiming or not the EU priority application, extending to China the right acquired in Europe), such design will be invalid in that the 12-month use and grace period allowed by the EU laws is irrelevant in China and such use is novelty-destroying under Chinese Patent Law.
In sum, when filing a design patent in China, the applicant must avoid undue disclosure of the same by prior use or publication abroad, unless such disclosure was either done by third parties without the right holder’s consent, or was done at specific exhibitions or academic events approved by the Chinese Government. 
It is important to note that in light of the mere formal examination of designs in China, their validity is not verified at the time of filing or by way of an opposition like in the EU, but at a later stage, i.e., when an invalidation proceeding has been filed against an already-registered design patent. This normally occurs when a design is enforced by its holder, and the alleged infringer defends by filing an invalidation claim against the design patent. Like in Germany—but unlike other European countries such as France and Italy,—the patent validity lawsuit in China must be filed before an exclusively competent administrative body called the Patent Re-examination Board and not with the civil judge of the parallel infringement case. Filing of an invalidation suit against a design patent will likely lead to a suspension of the parallel infringement proceedings, and an invalidation of the patent will also bring about the dismissal of the infringement lawsuit. Such a system requires the right holder to be very sure about his design strength before starting an infringement action.
Consequently, even if a design patent is granted, it may not mean that such a design is really enforceable. For example, if someone files and obtains a design patent over a certain product’s shape and then finds a third party manufacturing and selling that same product’s shape, the design right holder can file a civil lawsuit or an administrative enforcement to obtain the cessation of the infringing activities and, in the context of a civil lawsuit, to obtain damage compensation. However, in a case such as the one above, the infringer will likely find and use that evidence of prior use to file an invalidation action against the design. This action will suspend the infringement proceeding and may result in the invalidation of the design patent and the dismissal of the infringement claims. The same could happen if someone were to file a design application without checking first if the same design had not been already registered by a third party (first to file rule).
V.IDENTITY/SIMILARITY OF DESIGNS FROM THE INFRINGEMENT PERSPECTIVE
The Interpretation of the Supreme People’s Court of December 28, 2009 on Patent Disputes gives some clarification as to the determination of identity/similarity in the context of a judicial dispute over a design patent infringement. First of all, the determination of identity/similarity between designs in an infringement lawsuit or in an invalidation action must be conducted between the patent and the alleged infringing product, while the patented product can be taken as a reference at most.
Also, an infringement can exist only between goods belonging to an identical or similar class of products. The criteria for such determination is based on the identification of the normal use of the relevant products, their functions and sales, in light of the brief explanation of the design made by the patentee and the International Classification for Industrial Designs . 
But how is the court to judge whether the designs are identical or similar? Mostly it can refer to a level of knowledge and the cognitive ability of a normal consumer of the product the design of which is the object of litigation or invalidation. In particular, the court has to comprehensively judge whether the designs are identical or similar in light of the overall visual effect given to the designs by their aesthetic features. However, the court must not consider the design features mainly defined by the technical function, the product material and internal structures which do not influence the overall visual effect. In general, the overall visual effect of the design will notably be influenced by the following: a) the portions of the product which can be observed easily and directly when the product is normally used, compared with other portions of the product; and b) the features of the patented design which are different from the existing design, compared with other features of the patented design.
Where there is no difference between the accused design and the patented design in the overall visual effect, the court will determine the two designs to be identical; where there is no substantive difference in the overall visual effect, the court will judge the two designs to be similar. Mere decorative patterns cannot take away the impression of similar visual effect. 
Generally, an experienced Chinese IP court, such as Beijing, Shanghai or Guangzhou, will base their decisions on a rather consolidated jurisprudence and there should be little surprise as to the identity/similarity determination process. This will affect the enforcement preparatory strategy, which will have to be set so as to obtain the jurisdiction of one of these major IP courts.