Chinese patent office receives over one million patent applications, 96 percent are domestic office only

By Steve Brachmann
December 5, 2016

 illustration of a china long shadow flag with a light bulbOf the 2.9 million patent applications which were filed in patent offices across the world in 2015, more than one million of those applications were filed with the State Intellectual Property Office (SIPO) of China, the first time that a single patent office has broken that milestone according to the World Intellectual Property Organization (WIPO). China’s huge number of filings is a big reason why worldwide patent applications rose 7.8 percent from 2014’s totals. WIPO also notes that China received more patent applications than its next three rivals combined: the United States (589,410 patent applications); Japan (318,721); and the Republic of Korea (213,694).

China has been making some sizable waves in the world’s patent landscape in recent years. Since the country opened its first courts dedicated to intellectual property cases in November 2014, patent enforcement activity in China has increased and even foreign firms are finding China’s IP court to be a preferred venue for handling patent enforcement actions. China may sometimes be seen as protectionist in terms of domestic business interests but a report from IAM published this July offered remarks from a Chinese IP judge indicating that non-Chinese entities won each of the 65 IP cases, including patent and trademark litigation, they brought to the IP court in Beijing during 2015.

In late November, news released by China’s Xinhua News Agency, China’s largest media organization, reported that the nation’s government had released its first guidelines on state-level protection of property rights. The guidelines extend to legal issues relevant to many types of property but where intellectual property is involved, the guidelines will reportedly help to improve the protection of intellectual property. Consequences for the infringement of intellectual property could include the “contamination” of infringers’ credit records and the public announcement of any punishments for infringement.

Calls for stronger IP rights in China and enforcement mechanisms have come from academic voices both within China and in the U.S. A March 2015 study penned by members of faculty from the Massachusetts Institute of Technology (MIT), Harvard University and Xiamen University offered the argument that strong local IP rights incentivizes firms to engage in innovative activities. The authors argue that China has experienced strong growth despite weak IP institutions and that strengthening those institutions will be critical for China’s future success. The study identifies the fact that private firms in China tend to invest more in research and development than their state-owned enterprise (SOE) counterparts. The authors also found that regions where plaintiffs win a high percentage of IP cases in provincial courts see a 7.2 percent increase in patenting rates, whereas patenting rates are only increasing by 0.3 percent in regions where plaintiffs win a low percentage of IP cases.

Yet for all of this increased activity within its own borders, it’s not clear that Chinese IP rights will hold much sway in jurisdictions across the globe. In 2015, Chinese entities only filed 42,154 patent applications with foreign patent offices, placing it behind France in terms of countries filing the most patents overseas. This means that about 96 percent of all Chinese patent applications filed in 2015 cannot be enforced outside of China’s borders. By contrast, the U.S. produced the most overseas patent applications with 237,961 in 2015, a 6 percent increase over 2014’s totals.

Property rights of all kinds have historically been very limited in the People’s Republic of China but China’s new property guidelines are evidence of a recognition of the need for its citizens to be able to protect property. A 2011 survey conducted by the Landesa Rural Development Institute found that land takings, or eminent domain land acquisitions, led to massive inequity in compensation for property, especially among farmers. While farmers were compensated for land takings at about $17,850 per acre, that property was then sold to commercial developers for $740,000 per acre. In almost 10 percent of cases, farmers received no compensation for land takings.

Some commentators have raised their eyebrows at China’s first-ever property rights guidelines, noting that previous reforms such as the Law on Rural Land Contracting of 2003 have delivered few results. As far as intellectual property is concerned, however, it seems that reforms within the country have already taken place to encourage not only the filing of patent applications but also the enforcement of legitimate IP rights. If the Chinese government truly does come through on a promise of tough IP enforcement, it would continue a trajectory which is pretty much the opposite of what is being seen in patent system reform proposed and enacted by the U.S. Congress in recent years.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 7 Comments comments.

  1. Ternary December 5, 2016 1:30 pm

    SIPO is creating an enormous prior art database that is making it easier for Chinese companies to circumvent and/or invalidate US patents and enable rejection of US patent applications. The quality and reach of Chinese patents is improving at a tremendous rate. Soon, many ongoing efforts to diminish the value of the US patent system (see Gene’s new post “Patent infringer lobby pushes Trump Transition Team to aggressively pursue patent reform”) may be moot in view of Chinese inventions. America inventors are not the threat to US industry.

  2. Night Writer December 5, 2016 4:23 pm

    Ironic that while we burn down our system, China is trying to build a system to promote innovation. They want to innovate like Korea, Japan, Germany, and the former U.S.A.

    My bet is that it works for China. I recently added a talk about China’s patent office and from what I heard it has progressed a lot over the last few years.

  3. Edward Heller December 5, 2016 5:36 pm

    Methinks that Chinese companies are giving their engineers invention disclosure quotas for the very purposes of invalidating foreigner patents.

    A real patent system allows independent companies to be formed that are truly protected by their patents against competitors. Without the ability to enforce one’s patents, why even bother to file, let alone invent.

    But does China allow truly independent companies to flourish?

  4. Anon December 5, 2016 7:21 pm

    Mr. Heller,

    Your last question is moot, as the ultimate model is not for independents as would be befitting US culture, as undergirding the entirety of the Chinese entrepreneurs remains the State.

    While it has been many years, I have been there and have seen in person the magnificent dichotomy of personal initiative and State control.

    We are losing a war we don’t even know that we are fighting.

    Unlike the Cold War in which our adversary provided a ready focus, this war is one of stealth.

    Khrushchev loudly proclaimed “We will hang you with the rope you provide” and gave us a focus (right or wrong, over zealously applied or not). The Chinese are simply “doing” and remaining quiet.

    Teddy Roosevelt once said “Speak softly and carry a big stick.” The Chinese don’t even bother with speaking and wield one of the most impressive sticks imaginable: financial control. They mean to beat us at our own game.

  5. Benny December 6, 2016 5:27 am

    Edward @ 3 thinks that Chinese companies give their engineers invention disclosure quotas. I strongly suspect this practice is not unique to China.
    I also think that there is vast room for improvement to the SIPO website before it is anywhere near the standard of the EPO site (which, in my opinion, the USPTO site should look up to).

  6. J.L. December 8, 2016 2:02 am

    I can say that in our large company, we do not give quotas to our engineers, but we do have IP goals for our business units (too easily ignored goals for my taste). We do have modest incentives, and China does provide some significant tax breaks and other incentives for companies that file many patents. More importantly, China is taking strong steps to strengthen enforcement (IP courts, abundant training, revised laws, increased penalties, etc.), and foreign companies can and frequently do enforce their IP with high rates of success in Chinese courts. Awards could be higher. The system could be strengthened more. It will be, I think. Meanwhile, US patent values are plunging and innovation is discouraged with the torture of a thousand cuts from a government that for the past few years at least seems hostile to innovation, especially for small companies. Innovation is flourishing in China. The trend is strong: it seems that China will win in the long run.

  7. Edward Heller December 8, 2016 5:58 pm

    J.L., you in China are learning. I hope you allow small Chinese companies to sue big companies who infringe their patents, and allow the contingent fee lawyers necessary to do that. Then Venture Capitalists will be encouraged to invest in Chinese companies because their investments will ultimately be protected by the patents they generate, just as it used to be in the United States before the AIA and all the anti-troll propaganda that has so poisoned the well here.

    BTW, we flourish in part because in our court system, each party bears its own attorneys fees. This feature allows for contingency fee lawyers and by extension, the patent system to function the way it is supposed to function.