China’s Upward Path In Innovating: What Global Patent Data Shows


Thomson Reuters/Derwent has just published its 2014 State of Innovation Report. This report analyzes 12 key technology areas and offers some interesting observations about China’s growing global role in patenting and innovation. Here are some results:

In most fields, China did very well compared to other Asian economies. In some fields, China is a global leader. Many of these fields have also been a focus of China’s efforts to build a more innovative economy, or are considered a “strategic emerging industry.” In many cases, research institutions rather than companies continue to play a dominant, role.

In the Automotive Sector, there was no Chinese company amongst the top ten patent filers in Asia. The field was dominated by Japanese and Korean companies. Similarly, for Alternative Powered Vehicles, no Chinese company made the top 10 of Asia Pacific assignees. In Space Vehicles and Satellite technologies, seven Chinese institutions made the top 10 of Asia Pacific assignees.

The Computing and Peripherals technology area showed the most overall innovation of all sectors analyzed, with more than 300,000 unique inventions, more than twice as many inventions as Telecommunications, the next largest category. However, the subcategories reported didn’t reveal many Chinese stars. For example, In Smart Media, State Grid and Peking University made the top 10 of Asia Pacific assignees.   No mainland Chinese company made the Asia Pacific top 10 in Semiconductor materials and processes. In Mobile Telephony, Guangdong Oppos Mobile Telecommunications made the number six Asia Pacific slot.

Amongst Asia Pacific Kitchen invention assignees, Midea and Haier made the Asia Pacific top 10.  In the Beverage Fermentation area, SIPO Commissioner Shen’s alma mater, Dalian University of Technology, ranked number 5 among Asia Pacific assignees. China Petrochemical and South China University of Technology were also amongst the top 10.

China did shine in Petroleum & Gas Exploration, Drilling Production and Processing. Six Chinese companies or institutes were amongst the top 10 Asia Pacific assignees. China Petrochemical and Petro China took the first two slots, and were also in first place globally

China is also showing a growing role in biotechnology. In Cancer Treatment, there were several Chinese institutions amongst the top 10 Asia-Pacific assignees, including Peking, Fudan and Zhejiang Universities (Nos. 7, 8 and 9). In Surgery/Diagnosis.  There were no Chinese companies amongst the top 10 Asia Pacific assignees. In the Heterocyclic Pharmaceutical area, Nanjing, Fudan, Peking and Sichuan Universities, took the Asia Pacific 1, 7, 9 and 10 slots. Nanjing was in fact in first place globally, barely edging out European and US institutions. Dr Reddy’s Lab was the topped rank Indian company, with about 1/3 the number of inventions of Peking University.

China’s efforts in biotechnology, which is otherwise showing global declines, are in a sense doubly remarkable. Globally, in all fields except biotechnology inventions showed double-digit growth. Globally, Biotechnology showed a decline of 3% from last year, with the biggest being Drug Discovery related innovation, which fell by 25%. The data suggests that China’s 12th Five Year Plan for biotechnology (十二五”生物技术发展规划”) which has such goals as being number three in patents globally and developing a series of new pharmaceutical compounds is well on its way.



US-China IP Cooperation Dialogue Report Released

The “US-China IP Cooperation Dialogue Report” was released last week. The Report was prepared by experts from both the US and China, including co-chairs Professor Liu Chuntian of Renmin University and Joseph Papovich, former Assistant US Trade Representative. I was an also a member of the expert committee, first as an academic with Fordham Law School, and later as an advisor when I returned to USPTO, in an otherwise private sector initiative.

The Report reflects the consensus reached during several days of meetings among this experienced team. Here are some of its suggestions:

  1.  Civil Enforcement: the Report urges greater use of precedents through a guiding case system, experimenting with amicus briefs for important cases, expanding evidence preservation and preliminary injunctions, and greater civil deterrence in damage awards.

  2. Criminal Enforcement: the Report calls for adjustments to the criminal enforcement system and an expanded and stable role for criminal IP enforcement.  The US experts sought greater clarity over “for profit” requirements in criminal IP convictions, while the Chinese side believed that current judicial practice will ultimate reduce these difficulties.  Both sides agreed that criminal enforcement should be directed towards repeat offenders, large scale criminal activity, and cross-border criminals.  In addition, officials should be encouraged to increase the volume of criminal prosecutions.  Authorities should also consider plea bargaining and proportional criminal fines, as well as criminal settlement and victim-offender reconciliation.  Victims’ compensation (fudai) claims should also be allowed.  Specialized IP enforcement teams and specialized prosecutors were suggested, as well as clearer IP criminal investigation guidelines.

