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Invention Patent Applications Skyrocket in China

Issued: March 29 2018

Patent applications have skyrocketed China. In 2017 alone, China received 1.35 million invention patent applications, which is a 14.2 percent increase year-on-year, according to an official at the State Intellectual Property Office.

 

The percentage is a healthy yearon- year increase, says Karen Taylor, general manager Asia Pacific for Anaqua, in Hong Kong. “This significant growth is a prime example of how IP is skyrocketing in China and the wider Asian region. Before 1985, China had no patent law at all. But that has all changed. Home-grown IP has increased dramatically in China and elsewhere in Asia, with many companies in the region now more focused on establishing, protecting and monetizing their IPRs and increasing their return on investment.”

 

To encourage innovation, local Chinese authorities went so far as to provide cash subsidies of up to US$4,500 to patent recipients, Taylor says. “This undoubtedly helped China become the top patent filer in the world in 2011. It then surpassed all other countries as the top patent issuer in 2015, with over 350,000 patents issued that year alone.”

 

The desire to protect innovation, combined with government support, has led Chinese companies to embrace global best IP practices, Taylor adds. “We can expect to see more companies throughout Asia taking a genuinely strategic approach to IP portfolio management and becoming truly global in how they evaluate, protect and exploit their assets.”

 

A total of 744,000 applications have been completed, said Shen Changyu, head of SIPO, at a meeting attended by IP officials from across China.

 

“The USPTO grants about 70 percent of all patents annually. 744,000 of 1.38 million patent applications is about 54 percent, so China has some catching up to do, but things are moving in the right direction,” says Taylor.

 

Under the Patent Cooperation Treaty, 51,000 international patent applications were received in 2017, up 12.5 percent from 2016, Shen said in a work report delivered at the meeting.

 

Shen said that for every 10,000 people in China, there are 9.8 patents on average.

 

“This can be good or bad depending on how important the patents are and how they are going to be used,” Taylor says. “If there is a clear purpose and IP strategy for all 1.35 million patents, then this will certainly be a huge benefit for Chinese businesses.”

 

A strong patent portfolio and IP strategy is also “a key driving force to the brand-building of Chinese companies,” as Shen stated, and “IP creates more value now than ever in China.”

 

While patents are fundamentally designed to safeguard innovation, keep in mind that, for a company, patent protection is limited to the extent that the business is willing to enforce it, Taylor says. “More patents can lead to more infringement, which could lead to more legal fees for businesses trying to address the infringement – not to mention more maintenance fees for all the patents filed.”

 

Approximately 67,000 administrative patent cases were handled in 2017, increasing by 36.3 percent on a yearly basis, according to Shen.

 

Strong IP protection relies not only on a solid legal framework and an efficient application and granting process, which is clearly improving and expanding rapidly in China, but also on an effective portfolio management strategy within companies, Taylor says. “Knowing what you have, how important it is to your business and crafting adequate protection strategies, e.g. defensive filing, is critical.”

 

Chinese companies should do more to globalize their IP portfolios. “This can drive both commercial opportunity and increased collaboration within and across industrial and technology sectors. Chinese companies are increasingly acquiring or licensing patents from around the world and partnering globally and within the Asia region in joint R&D and product development initiatives,” Taylor says. “The recent announcement of Google and Tencent’s patent licensing deal demonstrates this trend and, as China businesses invest more in leading edge technologies such as AI, the opportunities to globalize their portfolios will only increase. Chinese investment now represents over 20 percent of global R&D spend, and ensuring the global commercialization of the resulting IP will be critical in delivering a return on that investment.”

 

Shen also asked for more international cooperation and exchanges on IP, to serve the country’s policy of opening up.

 

For many companies now, intangible assets represent around 70-80 percent of their market value. “This value needs to be protected at home and abroad and presents a major revenue opportunity,” Taylor adds. “Chinese companies are realizing that embracing holistic legal technology solutions, which combine analytics and workflow tools, enables them to more accurately assess the value of their IP portfolios and identify opportunities to sell, license or partner across the globe.”