The China IP Blog Series: Latest on Functional Features and Junk Design Patents in China

By: Dr. Paolo Beconcini

I. Introduction: Will a Surge of Design Filings in China Break the System and Nullify the Real Value of Patents?

Design patents in China were traditionally defined in the Patent Law as any new shape, pattern, and their combination, or the combination of color and shape or pattern of a product, which creates an aesthetic feeling and is fit for industrial application.[1]The fourth amendment to the Patent Law, which was entered into force on January 1, 2021, expanded the scope of design protection to the outer appearance of the “overall or partial shape, pattern or combination of the product, as well as the combination of color, shape and pattern, which is aesthetically pleasing and suitable for industrial applications.”[2] As already discussed in my previous blog, The Latest Amendments to the Chinese Patent Law,[3] the expansion of patent protection to partial designs has opened the door to a massive increase in filings. If the previous experience with design patent applications in China is to teach us something, we are to expect the system to be flooded by applications for designs of very low quality.[4] In particular, the registrability of partial designs as patents, may likely attract many filings that will not only lack novelty (compared to prior identical designs), but also will be solely dictated by function; i.e. the handle of a hammer, the teeth of a key, the sole of a shoe, the handle of a cup or the lid of a bottle, etc.  

Even before the latest amendment to the Chinese Patent Law that introduced eligibility of partial designs, the system was not working that well for foreign right holders. The first-to-file system and the lack of substantial examination of the design applications had ushered into the systems an abundance of junk design patents filed by domestic companies with the sole purpose of obtaining government subsidies or to blackmail foreign competitors into licensing or making profitable transfers under the threat of a troll lawsuit. Mistrust in China’s enforcement system, as well as critical “structural” differences in the protection system, have made foreign right holders skeptical about the benefits of filing design rights in China. The changes introduced with the fourth amendment of the Patent Law, including the eligibility of partial designs and the extension of the life span of a design patent from ten to fifteen years, can be read as an attempt of the Chinese to make design patents more appealing to westerners. However, the risk of a flop, especially in relation to junk designs for parts of whole products, is a real risk, driven by how designs are filed and examined in China. 

In this post we will review the main design patent rules in China, and explore whether there are ways for patent examiners to prevent the registration of junk design patents and correct the current system that has sullied the image of such a valuable legal tool, diminishing its appeal especially to foreign rights holders with high quality designs.

II. Structural Issues with the Chinese Design System

One of the main legal reasons for why junk design patents exist in China is the absence of a formal examination process of design filings. This means that in China, the eligibility requirement, such as novelty and originality, in design applications are not examined. Design patent applications are only examined to the extent to ensure they have satisfied all filing formalities, while substantive examination of a design patent occurs only by challenging an already registered design with an invalidation lawsuit before the China National Intellectual Property Administration (“CNIPA, formerly known as State Intellectual Property Office or SIPO).[5] For this reason, junk design patent registrations are a widespread problem in China. As already stated, junk filings tend to copy already existing designs or other registered prior rights of others because they won’t be detected until an invalidation is filed. In addition, many filings concern designs that have little or no aesthetic value. We can only imagine that the latter group will significantly increase with the availability of partial design rights. The fallout could be dreadful. Patent owners may have to clean up all the junk design patents that could pose a threat to the enjoyment of their prior exclusive rights. It is common to see legitimate licensees of the rights holder grow frustrated  when they discover free riders on a design right eliminating potential royalty revenue, or when the rights holder’s attempt at enforcement is met by junk patent fueled counterclaims as a defense to infringement. Eventually, the increment in invalidations will further strain the already thin resources of CNIPA and affect its work quality.

In 2010, the then SIPO tried to stem the already serious problem of junk design filings by introducing an exception to the principle of formal examination, thus allowing patent examiners to reject design applications that were obviously not novel. In particular, Part I, Chapter 3, Article 8 provided that while normally an examiner does not conduct a patent search and judge the requirements of patentability of a design as listed in article 23.1 of the Patent Law (which include novelty and originality), it states that: “However, the examiner, may judge whether the design obviously does not meet the requirements of article 23.1 on the basis of the information available which is not resulting from a search concerning prior designs or conflicting application….”

