China streamlines patent examination for Internet, big data patent applications

By Steve Brachmann
August 1, 2017

“With each passing day, China’s patent system looks like a photo-negative of the U.S. patent system…”

On July 28th, 2017, China’s State Intellectual Property Office (SIPO) announced a new set of regulations which are intended to streamline the examination of patent applications in certain burgeoning fields of technology. The new policy, which comes in response to “the central government’s call for an improved business environment, streamlined procedures for administrative approval, and the booming market,” will allow for the examination of both utility model and industrial design patent applications; SIPO guidelines issued as recently as five years ago only covered a single patent application designation, invention patents.

As China’s state run media Xinhua News reports, the new examination guidelines will also provide for the streamlined examination of patent applications related to energy saving, environmental protection, next-generation information technology, intelligent manufacturing, the Internet, big data and cloud computing. “The regulations help form a more comprehensive system for prioritizing patent applications,” Song Jianhua, director of SIPO’s treaty and law department, is quoted as saying by multiple Chinese news outlets.

With each passing day, China’s patent system looks like a photo-negative of the U.S. patent system in a way that makes China look very good to inventors and venture capitalists alike. The new regulations come swift off the heel of comments made by Chinese President Xi Jinping during the recent National Financial Work Conference on the “heavy price” intellectual property infringers should pay for copying protected IP. As the SIPO press release on the new examination guidelines indicate, China has received 565,000 patent applications through the first half of 2015, a 6.1 percent increase over the same period last year.

Ownership of patents among Chinese nationals is also increasing as the country continues to improve the atmosphere in favor of patent owners. SIPO granted 209,000 patents during the first half of 2017, about 160,000 of which were issued to Chinese entities. The average patent ownership rate in China is 8.9 patents for every 10,000 citizens, giving the country a total of 1.22 million patents held by residents. In Beijing, the country’s capital, the patent ownership rate is 85.9 patents for every 10,000 citizens, the highest such rate within the country.

Conversely, what’s happening in the United States couldn’t be more different. Instead of making it easier for patent owners to assert their property rights in response to potential infringement, now it costs inventors like Josh Malone millions and millions of dollars to obtain a patent and defend it against invalidity challenges at the Patent Trial and Appeal Board (PTAB) which covers a technology that continues to be infringed by Walmart. But is Congress interested in holding hearings to look at the high cost to patent owners and the way the system is tilted against them? Of course not. We’re still stuck having hearings on the effects of “bad patents” on American businesses without any substantive dialogue on how patents can help tech startups. In the House of Representatives, the Congressman who presides over those hearings is a former patent troll who is heavily financed by the efficient infringer lobby and who uses his political position to pressure members of the federal judiciary. The false narrative of “patent trolls,” which no one can clearly define and has been found to be highly subjective in news coverage and is considered to be a prejudicial term by the Federal Trade Commission, is reinforced by a series of poor panel witnesses like Tom Lee of Mapbox, Julie Samuels of Engine Advocacy and Steven Anderson of Culver Franchising.

Rep. Darrell Issa (R-CA) can’t help but guffaw when someone points out that the Chinese patent system is more welcoming to innovation and private property owners alike than the current version of the U.S. patent system. What will it take? Will the political narrative swing around once China overtakes the United States in the annual IP index which is released by the U.S. Chamber of Commerce? In the most recent index, the United States’ system of patent rights was ranked 10th and China was ranked 20th in that regard. They could switch places as early as next year. China is actively addressing its key weaknesses outlined by the U.S. Chamber of Commerce, including historically high levels of IP infringement and an inability for some IP owners to secure adequate remedies for infringement. The recent IP index already noted that new SIPO guidelines on submitting post-filing experimental data could strengthen China’s patent environment. As for the U.S., we’re making zero progress on the key weaknesses outlined by the Chamber of Commerce, including substantial costs and uncertainty created by the patent opposition system as well as a narrow interpretation of the patentability of biotech and computer-related inventions.

To paraphrase a well-known American folk song, we might be hearing the following refrain in the years to come: “Where have all the patents gone? Gone to China, every one. When will they ever learn? When will they ever learn?”

