Over the past two decades, some of the world’s largest technology companies—Apple, Microsoft, Samsung, Sony, Huawei, Qualcomm, and many others—have been engaged in high-stakes litigation over patents covering the pervasive interoperability standards that form the backbone of the global technology infrastructure. Standards like Wi-Fi, 5G, Bluetooth and IPv6 have been developed by groups of competitors collaborating within international standards development organizations (SDOs) that require participants to make patents covering these standards broadly available to the manufacturers of standardized products on terms that are “fair, reasonable, and nondiscriminatory” (FRAND). The meaning of FRAND, and the amounts that manufacturers must pay to operate under tens of thousands of these standards-essential patents (SEPs), have been the subject of litigation conducted in multiple jurisdictions around the world.
This Article sheds light on an underappreciated feature of the SEP landscape: the existence of non-patent intellectual property rights that are being treated, for all practical purposes, like SEPs, but which are not themselves patents. Unlike the United States, which has a single patent system for the protection of all innovations meeting a minimum threshold of inventiveness, more than one hundred countries worldwide, including major economies such as China, Japan, Korea, and Germany, offer a lesser form of innovation protection known variously as utility models, technical designs, petty patents, innovation patents, short-term patents, registration patents, and the like. For the sake of convenience, we refer to all such forms of sub-patent innovation protection as “utility models” or simply “UMs.”
While national rules regarding the scope, availability and issuance of UMs vary from country to country, most UM regimes offer protection for tangible products. Many, but not all, jurisdictions exclude processes, biological materials, and computer software from the scope of protection. The duration of UM protection ranges from five to fifteen years, with most countries offering ten years of protection. In most countries, UM applications are not formally examined and must simply disclose the product in question.
Given the lack of examination, obtaining UMs is generally viewed as faster and cheaper than obtaining patents. This combination of speed and cost, in theory, makes UMs potentially attractive to small and medium enterprises (SMEs) that cannot afford full patent protection. Similar considerations have also been raised as advantageous to innovators in low-income countries. As one commentator observed of Germany’s UM system, which dates to 1891, UMs were originally intended to benefit small businesses and innovators who lacked the resources to seek full patent protection:
A utility model patent is a ‘little patent,’ or the ‘patent of the small business man.’ Its value lies in the rapid protection of short-lived innovations. It is intended to promote the development or further development of articles of use, articles of mass consumption, for which it has always had special significance . . . .
Despite their long history and widespread adoption, UMs remain, as Professor Mark Janis observed more than two decades ago, “a backwater of intellectual property.” Compared to the large body of scholarly literature in other areas of intellectual property law, particularly that concerning patents, there is scant literature concerning UMs, and only a handful of empirical studies that focus on them.
This paper, for the first time, empirically investigates the declaration of UMs as essential to widely deployed technical interoperability standards (standards-essential utility models or SEUMs) and analyzes the impact of SEUMs on the FRAND licensing commitments of their owners. The remainder of this paper proceeds as follows: Part I provides a brief overview of UM systems around the world. Part II summarizes SDO requirements regarding the disclosure and licensing of patents. Part III briefly summarizes the empirical literature concerning UMs, then presents the results of our study, comparing SEUM filing, declaration, and litigation rates to those of UMs and SEPs more broadly. Part IV discusses the implications of these findings for SDOs, policy makers, and private firms. We conclude with recommendations for policy and future research.
I. Utility Model Systems Around the World
A. Adoption of Utility Model Protection
The concept of the utility model was first introduced in Great Britain via an 1843 Act that allowed applicants to register the shape and configuration of useful articles of manufacture—a complement to an 1842 Act protecting ornamental product designs. Given a range of perceived conflicts with the patent system and little use by practitioners, the U.K. statute was formally revoked in 1919.
Germany, in contrast, embraced the concept of UMs during the late nineteenth century as a necessary form of legal protection for “small inventions”—useful improvements of products such as clothing, hand tools, and housewares. UMs, in the German framework, fit somewhere between existing protections for fashion designs, which were purely aesthetic, and patents, which required a higher showing of novelty. In 1891, the German legislature enacted its first statute protecting the utility model or Gebrauchsmuster.
Japan and Poland followed shortly after Germany by enacting UM protections during the early twentieth century. Other jurisdictions across Europe, Asia, and Latin America implemented UM systems throughout the century. Jurisdictions around the world continue to experiment with UM protection, and proposals for UM systems have been periodically made in the United States, the European Union, India, and other countries.
