China Be­comes First Coun­try With Over 1 Mil­lion Patent Ap­pli­ca­tions in One Year

Be­comes 1st Coun­try With Over 1 Mil­lion Patent Ap­pli­ca­tions In One Year

Trillions - - In this Issue -

Fil­ing for and hav­ing patents is­sued is one way of mea­sur­ing how com­pet­i­tive a com­pany, state or coun­try is in the world stage. By that mea­sure, China just sur­prised ev­ery­one by be­com­ing the first coun­try ever in the world to file 1 mil­lion patent ap­pli­ca­tions – in 2015.

The ac­tual num­ber of patent ap­pli­ca­tions filed, 1,010,406, rep­re­sents a whop­ping 35% of the to­tal 2.9 mil­lion patents filed for world­wide last year. And if that were not im­pres­sive enough, this per­cent­age com­pares to China only hav­ing filed 7.8% of the world’s patent fil­ings in 2014.

The ap­pli­ca­tions do in­clude all Chi­nese fil­ings, so this is a mix of those filed by Chi­nese res­i­dents and those from for­eign en­ti­ties look­ing for patent pro­tec­tion in China. But the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion, WIPO, an­a­lyzed the data and showed that almost two-thirds of the 1M+ fil­ings were from within China and not over­seas. The U.S. and com­pa­nies within it was a sub­stan­tial num­ber two in Chi­nese fil­ings, with close to 238,000 filed.

The sig­nif­i­cance of the patent fil­ings can­not be over­stated, especially as China makes its play both tech­nol­ogy and eco­nom­i­cally to com­mand lead mar­ket po­si­tions where West­ern com­pa­nies had pre­vi­ously been dom­i­nant. When the patents is­sue, they provide a pro­tec­tive wall for do­mes­tic or­ga­ni­za­tions that com­peti­tors must wade through to avoid law­suits or the need for costly li­cens­ing. And even be­fore is­suance com­peti­tors who see the patents “laid open”, a le­gal term mean­ing the con­tents of the patent fil­ings are made pub­lic in ad­vance of is­suance, so pub­lic com­ment is en­cour­aged, are al­ready hav­ing to design around them.

China clearly is in­no­vat­ing more and with more adept com­pa­nies in­volved in ad­vanced re­search and de­vel­op­ment of all kinds. So that is one reason for the in­crease. A sec­ond is the Chi­nese gov­ern­ment now pro­vid­ing patent sub­si­dies, mak­ing it less ex­pen­sive to file. Other stream­lin­ing pro­cesses to make it eas­ier to file are also in place.

A third reason for the in­crease is on the for­eign side, where com­pa­nies are fil­ing for patent cov­er­age now within China far more than ever be­fore. For the for­eign com­pa­nies, hav­ing their patents granted in China could con­ceiv­ably block lo­cals from copy­ing, as long as the Chi­nese courts agree, which they sel­dom do. And, as the U.S. in par­tic­u­lar learned some years ago in Ja­pan when it was more pre­em­i­nent in the world econ­omy, some­times hav­ing a patent granted in the coun­try can at least al­low one to op­er­ate one’s business there, even if it may not block a lo­cal com­pany from copy­ing some or all of it.

What many may not be con­sid­er­ing is that China may now also be plan­ning to weaponize patents and may use them to sti­fle for­eign com­pe­ti­tion and be­seige key com­pa­nies with patent lit­i­ga­tion to make them more amenable to hos­tile takeovers.

In 2015, after China, the next four high­est to­tals of patent fil­ings were the U.S. as a strong sec­ond, fol­lowed by Ja­pan, South Korea, and Europe.

And not sur­pris­ingly, the top fil­ings by ar­eas of in­no­va­tion were in Com­puter Tech­nol­ogy (with 7.9% of the to­tal), Elec­tri­cal Machin­ery (with 7.3%), and Dig­i­tal Com­mu­ni­ca­tion (with 4.9%).

At cur­rent rates, the to­tal num­bers and per­cent­ages of all world fil­ings is likely to in­crease by an­other gi­ant leap again in 2016. What this means on the world mar­ket is that, yet again, China is mov­ing rapidly to dom­i­nate the world while Amer­ica lags be­hind.

Image: Alexan­der Su­per­tramp / shut­ter­

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