China Leads the World in Patent Applications
As the Chinese economy develops, the country’s attitude toward intellectual property has been developing as well.
China is following in the footsteps of other countries whose industrial economies started out based on copying or being an outsourced manufacturing destination that evolved to become innovators, such as Japan and South Korea.
In a remarkable milestone, the Chinese patent office, SIPO, received over 1.1 million utility patent applications in 2015. That’s far more than the US Patent and Trademark Office (USPTO) received – 589,410. On a global basis, over a third of the 2.9 million patent applications that were filed in 2015 were filed in China.
Admittedly, the large number of filings doesn’t tell the entire story. The Chinese government set an ambitious goal to increase the number of patent filings in 2015, and with so much of the economy in China tied to the state, when the Chinese government asks for something Chinese industry responds. Those 1 million + patent applications would result in Chinese patents that only provide protection in the Chinese domestic market. There are those who question whether most of those applications would meet international standards for novelty and non-obviousness. Chinese inventors only applied for 42,154 patents in patent offices abroad; by contrast US inventors applied for 237,961 patents in non-US jurisdictions.
There could, of course, be a lot of other reasons for the relatively lower number of foreign applications by Chinese inventors. Cost is one big reason – no doubt it would be MUCH more expensive for a Chinese company to file a patent in the US than in China. Another reason could be lack of need: with a population of 1.4 billion people, the domestic Chinese market, second largest economy in the world, is large enough to keep many smaller enterprises busy without as urgent a need to export as companies in smaller countries, such as most of Europe.
Not getting as big a headline, but certainly from an American company’s point of view even more important, is the fact that China has made vast improvements in the system for enforcing patents in China. In response to charges from foreign firms that it was difficult to protect intellectual property in China, in late 2014 the Chinese government announced it was opening several IP courts. The initiative seems to be working, and it’s helping both Chinese and foreign companies. A report from Santa Clara University School of Law on patent litigation in China found that foreign firms won 70% of the patent litigation lawsuits they filed. Foreign firms represented 10% of all such filings in China.
Interestingly, non-Chinese companies are starting to sue other non-Chinese companies in Chinese courts. In November WiLan, a Canadian-based IP licensing firm, filed a lawsuit against Japanese giant Sony in the Chinese courts. This is a testimony to both the strength of the Chinese market and the robustness of the Chinese courts.
The trend in the US has been to weaken the patent system, both legislatively and in the court system. Populist responses to over-hyped instances of bad behavior by so-called “patent trolls” – bad behavior that could be stopped by existing laws – has resulted in erosion of patent owners’ rights. Meanwhile, in China they are strengthening their patent system. It’s no wonder that many players in the patent business – ourselves included – are paying greater attention to Asia.