At the same time, some countries that once had UM systems have discontinued them owing to perceived conflicts with the general patent system or their failure to achieve desired goals. Thus, the Netherlands, which adopted a “short term patent” system in 1995, eliminated that system in 2008. Belgium abolished its “small patent” system in 2009. And Australia, which adopted an “innovation patent” system akin to UMs in 2001, formally discontinued that system in 2021 after significant policy debate. Though major industrial jurisdictions including Germany, France, Italy, Japan, and Korea still offer UM protection, UMs today are used most heavily in China, where more than 97.5% of the approximately three million worldwide UM applications were filed in 2021.
B. Utility Models in International Agreements
UMs are expressly contemplated alongside patents by the Paris Convention for the Protection of Industrial Property, which added language concerning UMs in 1911. Yet the Paris Convention does not explicitly delineate the scope of UM protection, which is left largely to the discretion of signatory states. The principal effect of the Paris Convention is to require that signatories grant national treatment to applicants for these rights, meaning that they may not discriminate between domestic and foreign applicants or among applicants from different countries. The result of this lack of formal treaty guidance is a diverse set of UM rules that lack significant harmonization.
Unlike the Paris Convention, the 1994 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) does not cover UMs. According to one leading commentator, this omission was intentional. But while UMs are not expressly authorized under the TRIPS Agreement, they are not prohibited by it either. Accordingly, as observed by Uma Suthersanen, WTO members “are free to formulate or reject UM protection as they see fit,” provided that they comply with national treatment obligations under the Paris Convention, which are incorporated in the TRIPS Agreement.
In the 1990s, observers in the European Union began to note that the different sets of UM laws in E.U. member states could have a negative impact on the integration of the European single market, the free flow of goods within Europe, and a reduction of competition among European companies. In 1995, the European Commission published a Green Paper on the possibility of harmonizing European UM law, and in 1997 issued a proposed Directive on the protection of UM. The proposal was updated in 1999, but work on the proposal was suspended in 2000 owing to disagreements among member states, notably the United Kingdom. The proposed directive was formally withdrawn in 2006 as the Commission focused its attention on the development of a unitary patent system. Yet in 2013, one year after regulations on the unitary patent were enacted in the European Union, the Commission again turned its attention to UMs, commissioning a study of the economic impact of UMs on European markets. The study was published in 2015, yet we are not aware of any further movement toward the harmonization of European UM laws as a result. UMs are not included in the recent European legislation concerning the Unified Patent and Unified Patent Court (UPC), and several countries that participate in the UPC system also maintain national UM systems.
Despite their absence from these substantive international agreements, UMs are covered by the World Intellectual Property Organization (WIPO) procedural Patent Cooperation Treaty, thus facilitating filing in multiple jurisdictions.
C. Characteristics of Utility Model Protection
While UM protection varies from country to country, UM protection systems share some key characteristics. This Section highlights some of the similarities and differences of UM protection around the world.
1. Eligible Subject Matter
It is a common perception that UMs are intended to cover relatively simple product design features or “‘minor’ improvements” that do not rise to the level of inventiveness of patents. For example, the original German UM system was directed toward physical products (i.e., those that possessed “spatial form” (Raumform)). Thus, as recently as 2021, UMs in Germany were granted for inventions such as neck pillows (DE202021001064U1), Christmas tree stands (DE202021000981U1), drinking straws (DE202021103855U1), and a novel “mobile dog waste collection aid” (DE202021003254U1). However, the German spatial form requirement was eliminated in 1990. Germany now permits UM protection for chemical and electrical designs, in addition to mechanical designs, resulting in what Mark Janis refers to as “a scope of eligible subject matter essentially congruent to that of the regular patent regime.” Thus, recent German UMs include a “communication control chip” (DE202021106098U1), a “circularly polarized cylindrical two-port MIMO dielectric resonator antenna device for 5G applications” (DE202021105303U1), and a “payment system with the option of transaction-specific rights control” (DE202021000532U1)—inventions that could easily be envisioned as the subjects of ordinary patent protection. This convergence of UM and patent coverage appears in several jurisdictions, such that many UMs today are virtually indistinguishable from patents, at least at a textual level. Yet other jurisdictions continue to limit the subject matter for which UMs may be obtained, often excluding methods and processes, chemical compositions, and software.
