Utility Model

by Joseph Straus

1. Subject matter and scope

According to § 1(1) of the German Utility Model Act (GUMA) inventions that are new, are based on an inventive step and are susceptible to industrial application shall be protected as utility models. Whereas this wording may suggest that the term ‘utility model’ stands for the subject matter of protection, in fact the object of protection is an invention which fulfils the protection requirements under the Act. As far as the latter are concerned, a linguistic clarification as regards the protection requirement of ‘inventive step’ seems appropriate: ‘inventive step’ is a literal translation of erfinderischer Schritt, used in the original German text in order to designate a lower level of non-obviousness than that for which the German Patent Act and the European Patent Convention (European patent) use the term erfinderische Tätigkeit, a term which translates as ‘inventive activity’, but which is generally equated with ‘inventive step’ in patent law terminology. Like patents (patent law), utility models, constitute an object of the protection of industrial property under Art 1(1) of the Paris Convention for the Protection of Industrial Property (PC) and Art 42 TFEU/36 EC. The filing of an application for the registration of a utility model in one of the countries member to the PC establishes a priority right of 12 months for filing subsequent applications in other Paris Union Member States (Arts 4A and 4C PC). Apart from the right of priority and apart from safeguarding the national treatment principle (Art 2(1) PC), the PC does not provide for any minimum rights as regards utility models. The International Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS; intellectual property) does not even mention the terms ‘utility model’, certificat d’utilité, modello de utilitad, or Gebrauchsmuster.

Historically, utility model protection was first introduced in Germany as a supplement to design and patent protection. The need for such a supplementary protection was felt because, on the one hand, the Reichsoberhandelsgericht (Higher Commercial Court of the German Reich) denied protection under the Design and Model Protection Act of 11 January 1876 (Gesetz betreffend das Urheberrecht an Mustern und Modellen) for models which served no ‘aesthetic’, or ornamental purpose, but only a practical use—useful purpose (Gebrauchszweck) (3 September 1878 ROHGE 24, 109). On the other hand, for utility models protection under the Patent Act of 25 May 1877, which required the examination of substantive protection requirements, appeared too costly. Moreover, it was soon realized that many utility models would barely meet patentability requirements beyond the requirement of novelty.

In order to meet the needs of small and medium-sized businesses for a simple and inexpensive protection for less significant but useful technical innovations, the German legislature on 1 June 1891 adopted the Utility Model Act (Gebrauchsmustergesetz—GUMA), which entered into force on 1 October 1891. The Act introduced protection to ‘models of working equipment or utility articles or parts thereof … to the extent that a new design, arrangement or device is intended to serve the working or utility purpose’ (§ 1(1)). The protection, which only required a regular registration at the patent office, but no examination of substantive protection requirements, was limited to six years from the filing of applications. Although the Act placed utility model protection close to patent protection and inventions, ie technical instructions, most often the object of protection, significant differences continued to exist between utility model protection and patent protection. The subject matter of protection under the Utility Model Act had to be in three-dimensional ‘spatial form’, ie it required a ‘new tangible spatial design’ (neue körperliche Formgestaltung); moreover, it was not applicable to process inventions. Only in 1990 was the requirement of ‘spatial form’ abandoned by the Act to Reinforce Intellectual Property and Combat Product Piracy (German Federal Supreme Court, BGH 17 February 2004, BGHZ 158, 142). Despite the fact that the 1891 Act only mentioned ‘new tangible spatial design’, soon the understanding had prevailed that novelty alone did not suffice as a protection requirement but that rather something progressively new must be added, without being already inventive itself.

2. Relationship to patent protection

The protection offered to utility models under the German Utility Model Act as amended on 1 January 1987 shares many commonalities with patent protection. Its objects of protection are inventions, ie technical instructions; it is an exclusive right limited in time and geographic scope; it confers on the first applicant a priority and it generates blocking effects. Thus, utility model protection is also effective against third parties who independently generated the invention but did not, or did only later, file a patent or utility model application with the Patent and Trademark Office. The same invention can be protected by a patent as well as by a utility model. Cumulative protection is allowed. This can be achieved either by filing applications separately and independently of each other or by filing a utility model application and claiming the priority of an earlier filed patent application, a right which can be exercised up to the end of the tenth year after the filing date of the patent application (§ 5(1) GUMA). In spite of these commonalities, however, a number of important differences exist between utility models and patents.

