Patent Law

China Ascendant

By Gary Odom and Jordan Kuhn

In the 18th century, America was the world's leading intellectual property thief: appropriating copyrighted works and infringing patents as part of its economic development. That same disapprobation has been applied to China in the past decade, as it was to Japan in the 1950s. China only started allowing intellectual property in 1985. Today, it leads the world in patent applications: over 800,000 in 2008.

The Economist characterizes the 800,000:

Most are for "petty" patents: middling technology that undergoes minimal review and receives only a 10-year term. Such patents are usually derided by research-intensive Western firms.

Such scorn can be expensive. Schneider Electric of France, which has hammered a Chinese competitor, Chint Group, for years with lawsuits over patents, was recently nailed for infringing one of Chint's petty patents, to the tune of $23m.

Chinese firms are increasingly filing "invention" patents that are rigorously scrutinised and receive 20 years of protection, as in the West (see chart). This year Chinese companies are poised to surpass foreign ones in receiving invention patents in China.

Since 2006 it has pursued a deliberate policy of gathering as many patents as possible and developing home-grown technologies--not least because Chinese companies pay around $2 billion a year in licensing and royalties to American firms alone, according to America's Bureau of Economic Analysis.

In 1999, China was awarded 90 US patents. Last year 1,225. Small time compared to, say, IBM, which gets around 3,000 patents each year. But with pendency as it is in the USPTO, expect US patent grants to Chinese companies to explode in the next few years.

The quality of patents issued in China is also improving. Revisions to the patent law that take effect in October strengthen the requirement for a patent's novelty, bringing it up to global standards. Stronger patents are easier to enforce, opening the door to more lawsuits.

Full post as published by The Patent Prospector on April 26, 2009 (boomark / email).