China understands link between incentivization and innovation, but U.S. still has advantages

By Gene Quinn
April 26, 2018

China understands link between incentivization and innovation, but U.S. still has advantagesI recently had the opportunity to speak on the record with Joff Wild, Editor of IAM Magazine. In part 1 of our interview we talked about the new leadership at the United States Patent and Trademark Office, concepts of transparency both in government and in dealmaking, and more. In part 2 of our conversation, which appears below, we devote our conversation nearly exclusively to developments in China. Wild remains bullish on the U.S., however, saying that he thinks too many Americans are unnecessarily pessimistic about the U.S. patent system because America, as a free country with a free economy, has certain advantages that simply cannot be replicated by China, or even Europe for that matter.

Without further ado, here is part two of my conversation with Joff Wild.

QUINN: What do you make of what’s going on in China right now from a geopolitical standpoint?  They seem to be trying to have a first world, first rate patent system but then they also and this is probably not the right term, but they seem to be moving in some ways towards a dictatorship.  Or at least solidifying power in one person.

WILD: Oh yes.

QUINN: And those two things seem incongruous.

WILD: The bottom line about China is that it’s a one-party state.  There isn’t an independent judiciary and the Communist party controls everything, so things can change quickly and for solely political reasons; but the Chinese have absolutely without question focused hugely on patents over the last 10 to 15 years and over the last five years there’s been an absolute explosion in strategic thought around patents.  It’s really unparalleled anywhere else in the world.  It’s extraordinary.  As I said before, 40 years ago there were no patents in China, but bit by bit they have put together a patent system.

A very interesting development that occurred earlier this year, they’ve announced the patent office and the trademark office are going to combine into one big super agency which is also going to take responsibility for issues like enforcement and IP antitrust.  They’ve already created specialist first instance IP courts and they’re now looking at specialist appeals courts — so essentially a federal circuit for China.  And all of this I think is to encourage the creation of high quality patents and innovation and invention based on patents.  I think the Chinese understand the very close link there is between patents and the encouragement and incentivization of innovation and invention in a way that perhaps we’ve lost sight of in the West to an extent.  In the U.S. you get the feeling that over the last three or four years people felt they could do without patents.  I don’t think the Chinese see it that way.

QUINN: No, they seem certainly not to, and you know I just I don’t get it on some many different levels because it seems to me like so many of the companies in Silicon Valley are of the belief that they are just going to be there forever when there’s no evidence that that’s the case.  The only company that has been there virtually forever has been IBM and they’re not actually even located in Silicon Valley.

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WILD: Yes.

QUINN: And IBM has been up and down a couple of times, and those that know the inside story know that IBM was literally a few days away from declaring bankruptcy at one point before they turned it all around.  So, IBM is the exception.  Tech companies burn white hot and go away, but this new brand of tech company seems to think they’re going to be there forever and the policies that are going to be good for them over the next six months are the ones that will be good for theme forever. If that doesn’t change, how could they ever compete with the Chinese, who have historically always played the long game?

WILD: I would say the one thing the U.S. is always going to have over China, whilst China has its current system, is that if you think about a company like Google — which is began as a way of searching the internet for any kind of information that you want— it could not have been created and then grown in China because China doesn’t allow its people freedom of information.  It controls that.  And so when it comes to things like breakthrough innovation and breakthrough invention which really depend very strongly on things like a deep questioning of establishment ways of thinking, a deep questioning of authority, allowing people to access whatever information they want to access, I think in those areas, a country like the U.S. is always going to have an advantage over a country which controls its people’s ability to act freely and access information.

It’s probably the same in Europe, because you know we’re free countries as well and Japan and Australia and places like that: if we can actually understand the advantage that gives us, then there’s no reason why we can’t sustain that advantage.  But the point is, we actually have to understand the advantage is there and you get the feeling sometimes we just don’t and a lot of it – a lot of the policies that have been followed around patents, again I think specifically in the U.S. over the last four or five years, have been incredibly destructive.  And it’s not only in areas like software and mobile communications; you hear stories about biotech companies not being able to get patents, which from a European perspective just sounds ridiculous.  Why on earth would that be?  Why would you want to discourage the development of biotech inventions or ones relating to personalized medicine?  Why on earth would you want to disincentivize that by making it harder to get patent protection?  It makes no sense at all to me.

QUINN: Well it makes no sense to me either.  I can’t answer that one either. I thought the goal was to walk in on a Friday and have your doctor prick your finger and take a drop of blood and over the weekend grow whatever organ you needed and come in on a Monday for the transplant, you know.

WILD: Yes.

QUINN: I thought that was the science fantasy world that we were hoping to live in someday.

WILD: Yes.

QUINN: And I look at the Myriad case particularly and certainly also the Mayo case, which more generically causes issues, and unless the U.S. changes course, that science fantasy world of personalized medicine is not going to happen in the U.S.

WILD: Absolutely and I will tell you where it will happen in China and in life sciences, China I think, is going to be absolutely massive.

QUINN: Right.

WILD: And it’s going to be a very, very serious competitor to the U.S.  On the telecoms, mobile coms side, I would say the U.S. still has very significant advantages, but even though that probably doesn’t seem like it because you’ve got companies like Huawei, Lenovo, ZTE and Xiaomi.  But I just think the U.S. is going to have an advantage because it’s a free country on that side of things.  But you know when it comes to life sciences, it is less of an issue; you can have an authoritarian government, limited or no democracy and still have a world-class life sciences operation.

