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The Other Chinese Patent Development: China’s Autumnal Patent “Hook”

It is 2012, and China’s State Intellectual Property Office (“SIPO”) has once again released its end of the year data on patent filings for the year.  While patent data and scientific citation data suggest that China is on the cusp of becoming an innovative economy, there is another trend that has subsisted for several years:  China’s autumnal upward patent “hook.”

As I have remarked in several conferences during the past two to three years, the data suggests that if patents are a surrogate for innovation activity, one of the most significant factors in China’s innovation efforts are the time of the year:  China innovates in the fall.   February, however, appears to be a slow month for creativity, perhaps due to lack of external pressure (government subsidies, quotas), but also due to the hiatus caused by the lunar new year and the 28 day month.

This past year once again reveals a notable spike for total patent filings at year end.

Compare with 2009 and 2010 data:

This “hook” is especially interesting when we compare the 2009 data with filings at WIPO using the Patent Cooperation Treaty, from the same period:

As China has ramped up its PCT filings, it contrasts dramatically with the total PCT filings as well as the aggregate PCT filings from the rest of the world (less China). See below:

The WIPO data suggests that that the magnitude of this “hook” is largely a Chinese characteristic.   It begins around October and climbs to year end, with a sharper rise than overall PCT filings.

There are other trends suggested by these charts.  In addition to the upward hook, there is also the February downward “spike,” and a mid-year (June/July) “bump”.  The June jump is mild, and looks more like a speed bump than anything else, but its persistence is notable.   Although the new year downward spike is noticeable, patent filings soon resume the year-on-year upward trend shortly thereafter as China continues its efforts to innovate and file more patents.

There are probably externalities that cause these changes.  Patent filings most likely drop significantly when the new calendar year has begun, with new budgets in place and the slowdown in activity with the lunar new year.  Companies that have mid-year fiscal cycles may be inclined to file patents in mid-year, however this mid-year “speed bump” is comparatively small.

The larger autumnal patent hook is probably due to a number of externalities: end of year government subsidies, corporate budgets, quotas for corporate patent filings, and other forms of government and corporate encouragement for enterprises and research institutions to file more patents by the end of the calendar year.

Your thoughts on the causes of this “hook”?  How might it compare to Western companies that are under pressure by their management to file more patents?  Do you think it has any correlation with patent quality? Are there comparisons to be made with other countries?

Written by Mark Cohen with the assistance of Jae Zhou, 2L at Fordham Law.

 

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China’s First Overseas Patent Filer?

Dr. Jin Fuey Moy (梅振魁; Mei Zhenkui, 1862-1924) was not principally an inventor, and his 1908 patent on an enhanced nutcracker for chestnuts  (“Attachment for Nutcrackers”, USPN 883,538) is in fact, the only thing he is known to have patented. He filed for patent protection for the same invention in Canada. Like many men from Taishan County (Toisan) in Guangdong Province, he came to the United States to seek his fortune and never returned to China. Following his elder brothers, he emigrated in 1875, making his way to New York, where he became a domestic servant and was baptized a Christian. Through the beneficence of some well-to-do Methodists who foresaw a missionary career for him, he was sent to New Jersey’s Pennington Seminary and then to Jefferson Medical College in Philadelphia. He earned his M.D. degree in 1890, the first Chinese to graduate from the school, and one of the first to become a physician in the United States.

In addition to working as a doctor, Moy made his living as an interpreter. He worked for the U.S. Immigration Bureau until he was discharged for allegedly smuggling Chinese immigrants into the United States. But he is most famous as the subject of two Supreme Court cases in which he was charged with misusing the mails to promote the illegal sale of drugs and for writing prescriptions that put heroin and morphine into the hands of drug addicts: United States v. Jin Fuey Moy,  241 U.S. 394 (1916), and Jin Fuey Moy v. United States,  254 U.S. 189 (1920).   The cases helped shape early federal efforts to regulate narcotics and, unlike his patent, are cited frequently to this day.  The Court reversed his conviction in the first case but affirmed in the second; he paid for his crimes with a two-year term in the Atlanta Penitentiary.

