Recently, the State Council promulgated the Decision of the State Council on Amending the Implementing Rules of the Patent Law of the People's Republic of China (the full text of the Rules is published on pages 15 and 16 of this newspaper), which shall come into force on February 1, 2010. The relevant contents are as follows:

I. Any entity or individual that intends to apply for a patent abroad for an invention or utility model completed in China shall, in advance, submit a request to the patent administrative department of the State Council for confidentiality review.

II. There are three methods for conducting confidentiality review:
1. For those preparing to apply for a foreign patent directly (applying for a patent directly to a foreign country or submitting an international patent application to a relevant foreign institution), a request shall be submitted to the patent administrative department of the State Council in advance, with a detailed description of the technical solution;
2. For those applying for a Chinese patent (intending to apply for a foreign patent or submit an international patent application to a relevant foreign institution after applying for a patent to the patent administrative department of the State Council), a request shall be submitted to the patent administrative department of the State Council before applying for the foreign patent or submitting the international patent application to the relevant foreign institution;
3. Submitting an international patent application (submitting an international patent application to the patent administrative department of the State Council) shall be deemed as simultaneously filing a request for confidentiality review.

III. For an invention or utility model that is applied for a patent abroad in violation of the above provisions, if a patent is applied for in China, no patent right shall be granted. This clause shall serve as both a ground for rejection and a ground for invalidation. That is to say, even if the Patent Office fails to discover it during examination, after authorization, competitors may still invalidate it on the ground of non-compliance with this clause.
This measure has indeed had a certain impact on the patent application strategies of Taiwan clients. In the past, Taiwanese businesses would take the lead by applying for patents in other countries first and then claiming priority when returning to Taiwan. However, this path is now hindered by the confidentiality review process. Therefore, applicants need to make a decision six months in advance on whether to apply for a patent abroad to avoid missing opportunities. Currently, the Patent Law stipulates that submitting an international PCT patent application is deemed as simultaneously filing a request for confidentiality review, meaning that the confidentiality review request at this time is not a separate procedure, and the review time will be accelerated. However, using a PCT application to expedite the review process is not entirely applicable for applying for a Taiwan patent. Because when applying for PCT in China, China will inevitably be the first country of application, and other third countries will be subsequent countries of application. However, Taiwan's intellectual property laws stipulate that Taiwan only recognizes the priority of the first country of filing in a PCT application (with China excluded from the scope of recognition). Thus, applying for PCT merely to save time on confidentiality review without obtaining priority is not worth the loss.

In summary, depending on whether the client ultimately plans to apply for a Chinese patent, under the current legal framework, the following three options are available for reference:

I. If the client does not ultimately intend to enter the Chinese market, they may directly apply for a patent in Taiwan without initiating the confidentiality review procedure. The consequence of such a procedural violation is that they cannot obtain a Chinese patent right. The client should assess this risk in advance.
II. If the client ultimately plans to apply for a Chinese patent, it is efficient and feasible to apply for a patent in Taiwan after obtaining the Chinese patent right. This offers certain advantages in the connection of initiating the confidentiality review procedure and document preparation, such as not needing to provide documents detailing the technical solution for the confidentiality review materials, and the overall procedure from Chinese patent application, confidentiality review to Taiwan patent application will be more smooth and time-saving, resulting in an earlier filing date for the patent.
III. If the client is eager to obtain a Taiwan patent right, the only option is to directly apply for a patent in Taiwan while separately initiating the confidentiality review (with a detailed description of the technical solution). According to the response from the patent authority: the average time for confidentiality review is approximately one to two months. If no issues are found during the preliminary confidentiality review stage, the review shall be concluded. This time has been significantly shortened compared to the previous estimate of 4-6 months.