Category Archives: Innovation Policy

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Confronting Chinese Innovation Mercantilism

Interest in and discussion about innovation practices in China continues.  Here’s another upcoming conference, which sounds like it could elicit controversy, from ITIF (the Information Technology and Innovation Forum): “Confronting Chinese Innovation Mercantilism“.  According to the press release “China is unabashedly seeking to favor Chinese-owned firms in order to dominate practically all sectors, especially the higher value-added, innovation-based sectors. Yet, the Washington consensus response can be summed up in one word: patience.”.

A separate stream of discussion in Washington has been on Chinese state-owned enterprises, which ITIF alludes to, including hearings yesterday on Capitol Hill on the role of SOE’s [State Owned Enterprises].  Prof. Curtis Milhaupt from Columbia has also written an excellent paper on this topic describing the organization of SOE’s, but without any strong proscriptive language. Prof. Milhaupt also lectured at Fordham on Feb. 16.

In the long run, there is only way forward on all these issues: informed, principled, and respectful engagement.  It isn’t a simple matter of patience as the ITIF study suggests.  Hopefully serious programs and reports will help us all pursue a reasonable way of engaging China.

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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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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 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.”