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 17 Comments comments. Join the discussion.

  1. Tesia Thomas August 1, 2017 4:24 pm

    Yeah and IoT is huge.

    China’s the next world superpower for sure.
    And once me and my fellow inventors who are/were screwed by DoD leave USA, renounce our citizenship, and invent amazing defense tech for China then there goes the military too.

    No country who screws over its most productive citizens ever wins.
    The USA is quite literally ‘biting the hand that feeds it’ in so many ways.
    All for the sake of rich companies who stash most of their money out of the US!
    They make the money here and then ship it overseas.
    The USA might as well be considered a multinational money mining place.

    The Software Cartel is a very small part of the country and so are the people like Darrell Issa but they can ruin it for the majority.

  2. Confused Pharmacist August 1, 2017 7:31 pm

    This seems like a ploy by China to get foreign money inside the country. Once there, Chinese companies will swoop in and copy whatever invention has been patented there and when a patent holder tries to assert the patent in the Chinese system, he/she will get caught up in the bureaucratic process (paying Chinese attorneys, etc.) only to lose in the end. There’s no way China would let a native company go down, but they are happy to take foreign money. I would be wary of the proclamation that China is the future for IP.

  3. Tesia Thomas August 1, 2017 7:50 pm

    @Confused Pharmacist

    Well how is that any worse than in the US?

    Also, foreign money is and has always been in China.

    I think China is trying to be #1.
    They want to manufacture and invent everything.
    Nationalism isn’t the best business strategy.

    But typically what happens is that, when people move to a different area for a better life, they settle.
    Current American. Future Chinese.
    Future Chinese and American heritage.

    That’s how America became so great.

  4. Paul Morinville August 2, 2017 12:55 am

    Confused Pharmecist, it’s not a ploy. China thinks longterm. They watched as we destroyed our patent system and strengthened theirs. They saw venture capital move from here to there. Now they are escalating. Cant have too much of a good thing. If they are playing games as you hypothisize, it will be very short lived. It is in fact a real change driven by real economic factors.

  5. Benny August 2, 2017 5:40 am

    Tesia –
    “I think China is trying to be #1”
    Do an internet search for “China MIC 2025” – it is a stated policy.
    Don’t give up your citizenship so easily. One SV executive said that the US will always be ahead because “our Chinese engineers are better than their Chinese engineers”

  6. Tesia Thomas August 2, 2017 8:49 am

    Benny,

    Wow. Stated policy. Go China.

    I don’t buy that SV executive’s words.
    Our Chinese engineers just have more interesting problems to work on at the moment and a more relaxed culture where people can feel free to make mistakes.

    That’s also something the USA doesn’t get.
    With all USA STEM jobs propaganda, they miss the point that the countries which test very high on math and science are not the most innovative.
    It’s also why most degreed engineers never get a patent in their lifetime.

    China’s culture is too rigid. Must master math, must get an A on all exams, must be top of class. No mistakes.
    Currently they learn and copy very well. Because learning and copying can easily be done error free.
    They learn better than they innovate. But I’m sure an influx of Americans can help with that.
    You have to fail and make mistakes to innovate which goes against their current “be the best” attitude toward schooling and their culture.

    Chinese Americans have an environment more suited to producing innovation.

  7. Benny August 2, 2017 8:58 am

    Tesia,
    I’ve met Chinese engineers who can out-think me in my own technical field. I think I’ve learned more from them than they have from us.
    Comparing US patents in my field filed by US applicants and CN/HK applicants, it’s pretty clear who is pulling ahead. (hint- not the Trump voters). Of course, this observation is limited to a particular technical field where the biggest players are probably the Koreans.

  8. Ternary August 2, 2017 9:30 am

    Seeing is believing I would say. There is one big party of interest in China that is completely dominant, self-interested and does not care about the rule of law: the Communist Party of China and its corrupt cadre. You may not be the real or at least exclusive owner of your intellectual property there. But then again, neither are you here it seems.

    They have learned from us what needs to be done to grow an economy: unleash the inventive and entrepreneurial powers of the individual. It is more than bizarre to see China carefully and deliberately develop an inventor based economy while we are step by step taking ours apart.