The provision seems to limit its analysis to the case in which an examiner can, without search or study, conclude that the design application is obviously not novel, i.e. it has already been disclosed by use or publication in China or abroad before the date of filing, or that there is a patent already registered for the same design in China. In practice, the provision has had little application. Without conducting a search, even a superficial one, it is practically impossible for an examiner to determine whether a product’s design has been disclosed already by publication or use worldwide. In sum, there is nothing “obvious” in a novelty check. Even less likely is to expect an examiner to know that an identical or similar design to the one just applied has already been registered without a search and analysis of the design patents database of CNIPA. The simple fact that junk design filings have kept increasing each year, is alone a proof that this provision has not worked as designed. If this is the only floodgate, we can safely assume that the flood of junk design filings will keep rising, especially with the eligibility of partial designs.

Aside from lobbying the Chinese government to take some more drastic measures, such as changing from a formal to a substantive examination system or to at least a mixed type of design examination system, is there any other way to more effectively use the above provision of the Patent Examination Guidelines? In the Chinese design patent system, there is indeed a patent eligibility requirement that, although not directly formulated in art. 23.1 of the Patent Law, is nonetheless listed where the law defines a design scope of protection: a design should not be dictated solely by technically necessitated features. Are patent examiners in China allowed to carry a functionality test when examining design applications? Or can this test be carried out within the frame of article 8 of Part I, Chapter 3 of the Patent Examination Guidelines?

Allowing such an evaluation could at least in part allow examiners to reject those designs that are solely dictated by function. Although there may not be many, their numbers may likely increase now that partial designs are allowed. By allowing an examiner to make a determination that the design features of an application are obviously dictated solely by technical necessity, junk filings may begin to be weeded out at the onset, without the need of substantial research and complex comparison analysis. This evaluation work could likely be done with less effort than that required to determine obviousness and novelty as provided by Article 8, part I, Chapter 3 of the Patent Examination Guidelines.

To address this possible solution, even if temporary, to an existing and pressing problem, we will first introduce more in details the key features of a design patent in China, then briefly explain its eligibility requirements and then dig-in deeper on the issue of non-functionality/functionality and its relation to the patentability requirements. 

III. Definition and Scope of Design Patents in China

The aesthetic appearance of industrial and consumer products has emerged in the last few decades as a key factor in securing their success among consumers worldwide. China is no exception to this trend. A product’s appearance is a key factor in consumer choices and has become an added value to a product. Shoes, furniture, bottle openers, blenders, and even electric switches or a lamp post, as well as many other industrial products and utensils can become a lifestyle statement depending on whether their appearance is original and different from the standardized shape normally characterizing the same type of products available on the market. Many Chinese, as eager consumers, attach great importance to design as a status symbol, and see uniqueness and exclusivity as a mark of success.

Like the U.S., but unlike Europe,[6] China has adopted a design patent system to protect the aesthetic value of such shapes and patterns of industrial products. In this respect, China has modeled its design protection system on the patent categories listed in the Paris Convention.[7] Article 2 of the Patent Law of the People’s Republic of China in its current version[8] defines a design as: “Designs means, with respect to a product, the overall or partial shape, pattern, or the combination thereof, or the combination of the color with shape and pattern, which are rich in an aesthetic appeal and are fit for industrial application.”

In order to enjoy design protection in China, an industrial product does not need to be beautiful, but only aesthetically original and different from the common design adopted by the market for that type of product. 

