In furtherance of the August 20 Notice of the Ministry of Commerce on “Issuing the Overall Plan for Comprehensively Deepening the Innovation and Development of Service Trade” (商务部关于印发全面深化服务贸易创新发展试点总体方案的通知) (商服贸发)〔2020〕(165号), CNIPA issued two notices on December 25, 2020 further liberalizing its IP services market: one notice concerns the eligibility of foreign patent agents with long residence in China to sit for the patent agents qualification exam (外国人参加专利代理师资格考试试点工作实施要点); and a second concerns the eligibility of foreign patent agencies to open offices in China (外国专利代理机构在华设立常驻代表机构试点工作实施要点).
The first notice permits foreign patent agents to sit for the patent qualification exam in certain trial implementation localities: Beijing (Zhongguancun), Suzhou and Nanjing. The foreign patent agents would additionally need to fulfill four basic qualifications including: complete civil qualifications; a long-term residence permit in China; patent agent qualifications from another country or region; and the ability to use Chinese to take the patent qualifications exam. The duration of the trial period is three years. However successful trial periods are often extended and expanded.
According to the second notice, foreign patent agencies are also now permitted in these localities to open representative offices. Authorized work includes: IP training; IP licensing and assignment; overseas IP investment and “warning” services; and emergency assistance for overseas patent disputes; and counseling on overseas disputes, including mediation services.
These are welcome developments and are small but important steps towards greater market liberalization. One issue that limits their impact is the differing role of patent agents who are not attorneys in countries throughout the world. For example, USPTO Rules of Ethics and Professionalism, provide that non-attorney patent agents activities may not provide an “opinion of validity of another party’s patent when the client is contemplating litigation and not seeking reexamination” because such activity “could not be reasonably necessary and incident to the preparation and prosecution” of a client’s patent. The Chinese patent agency rules permit a wider scope of activity, particularly in terms of patent-related litigation emergencies and may authorize a US patent agent to provide more extensive pre-litigation services than in the United States.
For United States patent agents, the initial impact of this rule is likely to be especially limited. There are only 46 registered US patent practitioners that list China as their address with the Office of Enrollment and Discipline at USPTO. This includes eight practitioners who identify themselves as patent agents rather than attorneys. If they fully qualify, these individuals may wish to sit for the patent agent exam. These numbers of mainland China-based patent agents enrolled at USPTO is also small in relative terms. There are 836 Canadian patent lawyers and agents enrolled at the USPTO, 69 from Germany, 50 from Japan, and 47 from Taiwan.
Another limiting factor is that foreign patent agent offices will be treated as representative offices. They may be subject to the same disadvantageous tax treatment of foreign law offices who operate as representative offices of their parent office in China, rather than as Chinese-registered legal persons. With a scope of work limited to advising on foreign patent matters, they may also suffer from the same inequitable treatment as foreign law firms who cannot advise on Chinese legal matters and must require that their China-licensed agents suspended their license while employed at their representative office. As I have previously noted, the rapidly changing nature of legal practice in China, including the numbers of US-admitted lawyers in Chinese firms, calls into question the scope and fairness of those earlier restrictions imposed on foreign law firms practicing in China.
These efforts may also be construed as part of a gradual liberalization of legal services in China, which included earlier efforts to permit the establishment of joint venture law firms in foreign trade zones. It also reflects the increasingly international nature of IP practice. The Chinese government also has openly stated that it intends to increase the global influence of its approach to IP, whether through RCEP or in transnational litigation. Market liberalization will no doubt assist in China’s efforts to increase its IP influence. These changes also reflect the priority that China has long placed on the development of IP-related talent and services.
Professions such as patent and trademark agents had largely escaped the attention of the West as an area of market liberalization in China. For example, China made no commitment at WTO accession to open up IP-related services apart from general legal services Patent agents, however, are likely included within the scope of legal services as “legal advisory and representation services in statutory procedures of quasi-judicial tribunals, boards, etc.” (Classification 86120) and may arguably have been subject to the same market liberalization commitments as law firms that China made at WTO accession. To the extent that patent agency services are liberalized to permit foreigners to sit for the patent qualifications exam, it is also a small sign that other commercial legal services may be liberalized over time.