  3. Customs: Greater support of Chinese customs, with more resources, and more engagement with foreign countries.

  4. Copyrights: The experts supports the 2012 Supreme Peoples Court Judicial Interpretation on intermediary liability and commended the court’s openness in accepting outside comments and evaluating foreign practices.  Both sides also encouraged foreign companies to more aggressively use legal remedies to stop infringement.  While China has made significant improvements in end user piracy, the necessity of criminal liability was also underscored.  The experts also believed that live sports programming should be protected under China’s copyright law, and expanded protection should be afforded to technological protection measures.

  5. Trademarks: The experts expressed support for SAIC’s efforts to address online sales of counterfeit goods, and urged the SPC to consider leveraging its experience in dealing with secondary liability in the copyright context to the trademark context, in order to encourage more cooperation between platform owners and brand owners.  The experts also urged the CTMO to adhere to the principle of good faith TM registrations to deal with squatting, and to expand cooperation with express mail services to deal with global counterfeiting organizations.

  6. Patents: The experts agreed that the courts should continue to play a central role in adjudicating patent cases.  The experts also suggested that China should consider centralized jurisdiction over patent cases to ensure specialization and predictability.  If a centralized patent court cannot be established, the experts considered that the SPC might wish to reduce the number of courts that hear patent litigation cases from the current 89.  The experts also expressed their concern about the low rate of injunctive relief for invention patent cases, and consider means of improving evidence collection, particularly in process patent cases.  The experts also discussed Article 26.3 of the Patent Law (enablement), and problems with retroactive application of examination guidelines and restricting data supplementation.  In evaluating appeals from the PRB to the Beijing courts, some experts also pointed to low reversal rates by the courts, and too much involvement by PRB officials in the court’s decision making process, which can impair impartiality.  The experts also recommended a study on the impact of the short statute of limitations (two years) in China on protection of patent rights.  The Chinese side also thought that foreigners also need better protection and planning for litigation in China.

  7. Trade Secrets: The experts agreed that theft of trade secrets, whether the victims are foreign or Chinese, is “not tolerable.”   The experts further noted that trade secret theft “harms business value and destroys trust” and that trade secret cases can have a big impact on “sustaining the growth of R&D facilities and technological collaboration in China.”  The experts pointed out that parties in trade secret disputes need to be given a fair opportunity to discover key facts and to examine evidence.  Police officers should be able to conduct undercover investigations (Criminal Procedure Law, Art. 51).  Chinese experts also cautioned that criminal prosecutions may be abused and that in some cases the civil and criminal results of the same trade secret cases have had conflicting results.

This eight page bilingual Report is a very useful read for policy makers in the United States and China.  What is perhaps even more important is that it was a joint collaborative effort, which showcases the potential for future cooperation on IP policy efforts.

USPTO Working Paper on Growth in China’s Patent Filings

The Office of the Chief Economist at USPTO has published a working paper on “Perspectives on the growth in Chinese patent applications to the USPTO” (Working Paper No. 2014-1, by Alan Marco, Richard Miller and Jay Kesan).    The paper looks at utility (invention) patent applications to the US from inventors residing in China.  The paper concludes that “growth in the number of applications from China has greatly outpaced the overall growth in applications from both domestic and foreign filers.”  To readers of this blog, this is hardly surprising n light of tremendous growth of domestic patent filings in China.  Somewhat surprising is that while biotechnology (Tech Center 1600) experienced the least growth, it still grew at a healthy 20% for the period 2000-2011, compared to growth rates of 38 and 36 percent, respectively, for communications and semiconductors.  This data to me suggests that China has a growing interest in its overseas biotech patent portfolio.

The paper puts this growth in historical perspective, by comparing it to the growth in South Korean applications for the 10 year period starting in the mid 1980’s.  In adition, in 2000, the USPTO received 422 patent applications from mainland China, compared to 1,500 applications from eight other emerging economies.  By 2006, the PTO was receiving 23 percent more applications from China than the other eight emerging economies (Argentina, Brazil, India, Indonesia, Mexico, Russian, South Africa and Turkey) combined.

 What was most striking however is the improvement in patent allowance rates, which suggests that the quality of patent applications is going up.  Over the past six years, the allowance rate for Chinese applications has begun to converge with the allowance rates for Japanese and South Korean applications.  The report notes: “This may indicate that Chinese applicants are developing institutional expertise regarding how the system works at PTO.  It may also indicate that the mix of inventors has changed and that more applications are coming from Chinese inventors who are working for multinational enterprises.” 

Perhaps Chinese inventors are also securing better counsel for their inventions, or showing greater care?

2000-2011: Comparing Allowance Rates of Disposed Applications