It is rare to see a patent, such as this (see also drawing here), which was filed in a foreign country and begins “I…. a subject of the Emperor of China.”   However, the first efforts at a patent law in China were during the Taiping Rebellion (1850-1864), and later at the end of the Qing Dynasty (1889).  Is it possible that there were other patents, filed within China, by “subjects of the Emperor of China.”

The total pendency on this patent appears to have been less than two years from date of application in the United States (applied July 18, 1906 and granted March 31, 1908).  We hope that the USPTO and SIPO can once again achieve this admirable record of keeping patent pendency to below two years.  The patent itself could probably be filed today in China as a utility model patent, as it consists simply of a new apparatus.  We could find no further citation to it in the USPTO database.

Dr. Moy’s biography, together with those of two of his brothers, is the subject of Three Tough Chinamen by Scott D. Seligman, which will be published in Fall, 2012 by Earnshaw Books.

This blog was prepared primarily by Scott Seligman, with some assist on patent law by Mark Cohen.

Thank you, Scott!

 

Related News:

Must Read of the Month: Subject of the Emperor Filed Enhanced Nutcracker Patent in U.S. and Canada 

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Brief recap of “Patents, Trade, and Innovation in China”

Attached is the speech by USPTO Director David Kappos from the joint Fordham/George Washington University conference on IP, innovation and trade issues in China on December 13.   USPTO Director Kappos was introduced by CAFC Chief Judge Rader, himself a veteran of Chinese-IP engagement.  The speech gives a good summary of hte current state of US IP engagement with China from the perspctive of USPTO including the important work of patent cooperation with SIPO which is handled by USPTO directly.
Approximately 125 people attended the program, to discuss the full range of issues, including rule of law and IP protection, patent protection and patent prosecution, IP enforcement, trade related aspects of IP, and constructive proposals for next steps forward.   Attendees included practicing lawyers, government officials, academics, and business people.  The program was intended as a “public discussion” on IP-related issues, in order to enhance substantive engagement on IP issues iwth China.  When asked at the end whether the conference should be held again, there was a unanimous show of hands.  In order to enhance the dialogue the conference was intended as an “off the record” discussion.
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China Transitions: Where People Went in 2011, And Where They Are Headed

Looking back on 2011 and into 2012, it has been a year with considerable transition for individuals following IP issues in China.

There were some important lateral changes in the private sector.   With the Hogan Lovells merger, Doug Clark went to Hong Kong, and Horace Lam left Hogan Lovells for Jones Day in China.  Former Supreme People’s Court IPR Chief Judge, Jiang Zhipei, left the Fangda Partners for King and Wood.  Meanwhile, King and Wood, which already had a large China IP practice, merged with the Australian law firm, Mallesons, which has a Chinese IP practice.  Amongst the more recent retirees from the Chinese government, Xu Chao, of the National Copyright Administration, and Yin Xintian, of the State Intellectual Property Office, both left the government for the Wanhuida law firm.  An Qinghu, the former Director General in charge of the Chinese Trademark Office, also left his parent agency, the State Administration for Industry and Commerce, to work for the Chinese Trademark Association.

Benjamin Bai left Jones Day for the Shanghai Office of Allen & Overy.  Zhu Nongfan, formerly in house at General Electric, left China Science Patent and Trademark Agent Ltd. and went to work for King & Wood.  Ping Gu, formerly of Unitalen, left for Zhong Lun Law Firm.  He Jing, formerly with Baker & McKenzie, went to work for ZY Partners as a senior consultant.

Several Microsoft China alumni went off in exciting new directions:  former Associate General Counsel Fengming Liu, went to General Electric China as Vice President for Government Relations after a sabbatical at Harvard and Princeton; former General Manager Malcolm Lee returning to Washington, DC policy making, by working as a senior policy advisor for the Department of Commerce; I went to Fordham University Law School as a visiting professor.

