Qual­ity over quan­tity in patent stakes, says ex­pert

China Daily (Hong Kong) - - BUSINESS HK - By OSWALD CHAN in Hong Kong oswald@chi­nadai­lyhk.com

China should brush up on in­tel­lec­tual prop­erty (IP) pro­tec­tion to pro­pel in­no­va­tion-led eco­nomic growth, as this would en­cour­age higher qual­ity patent fil­ings, ac­cord­ing to an in­ter­na­tional law firm.

The Chi­nese main­land set a record in patent ap­pli­ca­tions in 2015, be­com­ing the first econ­omy in the world to file more than 1 mil­lion patent ap­pli­ca­tions in a sin­gle year, the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion (WIPO) said last month.

Most of the 1.1 mil­lion fil­ings by main­land en­ter­prises were from the tele­coms, com­put­ing, semi­con­duc­tors and med­i­cal tech­nol­ogy in­dus­tries.

The num­ber of patent reg­is­tra­tions sub­mit­ted by main­land com­pa­nies is more than the top three run­ner­sup com­bined. The US was sec­ond with 578,000 ap­pli­ca­tions, fol­lowed by Ja­pan (325,000) and South Korea (214,000).

“While the Chi­nese main­land con­tin­ues to drive global in­creases, IP use grew in most coun­tries in 2015, re­flect­ing its in­creas­ing im­por­tance in a glob­al­ized knowl­edge econ­omy,” WIPO Di r e c t o r Ge n e r a l Fr an c i s Gurry said last month.

The num­ber of patent ap­pli­ca­tions shows that China is grad­u­ally trans­form­ing into an in­no­va­tive-led econ­omy amid ris­ing world­wide de­mand for in­tel­lec­tual prop­erty rights, with fo­cus on fos­ter­ing re­search and de­vel­op­ment to stim­u­late eco­nomic growth by re­in­forc­ing protec- tion for IP rights.

But, in­ter­na­tional law firm DLA Piper Part­ner Ed­ward Chat­ter­ton cau­tioned that the num­ber of patent fil­ings is not the sole bench­mark in mea­sur­ing the main­land’s in­no­va­tive ca­pa­bil­ity.

“T he large quan­tity of these ap­pli­ca­tions does not nec­es­sar­ily sug­gest all the fil­ings are of qual­ity,” said Chat­ter­ton, who’s also the com­pany’s co-head of in­tel­lec­tual prop­erty and tech­nol­ogy in Asia.

Some of these ap­pli­ca­tions can be at­trib­uted to lo­cal com­pa­nies re­spond­ing to patent sub­si­dies pro­vided by the govern­ment, ac­cord­ing to In­tel­lec­tual Prop­erty Watch.

Chat­ter­ton said the qual­ity of patent ap­pli­ca­tions is mainly en­shrined in two as­pects.

“Firstly, most of the main­land patent ap­pli­ca­tions are done do­mes­ti­cally and the num­ber of over­seas fil­ings by main­land com­pa­nies is sig­nif­i­cantly lower than that of en­ter­prises from Ja­pan and South Korea. Patent ap­pli­ca­tion on a per capita ba­sis is also sig­nif­i­cantly lower than those of the US, Ja­pan, South Korea, Ger­many and Switzer­land,” he said.

WIPO Chief Econ­o­mist Carsten Fink agreed, say­ing: “If you look at its patent fil­ings per head of pop­u­la­tion, there are still fewer patents be­ing filed there (China) than in the US. T here is clearly a dis­cus­sion out there as to what is the qual­ity of main­land patents.”

Ac­cord­ing to WIPO, Chi­nese en­ter­prises lodged 42,000 patent ap­pli­ca­tions out­side its bor­ders, with most filed do­mes­ti­cally. This com­pared to 238,000 over­seas patent ap­pli­ca­tions by US com­pa­nies, with China also lag­ging be­hind Ja­pan and South Korea.

Another weak­ness of China’s patent ap­pli­ca­tions is that any in­come gen­er­ated is of­ten not re­lated to IP pro­tec­tion.

“Rev­enue de­rived from li­cens­ing and other forms of tech­no­log­i­cal pay­ments on the main­land are still low com­pared with the US,” Chat­ter­ton said.

“Tech­nol­ogy ex­ported to the Chi­nese main­land tends to be re­search and de­vel­op­ment items that are uti­lized as a ba­sis for man­u­fac­tur­ing, rather than be­ing uti­lized for gen­er­at­ing li­cens­ing in­comes.”

To en­cour­age more Chi­nese en­ter­prises to file patents over­seas, C h at­ter ton said they must be able to see the ben­e­fits of do­ing so.

“This re­lates to the cen­tral govern­ment’s abil­ity to re­in­force IP pro­tec­tion in the coun­try and en­ter­prises’ ca­pa­bil­ity to reap rev­enues de­rived from tech­no­log­i­cal in­no­va­tions,” he said.

Rev­enue de­rived from li­cens­ing and other forms of tech­no­log­i­cal pay­ments on the (Chi­nese) main­land are still low com­pared with the US.” While the Chi­nese main­land con­tin­ues to drive global in­creases, IP use grew in most coun­tries in 2015, re­flect­ing its in­creas­ing im­por­tance in a glob­al­ized knowl­edge econ­omy.”

di­rec­tor gen­eral of the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion

place

global rank­ing of the Chi­nese main­land in terms of the num­ber of patent reg­is­tra­tions sub­mit­ted in 2015

Ch a tt er t o n sa i d mu c h more needs to be done in re­la­tion to IP pro­tec­tion in China.

“The re­cur­rent prob­lem of bad faith trade­mark fil­ings re­mains one of the big­gest chal­lenges for IP own­ers on the main­land, as does the rel­a­tively weak pro­tec­tion given to trade se­crets,” he said.

“The main­land should look into us­ing the ex­ist­ing pro­vi­sions of the Trade­mark Law to re­duce the num­ber of bad faith fil­ings, and fo­cus on im­prov­ing the qual­ity, rather than quan­tity, of patent fil­ings.”

About 2.9 mil­lion patent ap­pli­ca­tions were filed world­wide last year — up 7.8 per­cent from 2014. This is higher than the 4.5-per­cent growth rate in 2014, ac­cord­ing to WIPO data. The three top ar­eas of in­no­va­tion world­wide were com­puter tech­nol­ogy, elec­tri­cal ma­chin­ery and dig­i­tal com­mu­ni­ca­tion.

FORBES CON­RAD / BLOOMBERG

Em­ploy­ees of a Shen­zhen-based man­u­fac­turer at­tend a lecture at the Longhua Science and Tech­nol­ogy Park. The Chi­nese main­land set a record in patent ap­pli­ca­tions in 2015, be­com­ing the first econ­omy in the world to file more than 1 mil­lion patent ap­pli­ca­tions in a sin­gle year, the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion said in Novem­ber.

Fran­cis Gurry,

Ed­ward Chat­ter­ton, DLA Piper part­ner

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