Avoid Divisional Applications being Identified as Bad Faith Filings in China

China has been tirelessly investing effort in the enhancement of patent quality and examination performance to ensure the core legislative purpose of the Patent Law for encouraging innovative development is closely observed. In order to strengthen the indicator of technical innovation, China has re-emphasized the importance of both quantity and quality in the technology embodied in the patents. Unfortunately, reportedly irregular filings of patent applications—breaches of the duty of good faith—have occurred; such irregular filings were explainable in part by the availability of economic incentives in the form of local authority subsidies for patent filings, although all forms of subsidies for patent prosecution are ordered to be canceled by the end of June 2021.

CNIPA categorized the irregular filings into a non-exhaustive list of nine types of activity as per the “Measures on Regulation of Filing Patent Applications (关于规范申请专利行为的办法)” published in March 2021. The first type of activity comprises “multiple applications filed simultaneously or successively that are obviously the same invention-creation, or are essentially formed by simple combinations of different invention-creation features or elements”. The ninth and last type is a catch-all clause to encompass any other abnormal patent filings and related activities either in breach of the principle of good faith or in defiance of regular patenting practices. These bad faith activities were further clarified in April in a CNIPA’s official document titled “Interpretation of the Measures on Regulation of Filing Patent Applications (关于规范申请专利行为的办法解读).”

The intention to curb bad faith filings is commendable. Nevertheless Tsai, Lee & Chen happened to encounter some instances of supposedly regular cases being spotted by the examiner as having been filed abnormally.

At the stage of patent prosecution before the CNIPA, the applicant can voluntarily file for divisional applications, if not during pendency, then within lawful timeframes of two (2) months after grant or three (3) months after rejection in the latest. In a previous case handled by Tsai, Lee & Chen, a utility model was granted and then the applicant voluntarily filed one further divisional application within the lawful timeframes. However, in accordance with the provisions of Article 42.1 of the Implementing Regulations of the Patent Law, the examiner issued a Notice to Deem Divisional Application Not Filed, meaning that the divisional application was refused. The applicant then sought remedy through an administrative appeal but regrettably failed to overturn the decision of refusal. In the appellate decision, CNIPA specified that the divisional filing was refused on the basis of bad faith. This case occurred in 2019, suggesting that CNIPA had been de facto operating campaigns against bad faith filings for quite a while, even before the aforementioned Measures were officially released.

Utility models in China are not substantively examined. Inevitably, they are likely to be employed to abnormally accumulate a number of patent applications in a relatively short period of time. Hence, CNIPA and examiners have remained vigilant over sudden surges in utility model filings. As seen in the aforementioned past case, the risk of refusal remains even if the divisional application(s) for utility model(s) was/were filed within the lawfully prescribed timeframe. On the other hand, an invention patent application requires a substantive examination process, usually taking more than 12 months for the patent to be granted. An invention patent application is relatively less likely to be red-flagged as a resulting from filing a couple several divisional applications within the lawful timeframes.

On a separate note, divisional applications will only be considered bad faith activities when they are filed voluntarily. In the event of the examiner rejecting a parent application on the ground of lack of unity, the applicant’s filing of a divisional application as a defensive response would not be considered in any way malicious. Hence, embedding non-unitary elements, or more precisely, multiple subjects, in a parent application or in a lawfully-filed divisional application at the time of filing is a strategic means to trigger future divisional applications.

Looking to the future, it is foreseeable that China’s efforts to improve the overall quality of patents will not be reduced, but will only increase. In order for applicants to avoid having their applications being wrongfully considered as bad faith filings and incurring unnecessary additional costs in further appeals, Tsai, Lee & Chen has the following advice:

1.        For a case that has higher priority, it is recommended to opt for an invention patent rather than a utility model.

(1)      Even during the prosecution of an invention patent application, avoid effectuating too many divisional applications at once or in a short space of time. It is strongly recommended to file two (2) more divisionals at maximum.  

(2)      Try to include all sets of claims in one application and then await the involuntarily filing of divisional applications in response to examiner’s rejection of non-unity.

2.        When a utility model is strongly preferred over an invention patent,

(1)      Try to include all sets of claims in the utility model application and only respond to divide upon the examiner’s rejection.

(2)      Filing divisional(s) for a utility model even within the lawful timeframes is NOT recommended, in order to avoid the potential risk of receiving a Notice to Deem Divisional Application Not Filed.