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Using Clearance Searches to Prevent Intellectual Property Right Risks in the Chinese Market
date: 2014-02-12Lucy H. Li

Today so many overseas enterprises and Chinese enterprises are benefiting from the huge market of China which offers a lot of opportunities for development. These enterprises pin their hopes of future business growth on the Chinese market by setting up subsidiaries, offices or plant here.

Along with the huge market of China is the thriving intellectual property right (IPR) undertaking. With the development of this market, both overseas enterprises and Chinese enterprises are competing to further their IPR presence in China. In 2011, China's number of patent applications ranked first in the world. All parties jointly pushed China's IPR undertaking to a new peak. Beneath the enormous number of patents are enormous numbers of patent licensing. What kind of rights and risks are hiding behind the numerous patents? This is a question that an enterprise has to consider when entering the Chinese market, and to answer this question, an important aspect is to utilize the patent search tool. An enterprise can identify rights related to its own products and technical proposals by using patent searches, thus identifying the level of risks.

Specifically, enterprises need to conduct a China-specific clearance search before producing products or introducing products to the Chinese market or even earlier than that in order to determine whether such products or technical proposals infringe the patent rights of others. I'd like to share with you some experiences on how to better conduct China-specific clearance searches on the basis of past cases.

(I) How to deal with China's utility model patent

Many enterprises only select the database of inventions as they do overseas when selecting the Chinese database, and the database of utility models is not considered. However, ignoring the database of utility models will make the work deficient at the very beginning. Utility models in China are characterized by easy and fast grants; therefore, there are a large number of utility models. People have realized that most of these utility models are basically junk patents, though, given the enormous amount of damages ordered by the court in the case of China's Zhejiang Chint Electrics Co., Ltd. v. Schneider Electric concerning a utility model patent, it's obviously unreasonable to completely ignore the utility models.

Thus, we recommend that in addition to selecting the database of inventions, the database of utility models should also be selected when conducting a clearance search in China.


In past cases, we conducted clearance searches for clients by selecting both the database of inventions and the database of utility models, and sometimes the search results of utility models were really very surprising. According to the principle of infringement determination, technology and products will fall into the protection scope of some utility models.

These circumstances are very common, e.g., the protection scope of some utility models is so wide that it almost covers the maximum extent of the entire technology, but after reading the descriptions, you'll find out it doesn't really contribute that much to technology. To technicians in the same field, the protection scope of some utility models is the same as for the existing technology. There are some utility models for which determination is temporarily not possible as for whether they have protected the known proposal of an existing technology, and there are also some utility models which may be "small inventions" in a real sense.

In past cases, in order to rule out the risks of some utility models further and faster in a clearance search, we usually widened the scope of search from valid patent databases to the patent database of various legal status. After the search, while browsing the search results, we often saw technical proposals of some utility models protection which had been made public in previous invalid relevant patents for inventions. By doing so, we are able to minimize impediment patents that require serious attention.

In this way, the quantity of utility models for which the stability of their rights have to be determined by finally considering the use of invalid evidence searches will become less, thereby reducing the costs of dealing with them and really ascertaining whether the design of a product or proposal of an enterprise has to be adjusted or not.


(II) How to consider the selection of technologies to be searched for a product

A product usually comprises multiple parts and components as well as multiple technical proposals. Multiple technical points involved or multiple technical proposals adopted for a product all may infringe an IPR, and the infringement of any single technical point may lead to an infringement risk for the whole product. As far as cost control and risk control is concerned, the best solution is to select some key technical proposals to reduce the costs while also minimizing the risks of infringement.

The process of selecting key technical proposals involves disassembling of the product, including disassembling the product into basic parts and components or multiple technical proposals.

In past cases, we have cooperated with clients to consider factors including level, transferability, importance to the whole product, technological source, etc. of the risk to select key technical proposals for searches. For instance, the risk and liability of infringement can be transferred to suppliers through IPR agreements, e.g., research is usually not necessary for outsourced parts. In addition, we usually work with technicians to make a basic judgment about the possibility of the technology belonging to an existing technology.