2. Examination
One key difference between UMs and patents is in the process and substance of their examination. Patents are typically examined by a governmental office that has technical expertise and applies strict criteria for patentability to claimed inventions. UMs, on the other hand, are often granted on a registration basis, in which they are granted without substantive examination, or in which an examination assesses only novelty but not nonobviousness. These differences result in the issuance of UMs in a manner that is generally faster and less expensive than patents. Thus, while average prosecution times (the period from filing through issuance) for patents range from two to four years, UMs are often issued in a matter of months. However, the reduced examination given to most UMs makes their validity less certain than patents and does not confer on UMs the presumption of validity that is given to patents in many jurisdictions.
3. Validity Challenges
UMs can be subject to validity challenges in either administrative or judicial proceedings. Administrative cancelation proceedings are typically brought before the governmental office issuing the UM. In some countries, such challenges may not be brought until the UM is issued (i.e., pre-grant challenges are not available). In court, the validity of a UM may often be challenged as a defense when the UM is enforced against an alleged infringer.
4. Enforcement
The ability of holders to enforce UMs varies around the world. In a few jurisdictions, UMs may not be enforced in litigation; rather, the holder must seek a substantive examination or convert the UM to a patent before it can be enforced. But in most jurisdictions, UMs may be enforced directly once they are issued.
Some jurisdictions that permit the direct enforcement of UMs impose precursor requirements to enforcement. Japan, for example, requires that the holder of a UM obtain a technical opinion from the Japanese Patent Office regarding the compliance of the enforced UM with the requisite statutory requirements, and France requires that the holder of a UM obtain and provide a search report to the accused infringer.
Even with such requirements, UMs are frequently litigated in some jurisdictions. One Dutch researcher found in 2003 that Dutch “registration patents”—largely equivalent to UMs—were litigated 2.7 times more than ordinary patents.
As with patents, remedies for infringement of UMs may include monetary damages and injunctive relief to prevent an infringer from continuing its infringement. The enforcement of UMs has led to significant awards in some cases. For example, in one 2016 case, the owner of a UM claiming a “toe support pad” was awarded monetary damages of approximately US$1.2 million. And in a Chinese case that was heard by the Supreme People’s Court, the successful enforcer of a UM claiming the design of a selfie stick obtained a damages award of RMB 1 million, followed by the filing of a “massive number of lawsuits” against other manufacturers of this popular consumer product.
In some jurisdictions, UMs have been used to tactical advantage in litigation. For example, in Germany a UM may be “branched off” or filed on the basis of a pending patent application. As a result, some applicants file UMs strategically to obtain quick protection for inventions that are making their way through the slower patent system. UMs can then be enforced against alleged infringers before the issuance of the corresponding patents, often resulting in the entry of an injunction barring the infringer from continuing to make or sell infringing products. Protection can then be extended for an additional ten years once the corresponding patent issues. Moreover, as explained by one commentator, the scope of UM claims in Germany may be “tailored” to an infringer’s products even after an infringement lawsuit has been filed. That is,
the owner has the opportunity to file new claims during the infringement proceedings and to adapt or even shift the scope of protection in view of the infringer’s defence. The owner of the German utility model can thereby make very specific limitations, which are generally considered to be too restrictive in the framework of patent examination proceedings without the knowledge that the product may be at risk of later attack.
Moreover, these tailored claims are only binding between the parties, as no limitation declaration is required vis-à-vis the public. In other words, the German utility model owner could assert other correspondingly tailored claims against another infringer using the entire disclosure of the utility model.
Given the potential for tactical litigation use of UMs, some commentators have questioned the usefulness of UM systems. The Australian government, for example, noted that Australia’s version of UMs, “innovation patents,” were frequently “used strategically, either to target alleged infringers of standard patents or to increase uncertainty over the scope of rights for competitors.” In fact, the “high level of uncertainty” associated with UM protection has been cited as a tactical advantage for UM holders seeking to enforce their rights in litigation.
D. The Incentive Value of Utility Models
As noted at the beginning of this Article, UM systems were introduced in many jurisdictions to stimulate local innovation and industry via a low-cost pathway to intellectual property protection for modest or incremental designs not rising to the level of patentable invention. There is significant debate whether UM systems around the world have achieved these goals. As observed in a 2015 report commissioned by the European Commission,
in catching up economies, particularly in Japan and also in Korea. . . . [i]t has been shown that UMs facilitated the development of local industry, by incentivising small improvements on existing state-of-the-art technologies from developed countries. However, once the economies matured, the UM lost much of its supportive function for this inward international technology transfer.
