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Comparison between the Australian and Chinese patent systems

10 minute read

This article first appeared in the Chinese-language edition of Managing Intellectual Property. To download the article in Chinese, please click here.

Past and present

Australia was one of the early countries to establish a patent system. On 22 October 1903, the Australian Federal Parliament, in accordance with Article 51 of the Constitution and based on the British Patents Act 1883, passed the first Australian Patents Act. Amended versions of the Act were introduced in 1952 and 1990. Currently, IP Australia grants patents and manages the patent system pursuant to the Patents Act 1990. On 24 May 2001, Australia undertook further reform of the patent system and abolished the petty patent system which was replaced with the innovation patent. The intention of the innovation patent was to meet the requirements of individuals and SMEs by providing a form of patent protection suitable for lower tier inventions and products and processes with a short life cycle.

Although about 90% of patent applications in Australia originate from overseas, the total number of patent filings has not increased significantly since the implementation of the innovation patent. It seems that while many local inventors and SMEs are utilising the innovation patent system, the advantages of the system are not well known to applicants outside of Australia. The Australian patent system has become internationally recognised as being a mature, reliable, high quality, efficient and low cost system.

In contrast to the Australian patent system, the Chinese patent system has been established for less than 30 years with the first Patent Law of the PRC having been promulgated on 12 March 1984. In the early days of the Chinese patent system, China took guidance with regard to patent matters from Germany and other advanced countries, and in 1992, 2000 and 2008 the Patent Law was amended to suit China’s new market economy and for consistency with international standards. Using the Patent Law as a core component, China has established patent management, agency, documentation, legal protection and education systems, and is now one of the most active patent filing countries. According to the statistics of the State Intellectual Property Office (SIPO), more than 1.22 million invention, utility model and design patent applications were filed in China in 2010, of which 90% of the applications came from domestic applicants. Further, according to the statistics released by the World Intellectual Property Organisation (WIPO) in February this year, Chinese applicants filed 12,337 international patent applications in 2010, a 56.2% increase over 2009. This places China as the world’s 4th largest patent filing country after the United States, Japan and Germany.

Australia and China have different histories in the development of their patent systems, there are also differences between the patent laws and practices between the two countries. Nonetheless, both countries have regarded consolidating and improving the patent system as one of the indispensable means available to encourage invention and creation, promote investment in research and technology, develop the economy and enhance international competitiveness. In the construction of their patent systems both countries are taking paths that are consistent with international standards while at the same time being suitable for their own national conditions.

Types of patent protection

Unlike the three types of patent protection for inventions, utility models and designs under the Chinese Patent Law, Australia has, based on the standard patent and supplemented with the innovation patent, adopted a “two-tier” patent system for protecting inventions.

  1. An Australian standard patent is very similar to a Chinese invention patent, both have a maximum term of 20 years. One significant difference is that Australian standard patents for pharmaceuticals can be extended by 5 years to a maximum term of 25 years, whereas patent term is not extendable in China.
  2. The Australian innovation patent is different from the Chinese utility model patent: the former has a maximum term of 8 years and the latter has a maximum term of 10 years. The Australian innovation patent protects not only products but also methods, while only products can be protected by the Chinese utility model patent.
  3. The Australian innovation patent has some distinctive features. First, the format and claims are basically the same as for the standard patent. However, an innovation patent may not include more than 5 claims, although there can be up to 5 independent claims. Second, the innovation patent requires only an “innovative step”, which is a lower requirement than the “inventive step” requirement for a standard patent. That is, so long as there are some technical feature or features (even if very small) that are different from the prior art and that contribute to the manner in which the invention works, then the innovative step requirement will have been met. Therefore, an innovation patent can easily be obtained, and is difficult invalidate. Third, innovation patents are granted within 1 to 3 months after formality examination, but cannot be enforced after grant unless substantively examined and certified. In the event of infringement, the same remedies and relief as for standard patents are available. In addition, after a PCT (as a standard patent) application enters the national phase in Australia, it can be easily converted to an innovation patent application. In view of these features, the innovation patent may be a suitable choice for Chinese applicants who are seeking rapid and effective patent protection in Australia, especially in relation to incremental inventions.
  4. The patent term for a Chinese design is 10 years from the filing date. In contrast, Australian designs are protected by a registration system similar to trade marks and the initial term is 5 years from the date of filing, which is renewable up to a maximum term of 10 years.

