Cross Straits Recognition of Patent Priority Claims not so Clear-Cut

On 29 June 2010, Taiwan and China entered into two agreements: the Cross- Strait Economic Cooperation Framework Agreement and the Cross-Strait Intellectual Property Right Protection Cooperation Agreement. The agreements mark a milestone in IPR protection and cooperation between Taiwan and China. As of 22 November 2010, Taiwan and China should observe mutual recognition of priority rights to patents, trade mark and plant varieties. However, with regard to patents, the right to a "priority claim" between China and Taiwan is not so clear-cut. In this article, we will review this complicated issue and discuss some practical difficulties raised by the agreements.

Recent Agreements between China and Taiwan

Previously, applications made in Taiwan based upon a Chinese priority document, were rejected by the Taiwanese Patent Office, citing reasons of law in relation to the non-recognition of Taiwan by China.

The wording of the recent agreements relate to Chinese and Taiwanese "nationals/entities" i.e., the Taiwanese Intellectual Property Office (TIPO) will recognise a priority claim from a Chinese individual or entity, and the Chinese Intellectual Property Office (SIPO) will also recognise a priority claim from a Taiwanese individual or entity.

However, it remains unclear as to whether or not foreign applicants or foreign applications outside of Taiwan and Mainland will benefit from the Agreements. This leaves SIPO and TIPO room to use their discretion.

WTO Priority

Under WTO priority claims, the determining factor is the nationality of the applicant or at least one of the inventors, not the country/nationality of the patent application.

Accordingly, a priority claim made by an applicant who is a national of a WTO member state, or one of the inventors is a national of a WTO member state, or even if the applicant has a business presence in a jurisdiction which is itself a WTO member state, then another WTO member state must recognize the bilateral agreement for right of priority.

The problem with Hong Kong or other "Foreign" Applicants

Previously, a Hong Kong applicant (i.e. the applicant is a national of a WTO member state) who "first filed" in China and then sought to claim priority from the first filing for an application in Taiwan within 12 months from the filing date of the Chinese patent application, should have been entitled under the WTO agreement between Hong Kong and Taiwan.

The fact that the Hong Kong applicant decided to establish priority in China should not have been a factor for the Taiwanese Patent Office when considering if a valid priority claim could be made. However, this was not the case. Hong Kong applicants who established priority in China, and then filed applications in Taiwan, found that the priority claim would not be honoured. Accordingly, if the priority document is published within the first 12 months (which is usual with Chinese utility models for example) or the applicant publicly discloses the invention during the first 12 months, its Taiwanese application would be inherently invalid for lack of novelty.

Other non-Chinese applicants could also find that they could not make a priority claim in Taiwan. This could result in non- Chinese applicants having no patent rights in Taiwan if they commercialised within the first 12 months; and/or if the applicant established priority in China by way of a utility model patent.

The Practice in Taiwan

ollowing the execution of the Agreements, the TIPO issued a short official announcement, stating briefly that a priority claim from a first filing in China will be accepted by TIPO. There was no further guidance as to how the Agreements would be interpreted. There was no mention of foreign applications or foreign applicants.

According to feedback that we have obtained from Taiwanese agents, the Agreements should also extend to foreign applicants, e.g., a Hong Kong applicant. Under current Taiwanese patent practice, TIPO will accept a priority established in China by a foreign applicant, provided that:

• the applicant's home country has entered into a reciprocal agreement with Taiwan;
• or is a WTO member state;
• or has an inventor from WTO member state; and
• the priority date is on or after 12 September 2010 and the Taiwanese application has been filed within 12 months from the priority date.

Accordingly, it appears that the practice in Taiwan now complies with the TRIPS and Taiwan is honouring its obligation as a WTO member state, so that Hong Kong or other foreign applicants, who establish priority in China, will be afforded a priority claim in Taiwan. The numbers of such applicants are likely to increase due to the change in the Chinese Patent Law confirming the "first filing" requirement for inventions completed in China.

It should be noted that under the amended Chinese patent law, applicants who "complete" their inventions in China, and who wish to effect filing abroad, must pass a national security clearance. Although onerous, this should not be viewed as particularly problematic due to the relaxation of the security clearance procedures and confirmation that a PCT filed at SIPO in the English language, satisfies the "first filing" requirements.

The Practice in China

Regulations concerning patent filing by Taiwanese applicants and how to implement the Agreements have been formulated by SIPO. However, the Regulations only provide that SIPO accepts applications claiming Taiwanese priority by Taiwanese applicants. They are silent on priority claims from foreign applicants. The Regulations appear to indicate that the nationalities of both the applicant and the application will be taken into consideration when assessing the priority claim.

SIPO further confirms that if the priority is established in Taiwan by a Hong Kong or Macau applicant, a claim to this priority will be accepted. However, for applicants from other jurisdictions it appears that there may still be difficulties, when effecting a patent filing in China, in claiming priority from a Taiwanese application.

However, China has recognized a "national phase" application filed in China, whereby a PCT application claims priority to a Taiwanese "first filing" before entering the national phase in China. Therefore, for applicants from jurisdictions other than Taiwan, Hong Kong or Macau (who have "first filed" in Taiwan), if they wish to pursue patent rights in China they can (and always could have) file a PCT national phase to obtain Chinese patent rights accordingly.

Further Considerations

In light of SIPO's position with regard to foreign applicants claiming priority from Taiwan, we discussed a number of potential cases with SIPO:

• If a Chinese patent application, claiming priority from Taiwan, is jointly filed by two or more co-applicants, and one of the applicants is a Taiwanese individual/entity and others are foreigners, will SIPO reject or accept the priority claim? SIPO replied that the priority claim will be accepted only when the Taiwanese applicant is listed as the first applicant.
• A Taiwanese applicant files a Chinese patent application claiming priority established in Taiwan. However, the priority was originally established by a foreign individual/entity and then assigned to the Taiwanese applicant, will the Taiwanese applicant be afforded a priority right in China?

  SIPO confirmed that such a priority claim will not be accepted. However, SIPO further clarified that such a priority claim will be accepted if:

  • at least one of the assignors and assignees is a Taiwanese individual/entity;
  • the Taiwanese individual/entity is further listed as the first applicant for the first filing in Taiwan and the first applicant for the Chinese application.
• If the Taiwanese priority was established by a Taiwanese individual and then assigned to a foreign applicant, will the priority claims be accepted by SIPO?

  SIPO's position is that the assigned priority will be rejected. SIPO would only accept such a priority claim when both the first applicant of the first filing in Taiwan and the first applicant of the subsequent application in China are Taiwanese applicants.

Key Contacts

Annie Tsoi

Partner | Intellectual Property

Email or call +852 2825 9255