The ultimate function of a design patent in China is the recognition of exclusive protection of the added commercial value created by the original visual effect of the product, which makes it more appealing to the buyer, compared with other products with the same function but a different, more common and usual outer appearance. In this context, a design patent differs from a trademark in that the aesthetic visual effect provides no origin or source identifying effect, while it differs from a copyright because of the varying level of intellectual effort required and the industrial reproducibility of the design products. Design patents differ from invention patents and utility models because they do not protect the use of the product in itself or its functions and technical benefit, but only its original visual effect.[9] 

III. Patentability Requirements

For a design patent to be valid, it must be ‘novel,’ that is: (a) it cannot be a design known to the public in or outside China at the time of filing; (b) before the filing date, no entity or individual may have filed an application for the same design with the CNIPA; and (c) no entity or individual may have recorded any such design on patent-related documents officially published by the  CNIPA after the filing date.[10]  

The Chinese Law recognizes the principle of ‘absolute novelty.’[11]  Any disclosure either by use[12]  or publication in China or abroad will deprive the design application of novelty. However, design applications are not examined as to novelty[13] and challenges to the patent validity for lack of novelty will have to be brought up through an administrative complaint with the competent patent authority.

Furthermore, for a design patent to be valid its design must be ‘distinctively different’ from prior art designs for the product in question and must not be in conflict with any rights already lawfully obtained by another party before the filing date (i.e., trademarks and copyrights). However, during formalities examination, there is no inquiry into the originality of the design. In its draft of “Provisions on Several Issues relating to Hearing Administrative Cases on Patent Granting and Validity (I)” of April 28, 2020 the Supreme People’s Court further stipulated that designs obtained by the recombination of other known designs are not distinctively different “when their recombination is obvious to or easy to be conceived by the ordinary consumer, unless the recombination produces a substantially different and unique visual effect.”[14] Another important requirement is that the product in question is fit for industrial use.[15] Meaning that it is used and/or sold as a product fit for industrial use and can be mass produced without difficulty.[16] 

IV. Non-Functionality

Neither the Patent Law, nor the Implementing Regulations to the Patent Law and the Patent Examination Guidelines, have set forth a ‘non-functionality’ requirement for the patentability of a design. Therefore, non-functionality is not expressly listed by the key provision of article 23.1 of the Patent Law that lists the eligibility requirements for a design patent. Article 23 of the Patent Law has formulated instead the positive requirement that a design must create in the relevant user/consumer an ‘aesthetic visual feeling/appeal.’ If this is the case, the provision of article 8, part I, Chapter 3 of the Patent Examination Guidelines is not applicable, and an examiner could not reject a design application even if it is obvious that it is solely dictated by function. This means that that even if the examiners see and know that a design application is for a common hammer and it is solely dictated by function, it cannot reject it. 

Is this an acceptable result? How can it be that an examiner is allowed to reject a design application if it obviously lacks novelty (i.e. he knows there is an identical design already out there), but cannot reject the same application if he knows that it obviously concerns a design that is solely dictated by function?

The answer to these questions may be in how non-functionality is conceptually understood and interpreted: is it just the negative side of the positive requirement of “aesthetic appeal”? Is non-functionality a manifestation of an obvious lack of novelty? Or is it an independent requirement of patentability?

Functionality cannot be read as a feature of novelty. Novelty only refers to the status of a design, i.e., whether it is already known to the public by the time of the patent filing. A design solely dictated by function may still be novel. We can think of a newly developed component of a machine or product that has been kept secret in the R&D division of its creators. This design is novel in that, once filed, there will not be other identical designs already known to the public. However, it is possible that each curve and shape of that product is dictated by a technical need and function without the designers having input any creative contribution. That design will be novel, but solely dictated by function at the same time. 

Generally, Chinese examiners and judges do not seem to equate lack of aesthetic feeling to sole functionality. In the legal literature there has been some debate as to whether non-functionality should be understood as a negative patentability requirement and perhaps complementary, or even equivalent, to the requirement of aesthetic appeal. However, there were no judicial decisions that could support such an interpretation. Therefore, we can conclude that non-functionality is a requirement separated from aesthetic appeal.

Recent case law from the Beijing Higher Court has taken a clearer stance on non-functionality. While aesthetic appeal has been connected to the concept of decorativeness and ornamentality[17] of functional design features, non-functionality has been recognized as a requirement for patent eligibility on its own and a limit to aesthetic appeal.[18] Considering the authoritative weight of the highest IP court in China, such decisions may have opened a new phase concerning the role of non-functionality and its relationship with the positive requirement of aesthetic appeal.[19] 

The decision of the Beijing Higher Court in Jaguar Land Rover v. JMC,[20] has in fact expressly recognized a conceptual separation between functionality and aesthetic value while defining their interrelation and their influence on the final determination of a design scope of protection.