As regards the subject matter of protection, the Utility Model Act excludes from protection, in addition to inventions excluded from patent protection, all biotechnological inventions, ie products which consist of or contain biological material, as well as all biotechnological processes in general (§§ 1, 2 GUMA). Also, the state of the art decisive for determining novelty differs between the two forms of protection. On the one hand, knowledge made available to the public by use or oral descriptions outside the jurisdiction of the GUMA does not constitute relevant state of the art. On the other hand, any description or use within six months prior to the date relevant for the priority application is disregarded if it is based upon the work of the applicant or his predecessor in title (§ 3(a) GUMA). Thus, under GUMA a general grace period of six months preceding the priority date exists.

As noted at the outset, apart from the novelty of the invention, § 1(1) GUMA also sets forth as a protection requirement that the invention is industrially applicable and is based on an inventive step. However, whereas § 3(2) GUMA, like § 5 GPA, provides that the subject matter of a utility model shall be considered susceptible of industrial application if it can be made or used in any kind of industry, including agriculture, the GUMA, unlike § 4 GPA, remains silent as to when an invention is to be considered as being based on an inventive step.

Since the adoption of the GUMA in 1891, the courts and with rare exceptions, also legal scholarship, have generally assumed that utility model protection requires a lower degree of inventive step than patent protection (RG 25 January 1908, [1908] Blatt für Patent-, Muster- und Zeichenwesen 188, 189). This was also the understanding of the legislature when the Act was revised in 1986 and, as emphasized at the beginning of this contribution, the term erfinderischer Schritt instead of Erfindungshöhe was introduced into the Act. The requirement of a lesser inventive step should enable in particular small and medium-sized businesses to acquire an inexpensive and easily achieved—though briefer—protection for smaller inventions, thus offering incentives for innovative behaviour and helping to secure the necessary investment. The Federal Patent Court confirmed that the inventive step is at hand if the inventor could not have already found the solution off-hand based on his professional skills and taking into consideration the state of the art (Federal Patent Court 13 February 2003, [2004] GRUR 852), or in those cases where the solution would be obvious to the person skilled in the art, but that person would nevertheless have to deal with technical circumstances in detail in order to find that solution (Federal Patent Court 2 August 2000, Mitt.2002, 46).

However, by a decision of 20 June 2006, the German Federal Supreme Court rejected that understanding and stated, inter alia, in an official headnote:

‘Determination of an inventive step can have recourse to the principles developed in patent law, if account is taken of the differences that result from the fact that the state of the art in utility model law is defined differently in Section 3 of the Utility Model Act in terms of oral description and in terms of uses outside the Act’s scope of application. It is not permitted to find that the obvious is based on an inventive step on the grounds that the person skilled in the art could not easily find it on the basis of his general knowledge, taking routine account of the state of the art’ (BGH 20 June 2006, BGHZ 168, 142—quoted from (2007) 38 IIC 104).

The BGH emphasized, inter alia, that like the requirement of non-obviousness as a precondition for patentability, the criterion of inventive step in utility model law is not a quantitative but rather a qualitative criterion. Hence, the determination of an inventive step was, like that of non-obviousness, the result of value judgment and the criteria to be applied differ marginally. If one attached the exclusivity in utility model law to a ‘lesser’ inventiveness than in patent law, the utility model law would be exposed to the danger of becoming a collecting pond for subject matter not eligible for patent protection. The court, moreover, opined that applying different thresholds for assessing inventiveness under the two forms of protection would also disregard the fact that the effects of protection as provided for patents under §§ 9, 10 GPA and for utility models under §§ 11, 12a GUMA are by and large the same (BGH 20 June 2006, [2006] GRUR 845).

As a result of this BGH decision, some fundamental deliberations seem appropriate as regards German law. As compared with patent law, does a somewhat narrower subject matter eligible for protection and a somewhat narrower state of the art determinative for the assessment of novelty justify a second form of protection for inventions in addition to the patent protection? Moreover, can such a form of protection for inventions which can be acquired parallel to patent protection without examination of substantive protection requirements by the Patent and Trademark Office and which directly leads to an enforceable exclusive right to deny third parties the use of the invention be defended in view of the fact that in the case of patents, such an enforceable right is only available upon the patent grant? Can the shorter term of protection alone justify such a difference in approach?

