Chinese Patent Innovation and Competition Under the America Invents Act—A Whole New World of Prior Art

Jessica C. Engler, J.D./C.L. 2013, Paul M. Hebert Law Center, Louisiana State University. Managing Editor of the LSU Journal of Energy Law and Resources. 

When it comes to foreign manufacturing and development, American consumers and producers are very familiar with a certain phrase—“Made in China.” However, recent efforts by the Chinese government to increase innovation and intellectual property development are working to change the phrase “Made in China” to “Invented in China.”[1] China’s “12th Five Year Plan for National Economic and Social Development,” released in 2010, strategizes China’s transformation into an innovation economy, plans for further development in China’s intellectual property rights system, and provides funds for investments in science and technology education and research and design.[2] More specifically, China has allocated funds for further development in seven identified “emerging industries” including: new energy—particularly nuclear, hydro, wind, and solar power; energy conservation and environmental protection; biotechnology;[3] new materials;[4] new generation information technology;[5] high-end equipment manufacturing;[6] and clean energy vehicles.[7] The Chinese government planned to spend over 4 trillion Yuan, approximately $643.936 trillion, on developing these industries.[8]

This increase in innovation, while potentially profitable for China, has also put a competitive wedge between it and the United States, who has traditionally had the edge in the global energy sector.[9] The United States and China have cooperated and worked together on many energy initiatives; however, there has been increasing competition between the two states. The conflict has become especially heated as China fights to own more clean energy patents and technologies, while the United States counters by advocating for stronger intellectual property protection.[10]

According to figures released by Thomson-Reuters in December 2012, China’s patent office has surpassed the United States in patent applications submitted to its office.[11] With the billions of dollars available in incentives to Chinese inventors,[12] it is small wonder that applications to the Chinese patent office have grown. Yet, the question stands whether the dramatic increase represents a surge in innovation or rather a simple increase in applications motivated by the subsidies.[13] As noted by The Economist, a natural “stress test” for this question is whether the inventor has also filed applications in foreign patent offices.[14] For those anxious about the increase in Chinese applications, the answer appears comforting. Between 2007 and 2009, only 5 percent of Chinese inventors filed for patents outside of China.[15] During the same period, 27 percent of United States inventors and 40 percent of European inventors filed for foreign applications, indicating that the subsidies are driving Chinese patent applications rather than a surge of innovation.[16]

While the low rate at which Chinese inventors have pursued foreign patents may initially cause United States innovators to relax, the recent changes to American patent laws make these figures worth closer consideration. Foreign inventive activity may become more relevant beginning this month, with the full implementation of the Leahy-Smith America Invents Act (“AIA”) that went into effect on March 16, 2013. The AIA represents the greatest overhaul to the United States patent system since 1952.[17] At the lead is the transformation of the United States patent system from a “first to invent” system to a “first to file” system. Under the former “first to invent” system, the patent was awarded to the inventor that was the first to substantially conceive the patentable invention.[18] Now, under the AIA’s “first to file” system, the first inventor to file a patent application will generally be awarded the patent.[19] The changes are motivated, at least in part, by a desire to synthesize American patent procedures with international procedures, as most other countries follow a “first to file” system.[20]

Under the “first to file” system, the filing date determines the scope of the “prior art.” Often referred to as the “state of the art,” prior art describes all the information the public has access to before a patent application’s filing date.[21] The prior art assists the patent examiner in determining whether the invention is original and new.[22] If the invention described in the application has already been described in prior art, the invention is not novel, and therefore is unpatentable.[23]

Before the AIA, an invention was considered “prior art” if the invention was described in a patent, printed patent application, or a printed publication worldwide or if the invention was publicly used or on sale in the United States.[24] Now, the prior art will also include publically used or sold products or processes anywhere in the world.[25] This expansion of prior art no longer excludes from consideration inventions used or sold outside the United States. As long as the invention has been used or sold before the filing date, the invention is not novel and is hence unpatentable in the United States.[26]

The expansion of foreign prior art itself is not as disconcerting for American innovation as what it represents. Implicit in the growth of prior art is the rapid amplification of individuals who are engaged in the inventive activity that are going public. “On sale” or “public used” anywhere in the world represents the largest expansion of prior art under the AIA.[27] For an invention to be “on sale” or “publically used,” the invention must have been previously used, offered for sale, or publically disclosed anywhere in the world.[28] When the inventor has not attempted to keep the invention secret, the knowledge is public.[29] What this could mean is that something as small as a seminar discussion of some new piece of technology at a conference in Japan or China, presented in the Japanese or Mandarin language, could invalidate a United States patent on that technology acquired later.[30]

As the alternative energy sector has shown itself to be an area of high economic worth and development, American and Chinese innovators are working feverishly in this area, with the AIA adding fuel to a growing trade conflict. Some have dismissed this influx as a “flooding of the market” with less-diligently researched technology, and other commentators have suggested that many of these applications serve as bids for government subsidies and are abandoned when the subsidy is not granted.[31] Yet, foreign information that can be considered prior art will more greatly impact innovation in the United States—both in killing applications and invalidating patents granted after March 16th.