Within the foreign legal community, the planned demise of the highly regarded EU IPR-2 Program forced changes in geography, if not position for its superb team.  Carlo Pandolfi and Jesus Romero went back to EPO and OHIM, respectively. After several years in Beijing, along with Benoit Misonne and others, they did a superb job learning about Chinese IP law and engaging the Chinese government.  Thomas Pattloch, from EPO, my own “ge’mer” (close friend), went back to the private sector to work for Taylor Wessing in Munich.   While the EU IPR-2 Team leaves, a new IP officer arrives at the UK mission, appointed by the UK IP Office, Tom Duke.

In the US Embassy in Beijing, Xiang Ting left the USPTO office for USTR’s office, while Ms. Zheng Xiaohong joined the US Embassy’s IPR team. A US Embassy/USPTO  alumnus, Wang Lei (a/k/a Leslie Wang) also went from Jones Day to Baker & McKenzie

Amongst more senior USPTO officials involved in China, there were also changes in the revolving door of US government and private practice.  In February, Sharon Barner  re-joined Foley & Lardner from her position as Deputy Undersecretary at USPTO.  She remains  constantly and passionately engaged on China-related IP matters.  Her successor is Teresa Stanek Rea, who also is quite active.

Other changes are in the works. USPTO announced for a second time that it was seeking to hire for an IP position in Shanghai, China – with a closing date for applications for year-end 2011.  This is a new position for Shanghai.  The position that becomes more important in light of increasing USPTO activity in East China including relations with local governments and academics, as well as the imminent departure of the Shanghai consulate’s Lin Xu for Taylor Wessing.  Lin Xu brought a wealth of knowledge and expertise to her position, including experience in the Shanghai municipal IP Office.  Back in Washington, DC, Joel Blank, who had been doing an admirable job on commercial rule of law issues with China, including transparency-related matters, left the US Department of Commerce International Trade Administration for USPTO where he will be working on IP enforcement issues in China (my old job).

In southern China, Ada Yang, IPR Specialist, departed PTO Guangzhou in December 2010. Remaining in Guangzhou, Ms. Yang moved to Microsoft to become Senior IP Counsel.  In February 2011, Danielle Zheng joined PTO Guangzhou as IPR Specialist, in an internal promotion within the Embassy.   Conrad Wong, who opened the PTO’s office in Guangzhou in 2007, is scheduled to depart in September 2012. He hopes to secure a position either in government or the private sector that will allow him to continue contributing to the Sino-U.S. dialogue on IPR matters.

We wish all of those who worked so hard in the government the very best in their new positions, and we hope those newly joining government service a rewarding position.

There were also several changes announced in academia. Benjamin Liu joined John Marshall Law School in Chicago to help head up its China IP training program and Dorothy Li retired.  JMLS has done a great job of training SIPO and other officials on IP issues over the years. Ira Belkin, formerly with the US Department of Justice and with the Trade Facilitation Office at the US Embassy in Beijing, announced he was leaving Ford Foundation in Beijing in September 2012 to serve as Executive Director of NYU’s Asia Law Institute.   Ira focuses on humran rights and rule of law at Ford, but he worked on many of the rule of law issues invovling IP when he was at the Embassy.   Ira will be a very welcome addition to an active community on Chinese legal issues in the greater New York area, including area colleges and institutions.

There were also changes amongst scholars following innovation issues, with veteran innovation scholar Denis Simon announcing that he was joining Arizona State University as Vice Provost. In China, veteran patent scholar, Prof. Wang Bing of Tsinghua University retired, but remains very active in the University and in international exchanges.

Is there some information you might want to announced?  Please tell us.  If there are inaccuracies, or developments we have missed, please tell us as well… A forthcoming posting will talk about some new publications and programs.  Please email us at chinaipr@law.fordham.edu with information what you have been writing or publishing on (English or Chinese).