While the law and the case law prior to 2016 were silent on non-functionality as a patentability requirement limiting the use of functionality as a test for the determination of design protection, the prevailing jurisprudence has expressly recognized the existence of a patent eligibility requirement of non-functionality. Courts have emphasized the fact that, although solely functional designs are rare, such designs exist and the “solely dictated by functionality test” must be conducted by an examiner first when necessary. The reality is that with now partial designs eligible for patent protection, more cases of solely functional design applications can be expected.

V. Conclusion

The question now is: what could now happen under this new case law, specifically if a design patent application undergoing formal examination is found to be obviously decayed by primarily functional features? Would the examiners feel more comfortable in rejecting such applications by invoking this recent case law and exercising their power to reject design applications under article 8 of Part I, Chapter 3 of the Patent Examination Guidelines? Could this be the best available tool to filter some of the most egregious junk design filings and a way to improve the quality of such rights by educating applicants as to the need of meeting the minimum non-functionality test? If such an option is denied to the examiners, junk design patents will keep clogging the system until a major reform of the examination process is undertaken. Implementing an examination system that substantively evaluates these patents, similar to that of the U.S., will be a step forward in the right direction to preventing an influx of junk design patents. We will follow this issue and we hope to report developments on this topic in a future post.

[1] Zhonghua Renmin Gongheguo Zhuanli Fa (中华人民共和国专利法) [Patent Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Dec. 27, 2008, effective Oct. 1, 2009), art. 3(2), https://www.legalbluebook.com/bluebook/v21/tables/t2-foreign-jurisdictions/t2-9-china-peoples-republic-of#b-1734077 [hereinafter Patent Law 2009].

[2] (全国人民代表大会常务委员会关于修改《中华人民共和国专利法》的决定) [Decision of the Standing Comm. of the Nat’l People’s Cong. On Amending the , [2020]] (adopted by the Standing Comm. Nat’l People’s Cong., Oct. 17, 2020), art. 1, http://www.gov.cn/xinwen/2020-10/18/content_5552102.htm. [hereinafter Decision Amending Patent Law].

[3] Paolo Beconcini, The China IP Blog Series: The Latest Amendments to the Chinese Patent Law, UIC RIPL (Jan. 29, 2021), https://ripl.jmls.uic.edu/2021/01/29/the-latest-amendments-to-the-chinese-patent-law/.

[4] See Christopher Carani & Paolo Beconcini et al., Design Rights: Functionality and Scope Protection 194 (Wolters Kluwer 2017); Jianwei Dang, Kazuyuki Motohashi, Patent statistics: A good indicator for innovation in China? Patent subsidy program impacts on patent quality, 35 China Econ. Rev. 137, 137-55 (2015); Josh Ye,Chinese government subsidies fuel surge in patents but experts warn it’s quantity over quality, SCMP (Apr. 15, 2020, 7:00AM), https://www.scmp.com/tech/enterprises/article/3079878/chinese-government-subsidies-fuel-surge-patents-experts-warn-its. The Chinese first-to-file design patent system, with no substantive examination has been misused by applicants that were filing already existing designs of others for a variety of reasons, not secondary, that of receiving government incentives according to innovation subsidy programs very common in China.

[5] See CNIPA, https://www.cnipa.gov.cn/ (last visited Feb 12, 2021). Ina sweeping administrative reform that took place in 2018, SIPO, the Patent Reexamination Board, the Trademark Office, and the Trademark Reexamination and Adjudication Board, along with other intellectual property administrations, were founded in one agency, the CNIPA.

[6] See P. Beconcini & M. Farina, Design Patent Protection for Automotive Spare Parts in China: A Comparative Analysis with the US and EU Laws and Legal Practice, 8 Bocconi Legal Papers 53-83 (Dec. 2016). Europe has recognized a design as an amorphous new type of sui generis right, while the Chinese preferred to box this new right within the known patent construction.

