China: Unpacking the first successful patent invalidation due to unauthorised foreign filing

In considering where an invention was ‘completed’ the CNIPA’s invalidation raises issues for any company carrying out R&D in China, says Jennifer Che of Eagle IP.

China and the US are similar in that both countries highly value national security, and thus have rules regulating the exportation of technology and information from within their territories. This includes new inventions that arise from within their respective borders.

In China, “inventions or utility models, of which the substantive content of the technical solution is completed within the territory of China” (Rule 8, Implementing Regulations of the Chinese Patent Law.) are subject to the foreign filing requirements stipulated in Article 19 of the Patent Law.

“Within the territory of China” is relatively straightforward to understand (even though it has a grey area, for instance, Hong Kong and Macau are not included). In 2022, the China National Intellectual Property Administration (CNIPA) handed down the first successful invalidation challenge based on Article 19 (Invalidation No. 55586).

The CNIPA Reexamination Board (the “board”) ruled that Chinese patent 201720389490.8 (the ‘490 Patent) was invalid because it was “completed in China” but not filed in China first.

Case details

Jiecang, a Chinese company specialising in the linear actuator industry, filed its first patent application (US62/436,730) in the US (December 20, 2016) just weeks before its counterpart application in China (January 10, 2017). On November 25, 2021, an individual petitioner submitted an invalidation request therefor.

The board determined that the US and Chinese priority applications were directed to the same invention, and no confidentiality examination request had been filed. In evaluating whether Article 19 was violated, the board had to consider where the invention was “completed”.

Is conception of an invention in the US sufficient?

Jiecang argued that the invention was made in the US by the first inventor, Renchang Hu, who travelled to the US for 10 days shortly before filing the US provisional application.

The board was not convinced that the invention was completed during that short period of travel. There was no evidence that Jiecang had any production facilities in the US at the time of Renchang’s visit.

Furthermore, the board thought it was impossible to overcome the technical barriers in the relevant field without such production facilities. Considering that all Jiecang’s facilities were in China, the board concluded that the invention had been completed within the territory of China.

The other Chinese inventors

Furthermore, evidence showed that the other three inventors were Chinese residents who were employed by Jiecang and had no evidence of leaving China. The board concluded “there was a high probability that the substantive content of the invention was completed in China” based on the evidence. The burden of proof was on the applicant to show otherwise.

Ruling: Patent is invalid

The board ruled the ‘490 Patent invalid entirely based on the Article 19 violation because of the unauthorised foreign filing, and the invalidation proceeding was concluded without further examination of any other issues.

What is ‘completed in China’?

In this case, the board did not consider the first inventor’s “conception” in the US to be complete due to the short travel period and the need for testing in a production facility to “complete” the invention. The patent owner failed to provide direct evidence that the invention was developed and completed abroad.

The board emphasised the technical barriers that Jiecang would have encountered because of the lack of production facilities in the US. This is why the board believed the invention was completed in China—the place with the necessary production facilities to test out the method parameters to fully determine the real scope of the invention (ie, fully realise the conception of the invention).

Would this imply that, if the invention itself did not require production at all, there would have been no such technical barrier, and the board would have potentially accepted the “not made in China” argument because the “reduction to practice” steps were not needed to determine the full scope of the invention?

Perhaps. In this case however, it really appears that all four inventors (together with the work done at the production facility), were needed to arrive at the technical solution outlined in the claims.

It was difficult for the patentee to show that the three listed inventors in China should not be inventors. We think the judge was actually quite reasonable in this case, and the patentee was really at fault for not requesting a confidentiality exam right at the beginning.

Red flags for companies doing work in China

This case certainly raises red flags for any company with employees in China or carrying out R&D activities in China (including with CROs). The board here considers such facts to be prima facie evidence of inventions “completed in China” and the patent owner has the burden to prove otherwise.

Of note, solely having inventors who are Chinese residents is not enough for a prima facie case. In a previous case (Invalidation Decision No. 36667), the Patent Re-examination Board (PRB) confirmed that one cannot conclude that an invention was “completed in China” simply based on an inventor’s residence address being in China.

Interestingly, the board did not conduct a separate inventorship analysis here. Instead, it focused on the location of the production facilities.

As for the other inventors, the burden of proof is on the patentee to show that those three other listed inventors did not complete the invention in China.

As such, the standard for “completed in China” in this case could encompass a wider net of inventions than those covered using US inventorship standards; or at least the burden of proof seems to be more difficult to overcome.

Scrutinise inventor lists

This case demonstrates the importance of determining accurate inventorship to identify any potential “inventive” activities occurring within in China.

Amending claims to separate claims that were “completed in China” and claims that were solely invented outside of China could be a way of “saving” certain patent applications (who didn’t initially file for security examination) from ultimate invalidation.

As can be seen in this case, if the request can show the high probability that the invention was made in China, the burden is on the patentee to show that the listed Chinese inventors did not complete the invention in China (which can be difficult if they are Chinese residents, did their work in China, and there is no evidence to the contrary). It’s much easier to obtain clearance first.

Prosecution tips

Companies should consider a request for clearance under Article 19 if they have research activities in China or if any inventors are Chinese residents or mainly in China during the invention period.

Such confidentiality examination requests can take 1-2 weeks to process, so it’s best to plan early. Otherwise, an urgent patent application may need to be filed in China first.

Another pathway to invalidation

From a litigation standpoint, Article 19 is a potentially easier way to invalidate a patent in certain unpredictable” fields, considering how the board accepted evidence that was very much attainable online for free and established conclusions based on a presumed fact that they thought had a high probability to be true (ie, the invention was made in China) without having to scrutinise inventorship extensively.

Jennifer Che is president and managing director of Eagle IP. She can be contacted at: jenniferche@eipgroup.asia

Audrey Cheung is a qualified Chinese patent attorney at Eagle IP.

Yolanda Wang is a principal, Chinese patent attorney, and Chinese patent litigator at Eagle IP.