With the development of globalization, more and more Chinese companies are expanding their overseas markets and seeking patent protection in the United States. However, a recent penalty announcement issued by the United States Patent and Trademark Office (USPTO) reminds all applicants to pay attention to integrity and compliance in the patent application process.

Author of this article:

Peng Huijian, Director of ScienBiziP

Tang Fangfang, Director of ScienBiziP

Liu Yonghui, Director of ScienBiziP

On October 2, 2024, the official website of the United States Patent and Trademark Office issued a penalty decision announcing the termination of the application process for approximately 3100 patents, due to the discovery by the Office that these patents involved the fraudulent use of the signatures of registered practitioners (i.e. patent agents/patent lawyers) by unqualified individuals. In this penalty decision, the US Patent Office has decided to terminate the application process for these patents and prohibit the submission of any requests for restoration or withdrawal – this means that these patents will no longer have the opportunity for examination and will not be granted patent rights, causing significant losses to the applicants involved.

According to US law, “applications with fraudulent behavior or attempted fraud in patent applications will not be granted patents. For Chinese overseas enterprises wishing to obtain patent protection in the United States, it is crucial to understand and comply with relevant rules. Therefore, we have specifically sorted out the issues that are prone to dishonest behavior in the process of applying for US patents, including the requirements for the authenticity of the inventor, the signature of the patent agent, the signature of the inventor, and the applicant’s entity.

What is Information Disclosure Statement (IDS)?

According to 37 C.F.R. § 1.56 of the US Patent Act, any individual involved in the patent application and examination process is obligated to submit to the US Patent Office any information known to them that is substantially relevant to the patentability of the invention. Simply put, IDS is a declaration document submitted by a patent applicant or their agent to USPTO during the patent application process, which includes a series of technical documents considered to be substantially related to the applied patent. These documents may include but are not limited to:

patent document
Non-patent literature
Other publicly available technical materials
Any information that may affect the novelty or non obviousness of the patent

Who is obligated to submit IDS?

According to 37 C.F.R. § 1.56 of the US Patent Act, individuals involved in the patent application and examination process are obligated to submit relevant information to the US Patent Office, including: the inventors listed in the patent application, the patent agent/lawyer who prepared the patent application documents or represented the patent application, and other persons who substantially participated in the preparation of the application documents and patent representation, such as the assignee of the patent.

When is it necessary to submit IDS?

According to the relevant provisions of 37 C.F.R. § 1.56 and 37 C.F.R. § 1.97 of the US Patent Law, as long as there are still claims under examination, the obligation to submit IDS remains. IDS can usually be submitted at the following time points:

(1) Application date or entry into the US national phase: If the relevant information is already known on the application date or when the PCT application enters the US national phase.

(2) Before receiving the first substantive examination notice: submit before receiving the first substantive examination notice.

(3) During the period of responding to review comments: submit when responding to review comments.

(4) After receiving FINAL OA and before paying the issuance fee (ISSUE FEE), or after paying the issuance fee and before the issuance announcement.

According to the relevant provisions of 37 C.F.R. § 1.97, submitting IDS at certain points in time may incur corresponding costs. Therefore, applicants should understand and master the information of IDS, control the submission time of IDS, and avoid unnecessary costs.

What are the consequences if IDS is not submitted

According to US patent law, if an IDS is intentionally not submitted or attempted to mislead, the consequences may include: the patent cannot be granted patent rights, the validity of the patent is questioned, the patent cannot be enforced, and other serious consequences.

Therefore, Chinese companies and individuals should pay special attention to the differences between the patent systems of the two countries when submitting US patent applications, especially in terms of different requirements for information disclosure. Compared to China, the United States has stricter requirements for IDS, so Chinese companies need to pay more attention to this aspect.

• Entity Rules for US Patent ApplicationsThe United States Patent and Trademark Office (USPTO) sets different official fee standards for different types of applicants to demonstrate support for small business and individual applications. Entity categories include:

1. Large Entity

Large entities typically refer to large enterprises or organizations with over 500 employees. This type of applicant is required to pay the full official fee when submitting a patent application.

2. Small Entity

Small entities mainly cover one of the following situations:

Small and medium-sized enterprises with no more than 500 employees;
Non profit organizations, such as universities or other educational institutions;
Government units, such as local or state governments.
Small entities can enjoy a discount of about 50% on official fees.

3. Micro Entity

Micro entities must simultaneously meet the following conditions:

Meet the requirements of small entities;
The total income of the inventor and applicant did not exceed three times the median household income reported by the Census Bureau in the previous year;
The inventor has not submitted more than four non provisional patent applications in the past; and
This application does not involve transfer or licensing to other entities.
Micro entities can enjoy up to 75% reduction in official fees.

Any attempt by an applicant to fraudulently provide micro entity status or pay fees as a micro entity will be considered as fraud against the Patent Office. USPTO will also conduct examination on the entity types of applicants in the near future. If an applicant does not meet the requirements for a small entity or micro entity, they will still apply as a small entity or micro entity, which may result in examination opinions or invalidation of the patent. Therefore, domestic applicants need to accurately determine their own entity type when applying for US patents, in order to avoid misusing or misusing entity types in order to save official fees, ultimately resulting in irreversible consequences. When applying for a US patent, in addition to paying special attention to accurately determining which entity it belongs to, it is also necessary to update the applicant’s status in a timely manner. For example, if the company’s scale expands beyond the standard of a small entity or its income exceeds the threshold of a micro entity, the entity information should be updated in a timely manner and fees should be adjusted according to the latest situation.