On such basis, the independent research and development proposal is usually the key technical proposal pending research. In the independent research and development proposal, the importance of such proposal to the whole product is further considered, such as whether it plays a role in highlighting the functions and characteristics of the product, and the core technical point is selected as the technology pending research. 

When determining a technical proposal, attention has to be paid to the fact that multiple technical proposals can also derive from a part or component, e.g., the manufacturing processes or structure of such part or component.


(III) How to determine search strategy

The circumstances of infringement determination must be considered when formulating a search strategy for a clearance search. As mentioned earlier, the infringement of any single technical point may lead to an infringement risk for the whole product. Therefore, we have to develop a search strategy specific to each technical point selected.

As mentioned above, the search strategies for the manufacturing processes and structure of the same part or component are different.

When deciding on a search strategy, considerations usually have to be made with regard to the expressions of technical terms for Chinese patents submitted by foreign applicants, the expressions of patents submitted by the Chinese applicants and IPC.

The purpose of clearance searches is to find the relevant content of patents which appears in the claim of rights.

When setting the technical expressions targeting the Chinese patents of foreign applicants, we usually find very superior concepts in the claims of rights and different translations for these superior concepts. Sometimes, it's very difficult for these expressions to establish a connection with our targeted specific technical terms. Therefore, when determining a search strategy, we need to specifically define these technical terms in the instruction book, which will help us find the patents in the claims of rights the proposal of which can only be understood by using the combination of several superior concepts together with the annexed drawings. This phenomenon is very common in actual cases. Furthermore, terms in the instruction book like the technical questions and functions are very important; they can play a guiding role in a supplementary and clear manner, and search for a group of patents which resolve the same kind of problems and realize the same kind of functions.

When setting the technical expressions targeting the Chinese patents of domestic applicants, we usually need to pay attention to another aspect, that is, some patents may use some non-standard technical terms which are different from the expression of common technical terms. In this case, it's usually very important to look for these non-standard technical terms by reading some search results.

The use of IPC will help us acquire an accurate direction. A group of patents can be found by looking for a precise classification group number which directly corresponds with the technical topic. If there is an accurate inferior group relative to the proposal pending research, the patents in such group may be considered to be browsed to avoid research omissions.

In the process of clearance searches, it's important to maintain the integrity of the data. On the one hand, IPC and key words need to complement each other; on the other hand, an additional verification link has to be adopted to determine whether the search strategy is complete or not. The verification usually uses a competitor as the access point to select relevant patents. Also, the search strategy can be used to see whether relevant patents can appear or not.


(IV) How to determine selection standards

There are two phases in the selection: preliminary selection and refined selection.

In the preliminary selection, the abstract and drawings attached to the abstract are usually used to rule out obviously irrelevant patents. As clearance searches require the finding the relevant content of patents which appear in the claims of rights, after ruling out obviously irrelevant patents, it's still necessary to look for patents which can constitute impediments legally by reading the claims of rights, which process is refined selection.

The patents after the preliminary selection should be selected in a precise manner using the selection standards of clearance searches; the principle of infringement determination, the principle of complete coverage and the principle of equivalents should be taken into account to determine the selection standards. There are usually two kinds of circumstances in which the principle of complete coverage is met, that is: when the technical characteristics of the subject pending a search are completely the same as that of the claims of rights of valid patents searched, there is risk of infringement to be determined based on the principle of complete coverage; or when the technical characteristics of the subject pending a search fall into the protection scope of the claims of rights of a valid patent searched, there is risk of infringement to be determined based on the principle of complete coverage. Therefore, these two kinds of patents have to be sorted out. The circumstances in which the principle of equivalents is met may be when the technical characteristics of the subject pending a search are partly the same as that of the claims of rights of a valid patent searched. As a result, these patents should also be sorted out for further judgment of their infringement possibility.

It's very important to understand the above-mentioned key matters, investigate possible risks and conduct a clearance search before producing a product and entering the Chinese market. By taking these steps, the risks concerning a specific product which hide behind the large number of patents in China can be sorted out well and precautionary measures taken and preparations made in advance.