[7] See generally Bonan Lin, Jon Wood, & Soonhee Jang, Overview of Chinese Patent Law (Oct. 19, 2004), https://ipo.org/wp-content/uploads/2013/04/China_Overview_ChinesePatentLaw_Sept20040425.pdf. The first modern Patent Law of China was in fact implemented on April 1, 1985, soon after the accession of China to the Paris Convention on March 19, 1985.

[8] Patent Law 2009, supra note 1.  

[9] Y. Bingbing, Decision Boundary between the Use and Making of Industrial Design Patents, Managing IP (February 16, 2007).

[10] Patent Law 2009, supra note 1, art. 23.

[11] Until the enactment of the new Patent Law in 2009 prior use was novelty destroying only if it had occurred in China.

[12] Disclosure by prior use includes disclosure by making, using, selling, importing, exchanging, presenting, demonstrating and exhibiting as well as any other activity that makes or can make the design available to the public. This includes the case in which the design is disclosed by use in such a way that the public is abstractedly able to get knowledge of it if it wishes so.

[13] China National Intellectual Property Administration, Guidelines for Patent Examination pt. I, ch. 3, art. 8 (2010), http://www.gechengip.com/information/gfpe2010_en.htm.  Exception made for obvious novelty as stated already with reference to Part I, Chapter 3, Art. 8 of the Guidelines for Patent Examination issued in 2010.

[14] (最高人民法院公布《关于审理专利授权确权行政案件若干问题的规定（一）》（征求意见稿） 向社会公众公开征求意见, 2020-28-04) [Provisions (I) of the Sup. People’s Ct. on Several Issues concerning , [2020]] (Apr. 28, 2020), art. 22.

[15] Patent Law 2009, supra note 1, art. 2(4). 

[16] China National Intellectual Property Administration, Guidelines for Patent Examination pt. I, ch. 3, art. 7.4 (2017). The same provision provides a list of other subject matters non eligible to design protection.

[17] See (捷豹路虎有限公司等与江铃控股有限公司二审，(2018)京行终4169号) [Jaguar Land Rover v. JMC ], (2018) Jing Xing Zhong No. 4169 (Beijing Higher Court 2018). The Beijing Higher Court has taken the opportunity to better define the content of aesthetic value and to detach it from a generic definition of the same as a matter of subjective taste. In particular the court stated that the aesthetic appeal or overall visual effect of the design is produced by:  “Generally speaking, functional design features do not have a significant impact on the overall visual effects of design; decorative features have an impact on the overall visual effects of design; and for the impact of the design features of both functionality and decorative features on the overall visual effect, it needs to be considered against the weight of itsdecorative aspect.” From this words we can understand that the aesthetic value of a design is defined through a balanced determination between the decorativeness and the functionality embodied in each design feature, whereby the degree of decorativeness is determined by the designer’s freedom for the feature or product under examination.

[18] See (株式会社普利司通、三角集团有限公司与国家知识产权局专利复审委员会二审， 2016, 京行终3233号) [Triangle v. Bridgestone, a Dispute with the Patent Reexamination Board] (2016).

[19] See id. Functionality is not a negative component of the aesthetic appeal, but rather a limit to the same. Aesthetic appeal is the result of the decorative and ornamental elements minus their strict functionality. As explained by the court in Jaguar Land Rover, most industrial products will be neither solely functional or solely decorative. Aesthetic appeal is the result of the dynamic between the forces of functionality and those of decorativeness:

the design of a product is usually composed of two basic factors: function and aesthetics, especially the exterior design of the car, requires a perfect combination of aesthetics, function and technology…. as far as a specific design feature of a design product is concerned, the dual requirements of functionality and aesthetics need to be considered at the same time, which is a compromise between technical and decorative characteristics. The functional or decorative characteristics of product design features are usually relative, and to make an absolute distinction between functional design features and decorative design features is unrealistic in most cases.

[20] Id.