3. International and European developments

The German Utility Model Act of 1891 was the pioneer of this specific form for protecting inventions. In the meantime, utility model protection has been introduced in many countries. The respective statutes, however, reveal differences as regards the subject matter of protection (eg the requirement of spatial form), protection requirements, the term of protection and the examination of protection requirements. The overall development, however, indicates a trend towards lower/lesser requirements for eligibility of inventions for utility model protection as regards the novelty (eg local novelty sufficient) and the ‘inventive’ activity as compared with patents. At the same time, the term of protection reveals a tendency of extension (up to 10 years), and, as a rule, full protection is available based on examination solely as to formalities upon the entry into the respective register, ie without examination of substantive protection requirements. The examination of substantive protection requirements only takes place in infringement suits before courts or upon a motion for cancellation of the utility model in separate proceedings. In some jurisdictions, however, the enforcement of protection is made dependent on an examination by the responsible office. Empirical data reveals that utility model protection is predominantly used by nationals and relatively seldom by foreign applicants. Among the Member States of the European Union only Latvia, Lithuania, Luxembourg, Romania, Sweden and the United Kingdom do not offer any protection for utility models. Outside the Union, in Europe, no such protection is available in Iceland, Norway and Switzerland. Specific statutory regulations exist in Austria (1994, 1998), Bulgaria (1993), Czech Republic (1992), Denmark (1992), Estonia (1994, 2002), Finland (1995), Greece (1987), Hungary (1991), Italy (1940), Poland (1972, 1984), Portugal (1995), Slovakia (1992) and Spain (1986). In France protection exists in the form of utility model certificates—certificat d'utilité (Book VI of the Code de la Proprieté Intellectuelle 1992) and in Belgium (1984), Ireland (1992), the Netherlands (1995) and Slovenia (1992, 1993) short-term patents are available. It should be added that outside Europe utility model protection exists, for instance, in Australia, where innovation patents are available (2001), Brazil (1996), the People’s Republic of China (1984, 1992), Japan (1905, 1959, 1994), the Republic of Korea (1908, 1961, 1998) and Mexico (1991).

After some preparatory work, in 1995, the European Commission also took up the cause of utility model protection. In the green paper ‘Utility Model Protection in the Internal Market’ (COM(95) 370 final), which subsequently served as the basis for extensive consultations on the introduction of utility model protection at Union level, the Commission brought forward the following reasons in favour of this form for protecting inventions: rapid and simple registration; less stringent protection requirements than in the case of patents; lower costs; and provisional protection available based on entry in the register alone. While noting that the protection available in the Member States revealed considerable differences, the Commission also emphasized that this form of protection was only unavailable in Luxembourg, Sweden and the United Kingdom. Moreover, the Commission observed that all national regulations provided protection for technical inventions, thus establishing that this form of protection fulfilled the function of an ‘additional protection for technical inventions’. They further noted that it was available in all Member States upon registration (entry into the register) without prior examination of the utility model as regards novelty and inventive step. Thus, the protection could be obtained in a fast and inexpensive manner. As regards the existing differences, three different groups were identified by the Commission: the first group applied the same criteria for the inventive activity and (absolute) novelty for the (patent protection supplementing) utility model protection as for patents but did not include spatial form as a protection requirement (Belgium, France and the Netherlands); the second group applied less stringent requirements as regards the inventive step but required that the invention be realized in spatial form (Finland, Greece, Italy, Portugal and Spain); the third group applied less stringent requirements for the inventive step but did not require spatial form at all or attached to it only a low level of importance (Austria, Denmark and Ireland). Germany was classified as falling into the last group with the qualification that only relative novelty was required.

According to the green paper, utility model protection was of particular importance for medium-sized and small companies. The Commission also emphasized that in this respect considerable differences existed between different branches of industry. The following fields were identified as the main users of utility model protection: mechanical engineering; electrical industry; producers of precision instruments; optics; toys industry; and car industry.

The green paper concluded that it was the obligation of the European Union to undertake steps aimed at removing this disadvantageous situation for the European internal market and at improving its functioning. The development of innovative activity in the European Union was characterized by a trend towards a lesser (lower) inventive step, higher sensitivity for costs, shorter production and commercialization cycles, as well as a shorter life-span of inventions, all of which resulted in an increased need for a simple and inexpensive protection of technical inventions in the common market. As possible options for an initiative of the Union, an approximation of national protection systems, on the one hand, and the establishment of a Union Utility Model System, on the other, were considered.

