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.”

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