• Choose a compliant agency and patent agent

   

  U.S. patent law stipulates that anyone can entrust a patent agent to handle matters before the Patent Office. A patent agent must obtain a practice license, and there are requirements for patent agents regarding professional ethics such as integrity and confidentiality.

   

  The United States Patent and Trademark Office (USPTO) has repeatedly investigated and punished illegal agency practices in patent and trademark agency, including the penalty decision issued by the USPTO on October 2, 2024. This indicates that the USPTO attaches great importance to and has strict requirements for illegal agency practices. Patents involved in illegal agency that have been investigated and punished are difficult to obtain relief through other means, which will have a significant impact on the applicant’s rights.

   

  Therefore, in the process of filing a patent application in the United States, choosing a qualified patent agent is crucial. Before choosing a patent agent, the applicant must verify whether the agent is registered with the USPTO, holds a valid practice license, and is actually acting as a patent agent. A qualified patent agent can not only help inventors or enterprises successfully complete the patent application, but also ensure that the application process complies with legal provisions, thereby avoiding problems such as patent invalidation caused by improper agency.

• Inventor Signature DocumentThe Code of Federal Regulations (CFR) of USPTO stipulates that “The inventor’s coat or declaration must be signed by the inventor in person and notarized unless it is executed under the provisions of § 1.64.” and MPEP 602.01 Naming the Inventor; The inventor, or each individual who is a joint inventor of a claimed invention, in an application for patent (other than a provisional application) must execute an oath or declaration directed to the application, except as provided in 37 CFR 1.64. According to regulations, except in special circumstances such as the inventor’s death, legal disability, or inability to contact the inventor despite efforts, the inventor’s affidavit or declaration must be personally signed by the inventor. If it is found that the signature documents during the patent application process are forged, the following situations may arise:

  Patent invalidity: The Patent Office has the right to declare the patent invalid, which means that even if the patent has been granted, it may still be revoked.
  Fines: Intentionally providing false information or forging documents may result in fines, which may be economic penalties depending on the severity of the violation.
  Criminal responsibility: In extreme cases, intentionally forging signed documents may constitute a criminal offense. According to the United States Code, providing false statements or forging documents may result in criminal charges, including fines and imprisonment.
  Revocation of professional license: If the party who forged the signature document is a patent agent or lawyer, they may have their professional qualifications revoked, which will seriously affect their career and reputation.
  Civil litigation: Other relevant parties, such as competitors or partners, may initiate civil litigation to demand compensation for losses caused by false signature documents.
  Reputation damage: Falsifying signed documents not only leads to legal consequences, but may also seriously damage the reputation of individuals or companies, affecting future business opportunities and cooperative relationships.

With the acceleration of internationalization of Chinese enterprises, especially the development of e-commerce platforms, more and more Chinese companies hope to sell their products to international markets, including the huge consumer market of the United States. Especially in recent years, the number of Chinese companies applying for US design patents has far exceeded that of other countries (except for the United States).

Figure 1

Such a large number of applications have made USPTO pay more attention to the examination of applicants’ integrity behavior, so the crackdown on a large number of “abnormal” patent applications similar to this incident will never stop, and may even become stricter and more frequent.

From the above analysis, it can be seen that the integrity requirements for applicants, inventors, and patent agents in the US patent application and examination process are very strict. Whether it is submitting IDS, applicant entity judgment, or signing documents in the application process, which may seem like procedural tasks, the professionalism and compliance requirements for the agency/agent are actually very high, not to mention the high level of professionalism required for substantive affairs such as writing US patent application documents, applying, and defending OA. Therefore, when Chinese overseas enterprises apply for US patents, how to choose a formal and experienced professional agency has become the primary issue they face.

How to choose a suitable patent agency? Directly connecting with domestic patent agencies in the United States is still difficult for most domestic enterprises. Firstly, communication channels and communication costs are high; Secondly, the charging model of domestic agencies in the United States mostly adopts time-based charging, which domestic enterprises cannot accept and cannot supervise the actual time used; Third, the labor cost in the United States is very high, and the professional fees are higher, resulting in the overall cost of an American case far exceeding the domestic cost budget; The fourth issue is cross-border payments and the inability to issue invoices.

ScienBiziP Group originated from a Fortune 500 intellectual property team, headquartered in Shenzhen, with domestic branches located in Wuhan, Zhengzhou, Nantong, Zhongshan and other places. Most importantly, it has its own US patent agency and US patent lawyer team in the United States. The domestic team of ScienBiziP has a senior agent team and a US process team familiar with US patent practices, and collaborates with ScienBiziP’s US office. This model not only solves several problems faced by domestic enterprises, but also directly communicates with domestic enterprises, including inventors and IPR, through the domestic US patent team to solve problems, providing the best US patent solutions for enterprises.