On 12 December 1997, the Commission submitted a proposal for a ‘Directive Approximating the Legal Arrangements for the Protection of Inventions by Utility Model’ (COM(1997) 691). The Economic and Social Committee delivered its opinion on this proposal on 27 May 1998. The European Parliament adopted a legislative resolution on the proposal for a directive on 12 March 1999, and the Commission presented an amended proposal for a directive on 28 June 1999 (COM(1999) 309 final). The recitals of this proposal emphasize the strategic role small and medium-sized firms play in relation to innovation and their rapid response to market requirements. In particular, small and medium-sized firms and researchers were in need of an instrument which is cheap, rapid and easy to evaluate and apply. Measured on these criteria, utility model protection was seen as being better suited than patent protection to technical inventions involving a specific level of inventiveness. As regards the subject matter of protection, the proposal provided for protection of products as well as of processes, but it excluded from protection inventions relating to biological material and in general inventions relating to chemical or pharmaceutical substances or processes and computer programs (Art 4(b), (c), (d)). With the exception of inventive activity, all other protection requirements were the same as those required for patent protection. Under Art 6, ‘an invention shall be considered as involving an inventive step if, in the utility model application, the applicant indicates clearly and convincingly that, compared with the state of the art, it exhibits either (a) particular effectiveness in terms of, for example ease of application or use; or (b) a practical or industrial advantage’. The registration of the utility model was to be based on examination as to formal requirements only, without examination of substantive protection requirements (Art 15). At the request and cost of the applicant or any other interested party, the competent authority was to draw up a search report on the relevant state of the art. However, it was left to the discretion of the Member States to provide for an obligatory search report in case of an infringement action (Art 16(1), (4)). The maximum term of protection was limited to 10 years (Art 19), and the cumulation of protection by a patent and a utility model for the same invention (‘dual protection’) was allowed (Art 22).

As revealed by a Staff Working Paper titled ‘Consultations on the Impact of the Community Utility Model in Order to Update the Green Paper on the Protection of Utility Models in the Single Market’ (COM(95) 370 final), which the EU Commission published on 26 July 2001 (SEC (2001) 1307), the Commission suspended work on the proposal for a directive as of March 2000 because the majority of the Member States considered that priority should be given to the work on the Union patent. In the framework of the consultations which the EU Commission initiated following the publication of the proposal, a vast majority of interested parties replying opposed the introduction of a Union utility model based on a regulation and prompted the Commission to give up all utility model protection initiatives. Only some respondents were in favour of reopening the work on the directive. Thus, it should be clear that for the foreseeable future the European Union will neither have an EU-wide harmonized national utility model protection nor a Union utility model protection.

Literature

Rudolf Kraßer, ‘Die Entwicklung des Gebrauchsmusterrechts’ in Festschrift zum hundertjährigen Bestehen der Deutschen Vereinigung für gewerblichen Rechtsschutz und Urheberrecht und ihrer Zeitschrift, vol I (1991) 617; Guenter Weitzel, Pilotstudie—Die wirtschaftliche Bedeutung des Gebrauchsmusterschutzes in der Europäischen Union (1993); Rudolf Kraßer, ‘Developments in Utility Model Law’ (1995) 26 IIC 950; Rudolf Kraßer, ‘Harmonization of Utility Model Law in Europe’ (2000) 31 IIC 797; Hans-Friedrich Loth, Gebrauchsmustergesetz (2001); Alfred Keukenschrijver, ‘Gebrauchsmustergesetz’ in Rudolf Busse (ed), Patentgesetz (6th edn, 2003) 1545; Takeyuki Iwai, ‘Modalities of Future Utility Model System’ [2004] IIP Bulletin 38; Peter Mes, Patentgesetz, Gebrauchsmustergesetz (2nd edn, 2005); Frank Peter Goebel, Der erfinderische Schritt (2005); Frank Peter Goebel, ‘Gebrauchsmustergesetz’ in Georg Benkard, Patentgesetz, Gebrauchsmustergesetz (10th edn, 2006) 1561.