Thus, Australia, in assessing its own UM-like system, determined that the system had outlived its usefulness and elected in 2021 to discontinue it entirely. This debate continues in other jurisdictions that continue to recognize UMs. The findings of this study may cast further doubt on the innovation-promoting value of UMs among SMEs.
II. Standards Essential Patents and Utility Models
A. FRAND Licensing Commitments
Technical interoperability standards such as Wi-Fi, 5G, and Bluetooth are communication protocols that enable products made by different manufacturers to communicate with little user intervention. Today, most of these standards are developed by firms that collaborate within SDOs. Given the technical nature of their contributions, firms that participate in SDOs, particularly in the telecommunications and computing industries, can accumulate hundreds or thousands of patents covering key interoperability standards.
To address concerns about the leverage that holders of such patents could exert on implementers of a standard after it has been widely adopted (so-called patent “hold-up”), many SDOs have adopted policies requiring their participants to disclose patents that are believed to be “essential” to the implementation of the SDO’s standards in a product (standards-essential patents or SEPs) to other participants in the SDO before approval of the standard. This obligation is intended to allow the SDO to work around or avoid any patent that could unduly impair the broad adoption of the standard. SDO participants that fail to disclose SEPs when so required by an SDO’s policies can be found to have breached the SDO’s policy or to have engaged in deceptive or anticompetitive conduct.
In addition, most SDOs also require their participants to license SEPs that they hold to the manufacturers of standardized products on terms that are either royalty-free or that bear no greater than FRAND royalties. This obligation is intended to assure manufacturers that they will be able to incorporate widely adopted standards into their products without the threat of being prohibited from selling standardized products by the holders of SEPs.
B. Essentiality
An SEP holder’s obligation to grant licenses to manufacturers of standardized products generally applies only to patents that are “essential” to the implementation of the standard. That is, a product implementing the standard will necessarily infringe the claims of the patent.
Holding an SEP is thus a double-edged sword in SDOs with a FRAND licensing commitment. On one hand, the owner must forego the right to use the SEP to exclude others from the market for standardized products by licensing the SEP to all implementers of the standard on FRAND terms. But in return, the SEP holder is assured that all implementers of the standard will pay it a FRAND royalty.
Despite the importance of essentiality to the value of patents covering standardized products, the essentiality of a particular patent to a particular standard is usually determined unilaterally by the patent holder without external verification. Yet this decision is often made with incomplete information at a time when the patent in question may still be in prosecution and the standard is not yet finalized. As such, the declaration of a patent as an SEP often constitutes a best guess by the SEP holder about the likely essentiality of an issued patent to a published standard.
Not surprisingly, given the potential royalty revenue that may be earned from SEPs, and the potential liability that can arise under the antitrust and competition laws from the failure to disclose SEPs in compliance with an SDO’s policies, SDO participants have often erred on the side of over-declaration of SEPs. For this reason, the essentiality of declared SEPs to particular standards is frequently challenged in litigation, with the result that some patents asserted against products implementing standards for which they were declared essential are found to be neither essential to the standard nor infringed by the product implementing the standard.
C. Injunctive Relief and SEPs
One remedy available to a patent holder upon proving infringement is a court-ordered injunction preventing an infringer from continuing to produce or sell infringing products. The availability of injunctions when SEPs are infringed has been the subject of considerable debate over the past two decades, as the general availability of the injunction remedy can be seen to conflict with the SEP holder’s commitment to grant licenses to all implementers of the standards covered by the SEPs. As a result, the availability of injunctive relief when SEPs are infringed by an unlicensed implementer varies by country, and may depend on applicable competition law as well as a determination whether the infringing implementer is “willing” to accept a license on FRAND terms.
D. Utility Models as Standards Essential
In addition to patents, some SDO policies require SDO participants to disclose UMs as potentially essential to implement their standards. This requirement is made explicit, for example, in the Guidelines for Implementation of the Common Patent Policy of the International Telecommunications Union (ITU), International Organization for Standardization (ISO), and International Electrotechnical Committee (IEC), which defines a “patent” as including “those claims contained in and identified by patents, utility models and other similar statutory rights based on inventions (including applications for any of these).” Other prominent SDOs, including the European Telecommunications Standards Institute (ETSI), the Internet Engineering Task Force (IETF), and the HDMI Forum, also expressly require the disclosure or licensing of UMs that are believed to be essential to a standard.