I wish everyone peace, happiness, and creativity in the year ahead – whether your new year starts January 1 or with the Year of the Dragon.

Mark Cohen

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The China Challenge

In testimony on December 13, 2011 before the Congressional Executive Commission on China on the 10th anniversary of China’s WTO accession, former Under Secretary Grand Aldonas,  stated that our “two countries operate from fundamentally different assumptions about the organization of economic activity, the nature of competition, and the role of the state in the economy in their respective home markets…”

Under Secretary Adolnas is right on the money.  Our assumptions of China’s market orientation are especially challenged in the IP context, where China has developed a regulatory/public management approach to IP that differs dramatically from the private rights orientation of most countries, especially the United States. China’s approach is manifested in such areas as substantive law, distribution of enforcement resources, subsidization/promotion of IP rights, restrictions on use of IP as a private property right, and use of quantitative goals / empirical data to guide the state’s resources. It is very difficult to engage China in a durable and action-forcing manner without recognizing these basic differences, and most of the questions that China poses are beyond our trade compliance tools.

I increasingly believe that China challenges a wide range of commonly-held assumptions about the IP system, e.g.: that countries will not protect IP until they have IP of their own to protect; that developing countries traditionally have small patent offices or have few resources allocated to IP; and that IP protection changes with stage of economic development. IP is a strategic state resource in China and as a consequence, it is being managed differently as market driven expectations might otherwise suggest, and in fact China is emphasizing IP In a manner that is quite different from other BRIC countries.

Fully addressing these challenges not only requires a better understanding of China, but also requires a significant rethink of our trade policy and trade structures, both in the government and industry.  In some cases, this rethink would have been long overdue, even without the challenges posed by China’s IP and innovation systems.

For example, although IP has been an important part of trade policy, the US does do very little trade promotion involving IP rights. The US government unlike the Chinese government, does not track licensing flows as a component of our balance of trade. We also have no advocacy mechanism within the Commerce or Agricultural Departments to engage in export promotion for licensing.  Our trade promotion policy too closely promotes tangible goods, not intangible ones.

Domestically, we have defunded the White House involvement in the innovation dialogue, and we have shut down other agencies (e.g., the Technology Administration) that support technology and innovation advocacy.   Even some academic efforts, such as Penn State’s long standing Science, Technology and Society program, are being closed. I was surprised to learn that the course I taught at Fordham this past fall was the first class in North America on Chinese IP law.

To properly align and understand China, we also need to insure we retain and reward the specialized talent needed in industry, government and the non-profit sector. We have a dearth of Chinese language and law competent diplomats. Increasingly our diplomatic issues are handled by specialist agencies, such as FDA or USPTO that do not have programs in place to hire and retain area specialists.  For example, some recent advertisements in USG for China-related trade positions do not require Chinese language competency, and use of Amcit interpreters in China is generally the exception, not the rule.
By contrast, China has aggressively promoted foreign language and international trade skills over the past 30 years within its bureaucracy.

It is also certainly not China’s fault that we have not been graduating scientists and engineers in sufficient numbers to satisfy demand in the United States, or that Tsinghua and Peking U. are the principal feeder schools for US Ph.D’s in science, technology, engineering and math.   In fact, we need more of those students to study and stay in the United States, if the US is to remain competitive.

No one agency is competent to take on the complexity of the challenges, even if they were fully staffed with Chinese-trained specialists. USG also needs greater incentives for interagency coordination to insure that all resources are adequately called into play on increasingly complex trade issues. Because most agencies are thinly staffed, and many have redundant authority with other agencies (e.g, DOJ, FTC, USTR, Commerce and USPTO on IP-related aspects of antitrust), the only means of achieving an adequate depth on the issues is through interagency work sharing.

While we have reasons to be frustrated with China, we also have equally strong reasons to be frustrated with ourselves. Our lack of persistence in making these improvements is tangible.  The place to secure the most immediate improvements in trade policy formulation involving China’s IP regime is by first correcting the misalignments at home.

