AIPPI Forum & ExCo in Hyderabad (India) 13-18 October 2011

1. AIPPI Forum & ExCo in Hyderabad (India)13-18 October 2011 Inventorship in Multi-JurisdictionsReport from China

2. Cotents • How to determine the inventorship • Inventorship and security clearances • Solutions to issues incurred by joint inventions • Reward and remuneration for inventors of service inventions

3. How to determine the inventorship • Inventorship Rule 13 (the new Implementing Regulations) provides that:"Inventor" or "creator" means any person who makes creative contributions to the substantive features of an invention-creation. Any person who, during the course of accomplishing the invention-creation, is responsible only for organizational work, or who offers facilities for making use of material and technical means, or who takes part in other auxiliary functions, shall not be considered as inventor or creator Key words: “creative contributions to the substantive features”; “auxiliary functions”

4. How to determine the inventorship • creative contributions to the substantive features Wherein, the substantive features should be the features that distinguish the invention from the most related prior art and thus make the invention patentable. While in practice, creative contributions would generally be referred to the act of proposing the original idea of the invention or the substantive features • Joint invention and Joint inventors In many cases, inventions were accomplished by joint inventors, which might subsequently lead to issues about security clearance and dispute on rewards and remuneration.

5. Inventorship and security clearances • Security clearances Article 20 (the new Patent Law) provides that,Where any entity or individual intends to file an application for patent abroad for any invention or utility model developed in China, it or he shall request in advance the Chinese Patent Office for confidentiality examination…… Key words: “any entity or individual”; “developed in China”; “confidentiality examination”

6. Inventorship and security clearances • Interpretations • Security examination shall only concern technologies involving national security and interest. There is a technology check-list used internally at SIPO, but such list is not open to the public. • SIPO does not give any more details or interpretations about “developed in China”, just stating that “an invention made in China” means “substantial part of the invention is made in China”, according to which joint inventions do not make any exceptions. • Consequences of failure to comply would be loss of patent or even disciplinary or criminal sanctions. Although Article 16 is a ground for invalidation, it is still not easy for third parties to challenge the validity of the involved patents Since there is no “discovery” procedure in China and thus it nearly impossible to get convincing evidences. • There is no excuses for inadvertent errors or any other remedies.

7. Inventorship and security clearances • The security examination request can be done in four different ways: • The applicant can directly file a security examination request alone, • The applicant can file a security examination request simultaneously with the filing of a Chinese patent application, • The applicant can file a security examination request after filing a Chinese patent application, • The applicant can file a PCT application directly to SIPO with no need to file such requests separately • Statistics During the period from October 1, 2009 to May 30, 2010, the total number of security examination requests (excluding PCT application*) is 9845, wherein • 12 cases were not allowed to file abroad, taking 0.12% • 46 requests were deemed as not being filed, taking 0.47% • 4132 PCT applications were all approved to be filed abroad.

8. Inventorship and security clearances • Why are inventorship and security clearances inter-connected • To determine whether security examination shall be requested, one shall see whether the invention was developed in China. • In today's global economy, there are more and more joint inventions accomplished by inventors from more than one countries, for which it is hard to determine where they were developed. Due to the publication of patent gazette, on the other hand, the nationality of the inventors will be disclosed and consequently reveal to the public the possibility that the invention might be developed within China. • Thus determination of inventorship would affect the decision-making about whether security examination shall be requested.

9. Solutions to issues incurred by joint inventions • The predicament where the joint invention involves both US and Chinese inventors Issue: • Filing first in US would violate Chinese law • Filing first in China would violate US law • Request for foreign filing license in China could violate US law Option: • Request for foreign filing in US followed by actual filing in China may satisfy both country’s laws

10. Solutions to issues incurred by joint inventions Solutions: • First, check if it is feasible to identify single inventor, the one who made the most substantial contribution. • Second, check whether it is feasible to split the subject of the invention so as to make each subject correspond to less inventors (either us inventors or Chinese inventors) and file applications basing on the separated subjects. • If none of the above is feasible, there seems only one option left,to request for filing license in US followed by actual filing in China. • It seems that this option could satisfy both country’s laws, as the Chinese Patent Law does not have literal provisions prohibiting the applicant from requesting foreign filing license first in other countries. • In practice, many multi-national companies had followed this solution to resolve this contradiction. • Nonetheless, there is still a potential risk of violating Article 20 when viewing from the legislation purpose of Article 20, i.e. preventing the secret of the state from being divulged.

11. Reward and remuneration • Provisions • About Article 16 – not changed by the third amendment The policy of awarding the inventor a reward and a reasonable remuneration is unchanged. • About the Implementing Regulation The old Regulation • Rules 74-77 only applied to state-owned entities, other entities did not abided by the rules but took them as reference. The new Regulation • Rules 76-78 are applicable to all entities, covering joint ventures, wholly foreign-owned entities and R&D centers of multi-national companies. • If an agreement or policy is in place, the agreement or policy will rule; but if in absence of that, Rule 77-77shall be complied , which set lower limits of the amount of the reward and the remuneration.

12. Reward and remuneration • Interpretations • “Reasonable” in Article 16 is a very abstract criteria and thus hard to interpret. At present stage, the prevailing point on this issue can be expressed in this way, the amount of the reward and remuneration can be set either lower or higher than the statutory ones but definitely can not be zero. • Rules 77 and 78 shall apply to both Chinese inventors and foreign inventors. • The monetary reward and remuneration shall be shared by joint inventors. • The remuneration could be based on revenue or it could be just a set amount. • The remuneration could be paid either in lump-sum or in on-going payments

13. Thank You ! Qing GE Liu, Shen & Associates qingge@liu-shen.com