While the policies of some SDOs expressly mention UMs, the policies of other SDOs, including the Advanced Television Systems Committee (ATSC) and Joint Electron Device Engineering Council (JEDEC), do not, and instead apply their disclosure and licensing requirements only to “patents.” At these SDOs, it is not clear what effect the disclosure of a UM under the SDO’s disclosure or licensing policies would have, and whether the FRAND or other licensing commitments of the SDO apply to UMs. Conversely, it is not clear whether an SDO participant’s failure to disclose a UM would constitute a violation of such an SDO’s disclosure policy or deceptive conduct that is otherwise actionable. The implications of this definitional gap are considered more fully in Section IV.B, below.
And while commentators have casually observed that UMs have infrequently been disclosed as essential to technical standards, there has not, until this study, been an empirical assessment of the rate at which UMs are declared to be essential to industry standards. With the caveat that, just as with patents, a declaration to an SDO that a UM is believed to be essential to the implementation of a particular standard is not an assurance that the UM will ultimately be found to be essential, this Article refers to such declared UMs as standards-essential utility models or SEUMs.
III. Data Concerning Standards Essential Utility Models
A. Empirical Literature Concerning Utility Models
Over the years, a small amount of empirical literature concerning utility models has emerged. In 2006, Uma Suthersanen analyzed empirical data on UM filings in Germany, Japan, Korea, China, Malaysia, and Taiwan, and Suthersanen and her colleagues’ 2008 work collects contributions including empirical data on UM filings in Singapore, Australia, Japan, Korea, China, various ASEAN nations, and Mexico. Both of these foundational works seek to assess the effectiveness of UM systems as promoters of local innovation, particularly in emerging economies. Relatedly, Jussi Heikkilä’s 2023 work develops a set of key performance indicators (KPIs) for UM systems based on a literature review and the public statements of governmental issuing offices.
UMs have also been the subject of a handful of more recent studies focusing on business strategy and innovation theory. Yee Kyoung Kim and coauthors’ 2011 work analyzes Korean UM filings to assess their contribution to firm performance. Siwei Cao and coauthors’ 2014 work compares firms’ filing behavior for inventions protected in both the United States and China. Heikkilä and Annika Lorenz’s 2018 study observes the strategic utilization of UMs by German firms, while Heikkilä and Michael Verba’s 2018 work explores the structures and characteristics of European patent families that include UMs. Daniel Cahoy and Lynda Oswald’s 2021 work uses U.S. patent priority data to assess the degree to which firms elect to pursue patent versus UM protection for similar innovations. Finally, Huiyan Zhang’s 2022 work investigates the frequency with which UMs are litigated in China and the characteristics that make both patents and UMs more likely to be litigated.
While Section III.C of this Article presents additional empirical data regarding UM filings and litigation worldwide, the purpose of this Article is not to analyze UM systems generally. Rather, the empirical data on UM systems presented in Section III.C are intended to provide background for the more detailed discussion and analysis of SEUMs in Section III.D.
B. Methodology
This study used data on UM filings around the world provided by the World Intellectual Property Organization (WIPO) as well as the IPlytics platform (now a part of LexisNexis). As an official United Nations organization, WIPO makes available filing data from the patent offices of its 193 member states. The IPlytics database includes patent and UM filing data from over 67 national and regional patent offices. IPlytics also contains SEP declarations made at 35 different SDOs and 11 patent pools, including disambiguated information regarding SEP declarants, as well as information (sourced from Darts-ip) concerning SEPs that have been litigated. These databases were queried between March and May 2023. Separately, detailed information regarding litigated SEUMs was sourced from Darts-ip.
C. Findings—Utility Models
In Section III.C, descriptive statistics are presented regarding all UM filings, applicants, and litigation. Section III.D, below, then turns to SEUMs.
1. Utility Model Filings by Country
From 1990 to 2021, inclusive, approximately 23 million applications for UMs were filed across 194 jurisdictions, with approximately 17.7 million filed between 2012 and 2021, inclusive (see Appendix A, Supplemental Data Table 1). China is by far the jurisdiction in which the most UMs are filed. In 2021 alone, there were 2.8 million Chinese UM filings out of a global total of 2.9 million (97.6%), and from 1990 to 2021, collectively, there were 19.8 million Chinese UM filings out of a global total of 23.5 million (84.4%). The growth of Chinese UM filings is discussed in greater detail below.
Other than China, several jurisdictions including Germany, Korea, Japan, Taiwan, and Russia have consistently had significant numbers of UM filings. Figure 1 shows the top 10 jurisdictions for UM filings in 2021, as well as cumulative UM filings for the period 1990 to 2021.
