One Case a Day | China: Confidentiality Review - Invalidation Decision No. 55586 (2022)

Late at night, it's time to study cases again.

In the past few days, we systematically studied key U.S. precedents on inventiveness. Today, let's take it a bit easier and study a domestic case. As is well known, China has a confidentiality review system. Before filing a patent application overseas, the corresponding technical solution must undergo confidentiality review. Although this provision is an invalidation ground, due to the difficulty of providing evidence, it has become a veritable "dormant clause," rarely supported even when raised. The 2022 case discussed here can be considered a classic case that revived the invalidation ground of confidentiality review.

Case Information

• Application Number: 2017203894908
• Invention Title: A Telescopic Transmission Assembly Device and Lifting Column
• Request Date: November 25, 2021
• Case Number: 5W126301
• Decision Number: No. 55586
• Decision Date: April 22, 2022

Key Points of the Decision

If a patent applicant/patentee first files a patent application for the same invention or utility model abroad and fails to perform the confidentiality review procedure, and if preliminary evidence indicates a high probability that the substantive content of said invention or utility model was completed within China, while the patent applicant/patentee cannot provide sufficient evidence to prove that the substantive content of their invention or utility model was completed abroad, then the patent applicant/patentee shall bear the legal consequence that their invention or utility model cannot obtain patent protection.

Important Case Information

• Evidence 1-4 is the patentee's own U.S. provisional patent application, with a filing date of December 20, 2016.
• Evidence 1-2 is the priority document of this patent, submitted on January 10, 2017, which is later than the filing date of Evidence 1-4.
• Comparing the technical content of Evidence 1-1, Evidence 1-2, and Evidence 1-4 reveals that the three technical solutions are identical, which the patentee explicitly acknowledged.
• From the archived documents of Evidence 1-3, it is evident that the patentee did not submit the technical solution of this patent for confidentiality review, which the patentee also did not dispute.

Views of the Parties

The patentee argued that:

1. The first inventor of this patent, Hu Renchang, possesses R&D capability. The invention of this patent was mainly completed by Hu Renchang in the United States. After completion, a U.S. provisional application was filed immediately. The other inventors contributed during the exchange process.
2. Completing an invention does not necessarily require experimental facilities. Chinese people are not necessarily required to complete R&D in China. It is a fact that this patent's invention was completed in the United States, but evidence cannot be provided to prove it. Counter-evidence 1 can serve as corroborative evidence for this fact.

Panel's Views

The Panel held that:
Article 20, Paragraph 1 of the Patent Law stipulates: "Where an entity or individual intends to file an application in a foreign country for a patent for an invention or utility model accomplished in China, it or he shall first request the patent administration department under the State Council to conduct a confidentiality review. The procedures and time limit for the confidentiality review shall be governed by the provisions of the State Council." Article 20, Paragraph 4 stipulates: "No patent right shall be granted for an invention or utility model for which a patent application is filed in China in violation of the provisions of Paragraph 1 of this Article."

Article 20 of the Patent Law imposes restrictions on patent applicants who intend to file applications abroad for inventions or utility models accomplished in China. It not only explicitly stipulates the obligation to submit to confidentiality review before filing abroad but also specifies the consequence of not being granted a patent right for failing to fulfill this obligation.

If a patent applicant/patentee first files a patent application for the same invention or utility model abroad and fails to perform the confidentiality review procedure, and if preliminary evidence indicates a high probability that the substantive content of said invention or utility model was completed within China, while the patent applicant/patentee cannot provide sufficient evidence to prove that the substantive content of their invention or utility model was completed abroad, then the patent applicant/patentee shall bear the legal consequence that their invention or utility model cannot obtain patent protection.

First, the requester bears the initial burden of proof to demonstrate that the substantive content of this patent was completed in China, and their evidence must meet the requirement of a high probability. To determine whether the substantive content of this patent was completed in China, it can be comprehensively examined from the following two perspectives:

