Be a local or foreigner to apply patent in China?

In China, there are many ways to classify patents, one of the way is the nationality of patent applicant (owner). The first difference is the application fee. A local Chinese citizen or company enjoy a much lower application fee, while a foreign resident or company have to pay a higher fee for the patent application, both governmental fee and handling fee charged by patent attorney. There are two sides of a coin. For example, a customer had companies registered in Hong Kong and China, we recommend the customer to use the Hong Kong entity (regarded as a non-domestic under Patent system) as the applicant. Why pay more for a foreign status?

In the Chinese socity, government is like the grand parents, and the local government officials are the parents, so we have the old saying of "father-and-mother-officials", these officials are the fathers and mothers of the countrymen. The central government actually represent the heaven. So much so for the history, nowadays goverment officials still want to protect their people like parents taking care of children, in particular against some bad-faith foreign business man.

Now, a Chinese inventor, after all the hard work and went though the patent application process, eventually got something valuable, decided to sell the patent rights to an investor in Europe, say for USD200,000. The parent(s) may step in and say, look, the international market value of such piece of work should be USD500,000. The inventor may say "my price is the best I can bargain for." Well, in the transfer of patent right process, the government have the right to look at such transfer and make requistion, and in the end, the tax man will charge tax based on the USD500,000 value estamted.

However, a Hong Kong inventor may sell the patent to a US company and such transfer of right only calls for a simple registration. No question asked.

So pay more for the foreign status and less trouble when such transfer is required in the future.

There are tax implication even before such transfer, so talk to your accountant as well as the patent attorney.

In search of Patent Attorneys in China - Part 2

We need to find one or more Patent Attorneys in China as an association to get our business started.

Apart from the smaller firms, there are national firms. National firms may have one office in Beijing and branches in cities of their choice. A national firms with offices close to us are important. It is the Chinese traditions to deal with some one you met before, not some one you talked over the phone or communicated by email. By simple logic, a large firms have a more diverse field of expertise. Be it chemical, electronic, mechanical, and even legal. That may be useful for us, so that when we expand beyond the first customer. In house attorney at law would take up the legal fight for IP protection in China. That was not part of our initial reuirement for association but nice to know our potential partners have attorney at law when we need one.

Interesting enough, there were large and small firms who charge US rate, at the same time, there are large firms who charge less then US rate. So high price is not a guarantee of professional service.

We ended up using one national firm and one local firm in our first year of operation. However, we only gave one job to the local firm in Guangzhou and switched to another national firm, making two national firms as our partners.

Patent Application Grant - some body else pay for it

In parallel with the experience of the start up of our company, I also want to share some experience with current customers. Dont be excited, nothing confidential.

A Hong Kong customer engaged us for about one year. The customer has Small and Medium Enterprise (SME) status in Hong Kong. The current definition is on the number of staff. A manufacturing company with less than 500 staff, or a non-manufacturing company with less than 50 staff is an SME. The Hong Kong SAR Government may grant a fund of HKD100,000 (about USD12,800) for the application of patent in countries of the SME's choice, when certain conditions are met.

The company runs his management, design and engineering office in Hong Kong. Manufacturing are being done in China with customers in US. They engaged us in doing trademark work and had some discussion on patent works. So we had an early start on their patent process and adviced them of this governmental funding scheme. We worked with the company for filling up the grant application about three months before the patent application was ready. The grant got approved in mid-2006.

The China Patent Application (Design Patent, equivalent to Utility Patent in US) was ready and waiting for the paper work for the grant, when the grant was approved, the Application was filed within the week. Then we did the translation back to English and get ready to file the US Patent Application after this New Year holiday. This patent would claim the China Patent filing date as priority and so no time was lost. Later on, we will file for Hong Kong Standard Patent.

It is so nice that 90% of all these worked are paid out of the HKD100,000 grant. So a Hong Kong company is on his way of protecting his intellectual rights of products he sells in US.

In search of Patent Attorneys in China - Part 1

In Oct and Nov 2001, we launched a major China expedition, that included Shenzhen (just across the broder), Guangzhou (2 hours by train) and Beijing (4 hours by plane). We planned our trip with internet search, referral by other law firms, etc. We visited a number local and foreign patent attorney firms and see how we can team up our association.

Those we called foreign firms, they have local staff who can handle both English and Chinese work, no problem in working with us for any patent applications coming from our US customers. They have engineers from different fields, including biochemical, electronic, mechanical... So we would be very comfortable working with these people. What is the catch? We would price ourself out of the market. These firms were charging US rate, that us USD5,000 and up for standard process utility patent.

Then there were a large number of local and national firms. Local firms with one office in their city of operation, among other things, are likely to be small firms with one or two experience attorneys. Again, some of these firms were a special products in China.

Years before, China have a very large government structure in the local levels that duplicated Central Government. That means as there was a Patent Office in the Central Government level, they had a similar offices in province, county and city levels. For some of these officies, they were actually an office with many plates, that is, one small office taking care of a lot of different areas of trade, commerce, manufacturing, etc. For some of the local governments that really need to govern local activities that were related to intellectual property protection, then a number of local government officials were handling patents and related matters. Then cames 1990s, to downsize government and drive privatization, some of these local goverment officials were asked to leave the government and set up their own Patent Attorney business. They had their local government and business connection. This was good for them to start off their business.

However, some of the local and national firms were charging US rate. With that knowledge we would wish them luck and said goodbye.

Nokia Year End Party

Five Cities, One Party. Wow! What a party. We were there, and got recorded on a news clipping! A nice view of Victoria Harbour, got music for more than 3 and half hour. Good party by Nokia.

The party was hosted in the roof top car park of Ocean Center. Actually it was on the fourth floor, so we were surrounded by buildings nearby.

There were about 8000 people there, a lot of people from nearby hotel were watching too, from the roof top, and of course, there were people without ticket, they may be in the Star Ferry, they may be floating on a boat around Ocean Park, etc. Of course, we have TV Pearl live broadcasting starting at 2230, and when the web is running, web casting as well.

There were quite some popular Hong Kong singers performing, and AK from UK. Great fun.