Chinese Utility Model Patent Protection Strategies for Hardware Manufacturing
Chinese utility model patents provide rapid six-month physical hardware protection and export enforcement leverage when combined with direct dual invention filings.
OEM Patent Hijacking
Meaning
Predatory filings of utility or design patents by contract manufacturers targeting the proprietary technology of their clients represent a significant threat to global supply chains. This oem patent hijacking occurs when a supplier takes the design drawings or product samples provided by a foreign brand and files for patent protection in its own name before the brand owner does so. Because the patent system follows a first to file rule, the factory can obtain legal rights over the client’s own invention.
This allows the manufacturer to block the client from switching to another supplier or even to seize the client’s goods at the border for patent infringement. The boundary of this issue is the filing date of the patent application relative to any prior art or public disclosure of the design.
Filing Strategy
Dishonest manufacturers often focus on utility model and design patents because these applications are not subject to a substantive examination before they are granted. This lack of initial review makes it easy for a company to engage in oem patent hijacking with little risk of being caught during the application process. The factory may make slight modifications to the original design to make the patent look like a new invention.
Once the patent is granted, the factory holds a powerful legal weapon that can be used to extort higher prices or better terms from the brand owner. This strategy is particularly effective against small and medium enterprises that may not have the resources to file patents in every market where they manufacture. The speed of the local patent office in granting these minor patents works to the advantage of the hijacker.
Injunction Threat
The most damaging consequence of this practice is the ability of the factory to obtain an injunction that stops the brand owner from exporting their own products. Using the hijacked patent, the manufacturer can record their rights with the customs authorities and request that all shipments of the product be detained. In the context of oem patent hijacking, the brand owner is then forced into a position where they must either pay a large settlement or face a complete shutdown of their supply chain.
This legal leverage can be used to prevent the client from terminating the manufacturing agreement even if the quality of the work is poor. The brand owner finds themselves being sued for infringing on a design they actually created. This reversal of roles is a common tactic in high stakes commercial disputes.
Prior Art
The main defense against this type of predatory filing is the demonstration that the technology was already in the public domain before the factory filed its application. To defeat oem patent hijacking, the brand owner must provide clear evidence of prior art, such as sales brochures, earlier patent filings in other countries or evidence of the design being shared with the factory. This evidence is used to file an invalidation request with the patent office to have the factory’s patent cancelled.
The process of invalidation can be slow and expensive, requiring the brand owner to maintain meticulous records of all communications and design iterations. It is much more effective to file for patent protection locally before any information is shared with a potential supplier. This proactive filing is the only way to ensure that the legal rights remain with the true inventor.