1. From the perspective of the patentee's domicile. Evidence 2-1 is the patentee company's prospectus. Its cover indicates that the company's domicile is in Xinchang County, Shaoxing City, Zhejiang Province. Page 1-1-113 records: "The company consistently emphasizes the construction and improvement of its R&D system, having established a provincial-level high-tech enterprise R&D center and a provincial-level enterprise research institute" and "In 2011, the company obtained the status of a National High-Tech Enterprise." Page 1-1-114 records: "The company completed two National Torch Program projects, 'Intelligent Drive and Control System for Multifunctional Medical Beds' and 'High-Precision Electric Actuator'... and completed the acceptance of multiple provincial-level new products such as the straight-cylinder lifting column in 2016." Based on the above content, the patentee's domicile and its R&D institutions are within China. Furthermore, there is no contrary evidence indicating that before the filing date of Evidence 1-4 (the U.S. provisional application), the patentee company had institutions abroad with technical R&D or product design capabilities. Therefore, it can be preliminarily proven that it is highly probable that the substantive content of this patent owned by the patentee company was completed within China.
2. From the perspective of the inventors' nationality. According to Article 13 of the Implementing Regulations of the Patent Law: " 'Inventor' or 'creator' referred to in the Patent Law means any person who has made creative contributions to the substantive features of an invention-creation." According to this provision, anyone recorded as an inventor shall be deemed to have made creative contributions to the substantive features or substantive content of the invention or utility model. This patent records the inventors as Hu Renchang, Lu Xiaojian, Huang Zhanhui, and Zhang Donghang. All four should be considered to have made creative contributions to the substantive content of this patent. According to Evidence 2-1, Hu Renchang, Lu Xiaojian, and Huang Zhanhui are all "Chinese nationals, without permanent residency abroad" (see pages 1-1-218, 1-1-219, and 1-1-121 of Evidence 2-1). Moreover, all three are employees of the patentee company. In the absence of contrary evidence, the workplace where Hu Renchang, Lu Xiaojian, and Huang Zhanhui made their service inventions should be presumed to be within China. Additionally, Evidence 2-2 reports on the theme "Zhang Donghang from Xinchang: A 'Dream Chaser' Forever Climbing the Peaks of Technology." It records that Zhang Donghang "serves as the head of the R&D department of the Office Business Center, mainly responsible for the desk lifting system," "came to work at Zhejiang Jiecang Linear Drive Technology Co., Ltd. by chance," "over the past six years of work, he has not forgotten his original aspiration, always adhering to his commitment to technological innovation," and "in recent years, Zhang Donghang's smart office team has achieved remarkable results." Based on the above, on one hand, it can be preliminarily proven that Zhang Donghang's work tasks are related to this patent; on the other hand, it also indicates that his workplace is within China.

In summary, the evidence provided by the requester can preliminarily prove with a high probability that the substantive content of this patent was completed in China.

Second, if the patentee cannot provide sufficient counter-evidence to overturn the above determination and demonstrate that the invention of this patent was completed abroad, they shall bear unfavorable legal consequences. In this case, the patentee submitted Counter-evidence 1, intending to prove that the technical solution of this patent was completed by Hu Renchang during a business trip to the United States in 2016.

First, Counter-evidence 1 is an "Entry and Exit Record Query Result" issued by the Exit-Entry Administration Bureau of Shaoxing Public Security Bureau. It shows the entry and exit records of Hu Renchang, one of the inventors of this patent, between June 12, 2016, and June 16, 2017. Before the filing date of Evidence 1-4 (December 20, 2016), Hu Renchang had three exit records from Shanghai: to Canada from June 12 to July 3, 2016; to Germany from October 24 to 31, 2016; and to the United States from November 13 to 24, 2016. Counter-evidence 1 itself can only prove that Hu Renchang had exit experiences during these periods; it cannot directly prove that the invention of this patent was completed by Hu Renchang abroad. Moreover, besides Hu Renchang, this patent has three other inventors, all of whom contributed to the substantive content of the invention. Counter-evidence 1 cannot prove that the other three inventors, Lu Xiaojian, Huang Zhanhui, and Zhang Donghang, completed the invention of this patent abroad.

Second, the patentee claimed that the invention of this patent was mainly completed by Hu Renchang in the United States. However, according to Counter-evidence 1, Hu Renchang only went to the United States from November 13 to 24, 2016. Within a mere ten days, as the chairman of the patentee company, Hu Renchang not only formed a complete conception of the technical solution but also completed the materials required for the U.S. provisional application and all application procedures. The reasonableness of this claim is clearly insufficient.

Furthermore, from Evidence 2-1, it can be seen that the patentee company, as a company planning to go public, has a complete corporate structure. Its claim that the invention of this patent was completed abroad should have the ability to provide direct evidence of the R&D and completion of said invention abroad. Since the patentee failed to provide sufficient evidence and did not fulfill its burden of proof, it should bear the adverse consequences of insufficient evidence.

In conclusion, the evidence submitted by the requester can corroborate each other, proving with a high probability that the invention of this patent was completed in China. As the patentee failed to provide sufficient evidence to overturn the above facts, the Panel confirms that the invention of this patent was completed in China. Given that the patentee filed a U.S. provisional patent application on December 20, 2016, for the invention completed in China, without fulfilling the obligation to request the patent administration department under the State Council to conduct a confidentiality review beforehand, according to Article 20, Paragraphs 1 and 4 of the Patent Law, the technical solutions of Claims 1-11 of this patent shall not be granted patent rights.