The system of pledge of patent right in China

2022-12-29
Borsam IP
Borsam IP

Intellectual property, as a kind of property right, has the value of use and exchange . With the increase of the value of intellectual property rights, more and more attention to intellectual property rights guarantees will be paid by society. In order to provide a more standardized, convenient and efficient pledge registration service of patent right, to make it easier for enterprises and the public to handle affairs, and to promote the implementation of intellectual property transformation, CNIPA issued the "Measures for the Registration of Pledge of Patent Right" on November 15, 2021, which came into force on the date of issuance. This article will introduce the system of pledge of patent right in China. 

 

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The pledge of patent right is a form of security, and it refers to the debtor or a third person pledging the property rights of patent to the pledge for debt. When the debtor fails to pay his or her due debt or the parties had agreed the situations, to realize the pledge rights, the creditor has the right to discount, auction or sell the price of the patent right in priority to be repaid.

 

The pledge of patent right has the following characteristics:

(1) The subject matter of the pledge of patent right is the property right of the patent right.

(2) During the pledge period of the patent right, the pledgee normally has no right to transfer or authorize others to use the pledged right, and the pledgee only has the right to possess and preserve the right, but the parties can agree on the matter in the patent right pledge agreement.

(3) During the pledge period of the patent right, all the expenses of maintaining the patent right itself shall be borne by the pledger, such as paying annual fees, but the parties can agree on the matter in the patent right pledge agreement.

(4) The pledge of patent right shall take effect from the date of registration of the contact. Without registration, patent pledge will not take effect.

 

In China, to establish the pledge of patent right, a Patent Right Pledge Agreement is needed, and it must be registered by CNIPA.

 

1. The conclusion of Patent Right Pledge Agreement

The agreement can be a separately concluded written contract, or it can be a guarantee clause in the main contract, and it shall specifically stipulate which kind of patent is pledged and state its title, patent number, filing date and date of announcement of grant of patent right etc., to avoid situations where the terms are unclear and cannot be implemented.

The patent right pledge agreement shall stipulate which right or several rights are pledged, such as exclusive right, right of transfer, right of license. The patent right used for pledge shall meet the following conditions:

(1) The patent right must be valid;

(2) What is pledged is the transferable property right in the patent right, that is, the right with economic content arising from the acquisition of the patent right.

Please note that the patent application right, due to its obvious legal uncertainty, cannot be pledged.

 

2. Registration of Patent Right Pledge

2.1 Procedures

(1) Submitting the application documents, which can be submitted in electronic form via online, posting paper form or in person:

The application form for the registration of the patent right pledge agreement signed or sealed by the parties, if a patent agency is entrusted, the official seal should also be sealed;

The original agreement or a notarized copy;

The legal identity certificate of the pledger and the pledgee; 

a. Chinese individual should submit a copy of the ID card, and foreigners can submit a copy of the passport;

b. Chinese units should submit a copy of the business license or a copy of the legal certificate, which should cover the official seal of the unit;

c. Foreign companies or foreign organizations should submit local registration certificates or a notarized copy.

The power of attorney signed by the pledger, the pledgee and the agency, if a patent agency is entrusted;

The legal identity certificate of the agency, if a patent agency is entrusted;

The other materials.

Except for the legal identity certificate, all other documents submitted by the parties should be in Chinese. If the identity certificate is in a foreign language, the parties shall attach a Chinese translation.

(2) The Patent Office initiated the examination process;

(3) The parties shall make supplements and corrections, if it is necessary to make corrections;

(4) The Patent Office will issue a notification to notify the parties of the examination result within 5 working days from the date of receipt of the application document, or 2 working days if the application documents are submitted in electronic form via online. If there are defects in the submitted documents, the time limit shall be calculated from the date when the parties overcome all the defects.

 

When a Chinese entity or individual handles the registration procedures for the pledge of patent right, it may handle it by itself or entrust a patent agency. However, foreigners, foreign enterprises, or other foreign organizations without a habitual residence or business office in China must entrust a patent agency established to handle the registration procedures for the pledge of patent right.

 

2.2 Going through the change procedures

During the pledge period of the patent right, the bibliographic changes such as the name or address of the party, the pledge right agreement content such as the type and amount of main creditor's rights secured can be changed. Then, within 30 days from the date of the change, the parties shall submit a request to the CNIPA for handling the change procedures with the relevant documents such as the change agreement.

 

2.3 Register

The relevant content in the registration document will be provided to the public through Register. By consulting the Register, the public can learn about the pledge of patent rights to avoid repeated pledges or to decide whether to accept the transfer or license of the patent right.