Confidentiality examinations for inventions developed in China -the legal landscape and best practice

Any entity or individual intending to file a patent application in a foreign country for any invention or utility model developed in China, must request in advance a confidentiality examination with the Chinese Patent Office. This rule was first stipulated in the third amendment to the Chinese Patent Law of 2008.

The legal provisions on foreign applications for inventions developed in China have changed over the years with amendments to the Patent Law. In the background are Chinese companies’ enthusiasm for the global market and foreign patent filings with growing technical capabilities, and the increase in technologies produced by cross-border R&D such as at the R&D bases set up by foreign companies in China.

The purpose of establishing a confidentiality examination system is to make it more convenient to file a foreign patent for inventions developed in China, and to prevent the public release of technologies related to national security and vital interests.

The provisions of the Chinese Patent Law regarding foreign patent applications for inventions developed in China have shifted from the initial "obligation to file first in China " to the "obligation to request confidentiality examination " as summarised below. In the meantime, penalties were stipulated so that patent rights shall not be granted in China if a foreign patent application was filed without undergoing the confidentiality examination.

As for how to interpret "invention developed in China", according to Rule 8 of the "Implementing Regulations of the Patent Law", it refers to an invention of which the substantive contents of the technical solution were made within the territory of China.

There are three ways to request a confidentiality examination:

1. If a patent application is filed in China first and a foreign application is filed later, a request for a confidentiality examination can be filed with the Chinese Patent Office at the same time as the Chinese application or thereafter. Since the contents of the invention are already described in the Chinese application documents, only the title of the invention, name of the applicant and the application number should be stated in the request form for the confidentiality examination;

2. If a foreign patent application will be filed first, a request for a confidentiality examination must be submitted to the Chinese Patent Office before filing the foreign patent application, together with documents that describe the technical details of the invention;

3. If a Patent Cooperation Treaty application is filed with the Chinese Patent Office, it is deemed that the request for a confidentiality examination has been submitted, such that there is no need to submit any separate requests.

When the request for the confidentiality examination is submitted simultaneously with the Chinese patent application, the shortest processing period to receive confidentiality examination results is about a week. In other cases, the confidentiality examination results are issued in about a month. If it is concluded that "the invention does not need to be kept confidential and foreign application is allowed”, the applicant may file a foreign patent application for the invention.

The Chinese Patent Law stipulates that an invention made in China cannot be granted patent rights if a foreign application has been filed without a confidentiality examination, but it appears that this provision has yet to be applied by the Patent Office to reject an application.

Breaching confidentiality examination obligations is also one of the grounds for patent invalidation.

Since the third amendment to the Chinese Patent Law came into effect, this ground for invalidation has only been raised in a limited number of cases, where it rarely succeeded before the Patent Office due to evidentiary difficulties.

The “telescopic transmission assembly” case (Invalidation Decision No.55586, April 2022) is known as the first case where a patent was invalidated for breach of a confidentiality examination obligation. Prior to this case, there were several cases where validity of patents was challenged based on breach of confidentiality examination obligations, but the Patent Office had never invalidated a patent on this ground.

In the “telescopic transmission assembly” case, the panel clarified burden of proof in this kind of case: "If there is preliminary evidence of high probability that the substantive content of the invention related to the Chinese patent or utility model was completed in China, and the patentee cannot provide sufficient evidence that the substantive content of the invention is completed abroad, the patentee shall bear the legal consequence that the invention cannot be granted patent protection in China".

In this case, the petitioner pointed out that the patentee had filed a provisional U.S. application before filing the Chinese utility model application, without undergoing a confidentiality examination. The petitioner submitted as evidence the patentee's IPO prospectus, an online article about one inventor, and an announcement of the high-tech company certification of the patentee, proving that the invention at issue had been completed in China. 

Based on this evidence, the panel found that it was highly probable that the invention was completed in China when the patentee's location and R&D base were both in China, and the four inventors, as employees of the patentee, were all Chinese nationals with no permanent residency in any foreign country. 

Regarding one inventor's traveling records to the United States submitted by the patentee, the panel indicated that it was unreasonable to assume that the invention was completed during a mere 10-day stay in the United States.

Until now, the lack of evidence proving the invention was completed in China has been the most common reason why the Patent Office does not support allegations of breach of confidentiality examination obligations. Having clarified the distribution of the burden of proof, Invalidation Decision No. 55586 was selected as one of the top ten reexamination and invalidation cases of the Chinese Patent Office in 2022, which shall provide valuable guidance for future practice.

The most important criterion for determining whether a confidentiality examination is necessary is the place of completion of the invention. The nationality of the inventor or patentee (applicant) receives some consideration, but cannot decide by itself the place of completion of the invention.

In the “electrical single-wheel bicycle” case (Invalidation Decision No.36591, May 2018), the petitioner alleged that the Chinese patent should be invalidated for failing to request a confidentiality examination, where a previous U.S. application had the same contents as the Chinese patent and both the inventor and the patentee were Chinese citizens. The panel held that since the nationality of the inventor and the actual place of completion of the invention are not necessarily the same, the nationality of the inventor alone cannot prove that the invention was completed in China.

In recent years, it is common for foreign inventors to conduct R&D at R&D bases in China. The resulting inventions from such R&D activities are inventions developed in China. Even if the inventor is a foreigner or the applicant is a foreign company, before filing a foreign patent application for these inventions, a request for a confidentiality examination must be submitted with the Chinese Patent Office.

In the “reagent pack” case (Invalidation Decision No.41282, July 2019), the petitioner highlighted that two inventors of the U.S. priority application were recruited through the Shenzhen overseas talent recruitment project which required them to work in Shenzhen. Therefore the invention described in the U.S. application must have been completed in Shenzhen, meaning the application was improperly filed in the United States without a request for the confidentiality examination.

In response, the patentee submitted emails and drawings among the inventors to prove that the invention was completed in the United States.

The panel accepted the patentee’s argument by finding that drawings, as a recording medium of technical content, can represent the main contents of a technical solution, and can serve as a basis for judging whether the invention has been completed.

While it is necessary to comprehensively consider various factors to determine where an invention was completed, documents and records in R&D activities are important pieces of evidence showing progress of the invention and should be kept carefully.

Regulations on confidentiality examinations for foreign filing is not unique to China, existing in other countries as well. Since there are differences in specific provisions, it is necessary to carefully consider the confidentiality examination requirements in relevant countries when conducting international joint development and filing a patent application for technical achievements. 

If a part of the substantive content of the invention is completed in China and another part is completed abroad, the confidentiality examination regulations of both countries must be followed. To submit the application smoothly, it is necessary to determine the country where the application will be filed and the timing of the application, giving due consideration to the necessary procedures of confidentiality examinations and the length of the examination period.

Nowadays, with the globalisation of companies, technological development is often carried out at Chinese bases where technological achievements are made. When filing a patent application for such achievements in a foreign country, it must undergo a confidentiality examination in accordance with the provisions of Chinese Patent Law.

With the invalidity opinion of the Chinese Patent Office based on violation of the obligation of the confidentiality examination, applicants who wish to obtain a foreign patent must take serious measures to fulfill the obligation of the confidentiality examination stipulated in the Chinese Patent Law.