Subject matter of patent protection

In general, a patentable invention in Australia must be new, inventive or innovative, useful, a “manner of manufacture” within the meaning of section 6 of the Statute of Monopolies and having not been secretly used within Australia prior to filing the patent application (Patents Act 1990, s.18). Therefore, except human beings and the biological processes for their generation, almost all products, processes and methods that meet these requirements are patentable in Australia, including the diagnosis and treatment of diseases, computer software (which can be industrially applied) and business methods (except pure business methods that do not have a physical element). With the exception of animal and plants per se, the subject matter that can be protected by innovation patents is the same as for standard patents. In China, although methods of production of plant and animal species can be patented, medical treatments and business methods are not patentable.

It is worth noting that the Australian Patents Act does not include a clear definition of patentable subject matter. The Australian Patents Act still relies upon the “manner of manufacture” requirement (drawn from the UK Statute of Monopolies of 1623). The benefit of this is that the patentability requirement has the flexibility to deal with new technologies. This is especially so in view of the significant decision of the High Court of Australia in 1959 in the NRDC case ([1959] 102 CLR 252) where it was held that “manner of manufacture” requires “an artificially created state affairs” in a field of economic endeavour. The Advisory Council on Intellectual Property (ACIP) recommended in its December 2010 Report “Patentable Subject Matter” that the provisions of the Patents Act relating to “manner of manufacture” be amended and modernised to comply with the High Court’s interpretation on patentable subject matter.

Characteristics of patent applications

Both Australia and China adopt the “first-to-file” principle for patent filings. That is, for the same invention, only the person who first files an application can be granted a patent. Also, both Australian and Chinese patent laws provide that only the inventor or a person who is entitled to the legal rights from the inventor can obtain the patent. Further, both Australia and China allow a 6 or 12 month grace period, within such a period prior disclosures by the inventor may be discounted as prior art when assessing novelty or obviousness. However, unlike China, Australia also allows the filing of a provisional patent application to establish a priority date. A standard or PCT application can then be filed within the 12 month priority period. This may be useful for the applicant to assess the value of the invention and decide whether to further develop and protect the invention.

Unlike the Australian patent law, Article 20 of the Chinese Patent Law (2008) includes a special provision on confidentiality examination, such that any entity or individual intending to file an application for patent abroad for any invention or utility model developed in China must lodge a request in advance with SIPO for confidentiality examination. Thus, patent rights will not be granted to any application filed in China, if such an application for an invention or utility model patent has been filed in a foreign country in violation of the Law. However, no confidentiality examination is required in relation to the filing of patent applications abroad in respect of technologies that are excluded from patentable subject under Chinese law. For example, a patent application for an invention made in China relating to medical diagnosis and treatment can be directly filed in Australia without the need to request a confidentiality examination.

Prospects for the future

With the rapid development of bilateral trade in the last decade, China has become Australia’s largest trading partner, with over $90.3 billion in two-way trade last year. The strength of the Chinese economy, together with Australia’s rich natural resources, stable political environment, sound legal system and developed economy, has provided a firm foundation for the further development of economic and trade relations between the two countries.

For further strengthening the Australian patent system, the Australian government recently released a Draft Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 to make improvements to the current Patents Act by raising the quality of granted patents. As detailed in the Explanatory Memorandum of the Bill, the standard of patentability will be heightened by removing restrictions on the information and background knowledge taken into account when assessing whether an application is sufficiently inventive to justify a patent; bolstering the requirement that a patented invention be useful; raising the standards set for disclosure of an invention and increasing certainty in validity of patented patents. Undoubtedly, the Bill will play a positive role in improving the Australian patent system.

For the first time, China has put “enhance innovation capability” into its Patent Law as one of the legislative purposes. In order to improve patent quality, in Article 22 of the Patent Law (2008), the “existing technology” has been expanded to refer to “any technology known to the public before the filing date of the patent application in China and abroad”, and absolute novelty and inventiveness have been formally adopted as the standards required for patent examination, thereby increasing the difficulty of being granted a patent in China. In China’s 12th Five-Year (2011-2015) Plan for National Economic and Social Development announced on 16 March this year, it has further been clarified that China will continue to implement the Outline of National IP Strategy enacted on 5 June 2008 to improve the IP law system, strengthen IPR protection and enhance scientific and technological innovation capability. Under the 12th Five-Year Plan, China will, by 2015, achieve the following goals: the total annual filing number of three kinds of patent applications is to reach 2 million; the total annual number of patents granted to local Chinese will be the highest in the world; and the number of patent applications filed abroad and the number of granted patents per million per capital will double compared to the figures from the last 5 years. According to its IP Strategy, China will be a nation with a “higher level of patent creation, utilisation, protection and management” by 2020. Judging from the pace of recent developments in the patent field in China we have no doubt that these ambitious goals will be achieved.