As Chinese innovation grows, Chinese subsidies work to encourage this technological development. While the growth of patents in China has not yet proven it to be a drastic blow to American innovation, the America Invents Act has made it easier for such patents to affect filings, current patents, and further energy innovation in the United States. Considering the United States relations with China concerning clean energy, those in the energy sector must understand the new laws and closely monitor patent filings under the AIA to see how this Act has changed the game.

Preferred citation: Jessica C. Engler, Chines Patent Innovation and Competition Under the America Invents Act—A Whole New World of Prior Art, LSU J. Energy L. & Res. Currents (March 28, 2013), http://sites.law.lsu.edu/jelrblog/?p=229.


[1] Rebecca Fannin, From Made in China to Invented in China: ‘Chinov8!’, Forbes.com (Sept. 22, 2011), http://www.forbes.com/sites/rebeccafannin/2011/09/22/from-made-in-china-to-invented-in-china-chinov8/.

[2] For a full English-language translation of China’s 12th Five-Year Plan (2011–2015), see China’s Twelfth Five-Year Plan—the Full English Version, CBI: China Direct (May 11, 2011), http://cbi.typepad.com/china_direct/2011/05/chinas-twelfth-five-new-plan-the-full-english-version.html.

[3] Drugs and medical device development. KPMG Advisory (China) Lmtd., China’s 12th Five-Year Plan: an Overview, KPMG (2011), available at http://www.kpmg.com/cn/en/IssuesAndInsights/ArticlesPublications/Documents/China-12th-Five-Year-Plan-Overview-201104.pdf.

[4] Rare earth materials and high ends semiconductor materials. Id.

[5] Including broadband networks, Internet security infrastructure, network convergence, and the “Internet of things.” Id.

[6] Aerospace and telecommunication equipment. Id.

[7] China plans to produce 1 million electric vehicles by 2015. Id.

[8] China’s 12th Five-Year Plan: How it actually works and what’s in store for the next five years, APCO Worldwide (Dec. 10, 2010), available at http://apcoworldwide.com/content/PDFs/Chinas_12th_Five-Year_Plan.pdf.

[9] Ian Bremmer & Evan A. Feigenbaum, Watch Out for Rising U.S.-China Competition, Harvard Bus. Rev. Blog. Network (Apr. 1, 2011, 1:52PM), http://blogs.hbr.org/cs/2011/04/watch_out_for_rising_us-china.html.

[10] Noting China’s movement from “Made in China” to “Designed in China.” Matthew Rimmer, Who Owns the Sun? Patent Law and Clean Energy, The Conversation (Feb. 21, 2012), http://theconversation.edu.au/who-owns-the-sun-patent-law-and-clean-energy-5193.

[11] How Innovative is China?: Valuing Patents, The Economist (Jan. 5, 2013), available at http://www.economist.com/news/business/21569062-valuing-patents.

[12] See China’s 12th Five-Year Plan, supra note 8.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Kathleen Hunter & Susan Decker, Biggest Overhaul of Patent System Since 1952 Passes Senate, Bloomberg (Sept. 9, 2011, 10:50AM), http://www.bloomberg.com/news/2011-09-08/senate-passes-revamp-of-u-s-patent-system.html.

[18] The first to conceive of the patentable invention and reduce the invention to practice would be awarded the patent. Prior to the AIA, if one inventor filed an application but a second inventor could prove that he reduced the same invention to practice before the first inventor, then the second inventor would be awarded the patent. 35 U.S.C. § 102(g) (2007).

[19] Nathan Hurst, How the America Invents Act Will Change Patenting Forever, Wired.com (Mar. 15, 2013, 6:30AM), http://www.wired.com/design/2013/03/america-invents-act/.

[20] Id.

[21] 35 U.S.C. § 102(a) (2007).

[22] 904 How to Search [R-5], USPTO.gov, http://www.uspto.gov/web/offices/pac/mpep/s904.html (last visited Mar. 25, 2013).

[23] Id.

[24] 35 U.S.C. § 102(a) (2007).

[25] 35 U.S.C. § 102(a) (2013).

[26] The America Invents Act does allow one small grace period for inventors who do disclose. If an inventor himself discloses his invention and a patent application for the invention is filed within one year of that disclosure, the disclosure will not invalidate the patent. Erin Geiger Smith, Disclosure exceptions a “landmine” in new patent rule—experts, Thomson Reuters (Mar. 11, 2013), http://newsandinsight.thomsonreuters.com/Legal/News/2013/03_-_March/Disclosure_exceptions_a__landmine__in_new_patent_rule_-_experts/.

[27] Cheryl Milone, A Powerful New Weapon Against Patent Trolls, Forbes (Nov. 15, 2012, 5:21PM), http://forbes.com/sites/forbesleadershipforum/2012/11/15/a-powerful-new-weapon-against-patent-trolls/.

[28] Id.

[29] W. L. Gore & Assoc. v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983).

[30] Id.

[31] Cong Cao, Patent Picture Overblown, China Daily, Mar. 1, 2013, pg. 9, available at http://usa.chinadaily.com.cn/weekly/2013-03/01/content_16265895.htm; How Innovative is China?, supra note 11; see generally Ian Wilhelm, China and Other Countries Crowd Into the Competition for Scholarly Research, The Chronicle of Higher Education (Mar. 11, 2013), http://chronicle.com/article/China-Crowds-Into-Scholarly/137815/.

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