What are your thoughts on the matter?
Mark

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China and Innovation: Should the West be Worried?

Welcome to my blog: ChinaIPR.    This domain has been revived after almost a decade in the dark. I hope the blog will be a meeting place for data-driven, informed discussions on IP issues in China.

This launch is timely.  While the weather has gotten colder, the innovation and IP issues appear to be as hot as ever.

It all seemed to up-tick in November, with a new flurry of testimony, seminars and reports.   Amongst the media events, a Thomson Reuters report, Chinese Patenting: A report on the Current State of Innovation in China, announced that in addition to startling growth in cited Chinese scientific publications, China is now set to become the number one global publisher of invention patent applications by the end of 2011, one year ahead of original predictions.

On December 5, both The NY Times and Washington Post reported on China’s dynamic march towards an innovative society (read NYT article here, and WaPo article here).   Both articles reflect unease over where China is headed, an equal lack of clarity on how the United States should engage, as well as the commercial reality of China as an increasingly attractive place to develop new technologies and launch new products.

A recent Pennsylvania State University conference on “China’s Emerging Technological Trajectory: Challenges and Opportunities” included an interdisciplinary group of political scientists, geographers, scientists and engineers, a cognitive psychologist and a lawyer (me).  The general consensus: foreigners are more optimistic than Chinese nationals about China’s ability to innovate than most Chinese.  Chinese tend to see broad social, economic, and even cultural obstacles to China becoming a truly innovative society.

I discussed at Penn State how China’s patent data may suggests China may be “innovating” too much in its patent subsidy system.   China’s month to month patent trends over the past several years typically show an end-of-year spike in filings that is likely attributable to end of year budgets to support patent filings, reward patentees, award innovative companies, and satisfy criteria of government employees for advancement in the civil service based on numbers of patents filed in their locality.  Too many of these patents are of low quality, not commercialized and not maintained through their useful lives.

At the same time, there is a body of thought that China doesn’t need to be a disruptive innovator or produce a “Steve Jobs” to be successful.  Perhaps incremental innovation is the solution for China’s labor-intensive, manufacturing oriented society. How to prosper from “copying” is a topic unto itself, with books such as on Oded Shenkar’s “Copy Cats: How Smart Companies Use Imitation to Gain Strategic Edge” being discussed at a China Institute forum in New York City on December 9.

The answer may also be in greater collaboration. Adam Segal from the Council on Foreign Relations noted in his November 2, 2011 testimony before the House Foreign Affairs Committee that nearly forty percent of Chinese science and engineering publications have a U.S. co-author, the highest of any foreign country.   Increasingly, multinational companies are locating R&D facilities in China, and bringing the fruits of this research to their global networks.  My former employer, Microsoft, in fact has an increasingly important share of its US-filed inventions made with an inventor who is resident or co-resident in China.

The discussion on these topics is set to continue on December 13, 2011, when a group of lawyers, trade officials, political scientists and business people will gather at George Washington University for a program co-sponsored with Fordham Law School (where I teach) to discuss the often unclear relationship between intellectual property protection, especially for patents, and China’s innovation strategies.  This program will be followed by a December 16 program at the American Chamber of Commerce in Beijing, also co-sponsored with Fordham, on China’s culture of innovation, with speakers from the US Embassy, Microsoft, and Chinese lawyers who have written extensively on innovation and IP policy.

Nearly everyone agrees that the West also needs to critically look at what it requires to remain an innovative society and to engage China on an informed basis.  Many observers are disheartened by developments such as decreases in funding for the White House Office of Science and Technology Policy, or the termination of such academic programs as Penn State’s on Science, Technology and Society.  Segal may have said it best in his testimony, when he notes that  “The combination of a rising China and globalizing science and technology make a more strategic approach to interacting with China in science and technology a necessity.”