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Patently Speaking: Failure To Heed IP In China Can Be Costly

Alok Aggarwal

Chairman and Co-Founder Saratoga, California, USA

Ram Deshpande

Evalueserve, Assistant VP and Head, IP Division Shanghai, China

Schneider Electric, a provider of power and control solutions headquartered in France, recently announced it had settled a three-year-old patent litigation with Chint, one of the largest manufacturers of low-voltage devices in China. The settlement amount of CNY 157.5 million (about USD 23 million) paid by Schneider is believed to be the largest for a patent litigation settlement in China. The decisive victory for Chint puts a fresh spotlight on the fast changing patent litigation landscape in China.

Chint originally paid CNY 500 (about USD 70) in 1997 in filing fees for the utility model application at the State Intellectual Property Office (SIPO) of China. The utility model was granted in a little over 15 months without undergoing any substantive examination. The Chinese patent office grants three types of patents:
• Invention patents or 20-year patents, which are similar to utility patents in the US and cover new technical solutions that relate to a product, a process or an improvement thereof;
• Design patents;
• Utility models or 10-year patents. The utility models are granted for ‘new technical solutions that relate to a product’s shape or structure, or a combination of the two, and are also fit for practical use’ and do not undergo a substantive examination and are granted rather quickly, typically within a year from the filing date. Evidently, utility models or 10-year patents are a cheaper and quicker way of obtaining patent protection.

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