  9. Tesia Thomas August 2, 2017 10:19 am

    @Benny,

    So… you can tell who’s a Trump voter from their patent applications?
    Chinese can’t vote in any US election…

    Is it AR and VR? That’s the only thing I can think of where Korea dominates totally.

    Out thinking just means their research is progressing beyond America’s. They’re probably throwing the most money at it.
    I hope they keep it up.

    The government is obviously being more lenient in its rigidity because it wants money more than total power.

  10. Tesia Thomas August 2, 2017 10:23 am

    The culture’s drastically changing in the high activity startup areas.

    China’s maybe even more “do or die. Fail faster and innovate more.” than the US is right now.

  11. Benny August 2, 2017 11:32 am

    Tesia,
    “Chinese can’t vote in any US election…” well it wasn’t them I was referring to.
    “That’s the only thing I can think of where Korea dominates totally”
    Two of the biggest consumer appliance and electronic manufacturers are Korean. What brand is your refrigerator, dishwasher, air-conditioner, TV or vacuum cleaner? There is a deluge of patent applications in the white goods field, too. Take a closer look at your appliances and you will soon spot some neat tricks which make you think “that must be patented” (It is).

  12. Tesia Thomas August 2, 2017 1:53 pm

    Benny,

    I actually don’t buy branded appliances. I only own a refrigerator, too.
    No TV (own 3 computers though), no dishwasher (I use the old hand scrub method), no air-conditioner (I have fans), and no vacuum cleaner courtesy of hardwood floors (sweep and mop and polish).

    No wonder I didn’t know that, right?

    But, cool!

    Yeah, electronics are fun to build. Not fun to spend money on or waste time with.

  13. Anon August 2, 2017 3:47 pm

    In a prior career (before I became an attorney), I was involved in business management and had the opportunity to take an extended trip to China and Korea.

    My takeaway – from way back then – was that the Chinese (no matter what their current political ideology was) were among the most capitalistic people I had ever met.

    Having studied the history of science and technology (and later, folding into that learning the history of patent systems), I can easily say that I am not surprised by the changes in the views of the Chinese sovereign regarding patents.

    It is a bit surprising though to watch how thoroughly flat-footed THIS country is to what is happening.

    A guess that Congressman Issa is simply too busy lining up selected soundbytes for his dog and pony shows to be concerned with actual innovation vectors.

    Maybe it is time for someone else on that committee to give Congressman Issa a nudge and have him wake up to the fact that we are being surpassed – and surpassed quickly – as a nation leading innovation support.

  14. Confused Pharmacist August 3, 2017 10:08 am

    I agree with the sentiment that China isn’t good at innovating, but just good at copying. As said in that comment, it’s a cultural thing. They don’t let their people experiment with new ideas because they have a rigid social hierarchy. They may want to be #1, but I don’t think they really want to be the leader of the world and a beacon of any sort. Here’s a good video explaining why:

    https://www.youtube.com/watch?v=isbMXKTwifA

  15. Benny August 3, 2017 10:26 am

    Confused,
    Now you have got me confused.
    The sentiment often expressed here is that US innovation is going down the drain. So with less innovation to copy, who are the Chinese copying, and if they are into copying rather than innovating, what is the worry if they are always one step behind?
    My experience is that Chinese (Shenzen) engineers are nothing to sneeze at, I would happily take on board some of those I’ve worked with (if only they could speak better English). I’m impressed with their work ethics, too. I don’t see too many US engineers responding to emails outside of working hours.

  16. Tesia Thomas August 3, 2017 10:30 am

    @Benny

    Agreed about Confused Pharmacist.
    I think some people don’t see what’s happening.

    Also you could learn Mandarin…haha
    And move to their country.

  17. G Flax August 5, 2017 2:20 pm

    American patent system is based on how much money you prepared to spend if you pick operation and the small patent application has very little power the Chinese are going to gobble up the Americans in pattern technology. Gross inefficiencies of set into the American patent system over the last 10 years. Truly a great tragedy for the country in manufacturing and inventor of innovation.

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