QUINN: Yes.

WILD: You know I think that’s the area where the U.S. probably needs to be more concerned.

QUINN: Yes.  You know and I’m a proud American.  I love America.  I love living here and I can’t imagine living anywhere else you know.  But the thing that worries me is it seems to me that the number of highly educated people with advanced degrees in engineering and science, and even Ph.D. level educations in China, roughly the entire population of the United States and that worries me you know.  Because there’s this old saying, you fish where the fish are, right?  You know.

WILD: Absolutely.  Yes.

QUINN: And why do you fish where the fish are, it’s because there’s just a greater chance you’re going to catch one and where you have a greater density of smart people searching for solutions to life’s problems, well you’re more likely going to get solutions.  Now I full well understand that you need to have the ecosystem in place that enables those creative people to actually create and incentivizes them, but at some point, you could have the world’s greatest ecosystem with the world’s greatest support system, and if you don’t have enough of the creators, then you’re not going to get as much as other places.  I look back in history and I wonder where the people are, where are the judges and the members of Congress and the people in the Executive Branch.  Where’s their understanding of history?  Because after World War II in America, we said come to America if you’re smart, you’re an engineer, you’re a scientist.

WILD: Yes.

QUINN: And I don’t see that anymore.  Sure, we give visas to people who are highly educated, but I don’t see the level of recruitment or open arms that we once had.  People used to come to America and get educated and want to stay. Now a whole bunch of them come to America, get educated and they want to leave.

WILD: Well, I would say again Gene, I think Americans sometimes take a too bleak a view of their country if you don’t mind me saying with all due respects.  I think America still has a mighty powerful proposition going for it.  I mean you look at the universities – the U.S. undoubtedly has the best universities in the world.  It’s still creating some of the world’s most disruptive technologies and it’s not a specific U.S. problem, I think it’s a problem for the West.  The West has kind of lost its way.  It’s lost sight of all of its advantages.  Now things like freedom of expression and things like an independent judiciary, things like the free flow of finance – all those kind of things they are incredibly important and they are huge advantages because they don’t exist in societies that are controlled.

And so if you can harness these advantages, then there’s no reason why what has happened before won’t happen in the future.  Obviously China is taking a great leap forward.  It has done and it’s fantastic.  It’s amazing.  It’s brilliant for the Chinese people and it’s going to be brilliant for the world because there will be more invention and there will be more innovation as a result.  But that doesn’t mean it has to replace anyone. If we do the right things, we will just become part of a greater good if you see what I mean.

QUINN: I do, but…

WILD: So I don’t think the choice necessarily – it doesn’t have to be China or the U.S. or Europe – really it could be everyone. But if it’s going to be everyone, we’ve got to understand what we’re good at and why we’re good at it and make sure that we focus on that.

QUINN: Yes.  You know and I think and I’m glad you say that you know because and I’m certainly not offended by you saying that you know Americans take an unnecessarily negative view of what we do, and that very well may be true because for me it’s always disheartening to see somebody do something really well and then all of the sudden lose sight of why it was that you got to the position that you’re in and take your foot off the accelerator…

WILD: Yes.

QUINN: …and then let others you know catch up.

WILD: Well look I think when America works, it works better than anywhere else in the world and it’s proved that over a number of years.  Again, with all due respect, I’d say that America has got to refocus on why the 20th Century was the American Century. For me, it was because Americans invested huge amounts of money in research and development, they honored innovators.  They made sure they were on the right side of the arguments that occurred during the 20th Century and they focused on building great lives for ordinary people.  And you know that for me on the outside, it’s probably a very simplistic view, but that was always kind of the American bargain -that if you work hard, you get on and the way the American institutions were set up, well they were set up for that to happen.

Maybe over the last 20, 30 years that has kind of fallen away a little bit, but those advantages are still there somewhere if you look for them.  You know you’ve still got the potential for this. You’ve still got all the commerce.  You’ve still got the rule of law.  You’ve still got the freedom of speech.  You’ve still got the people coming out of universities that are incredibly motivated.  There’s no reason why that can’t be taken advantage of.

But it’s not just an American problem. We’re going through Brexit at the moment in the UK. When we should be looking out to the world, we’re kind of drawing in on ourselves and in other democracies around the world similar issues are playing out.  It’s something that is going on in a lot of places and a lot of people are feeling a lot of pain as a result of it, but I don’t think that anything that’s happening is irresolvable.  I don’t think that there is any kind of finality to where we are now.  There is a way forward and as the father of three children I’ve got to think that way.  I’ve got to think that in the future there is going to be stuff for them as well, in the way there was for me and in the way, there was for you.

QUINN: Yes.

WILD: I guess it’s up to all of us to make sure that happens.

QUINN: Yes.  Yes, I agree.  I think there certainly is a way forward and maybe now we’re starting to see there is some snapback possible.  People are starting to open their eyes and see that and frankly the patent world has been a bit of a pendulum throughout its history.

WILD: Yep.  Yep.

QUINN: And so maybe we’re starting to move back a bit, but…

WILD: No, I think you definitely will – we definitely get the sense from not just Iancu, but there’s what’s going on at the DOJ, the appointment of Delrahim, he’s head of the DOJ Antitrust Division and the way that they’re now talking about IP, I think there are definite signs that there is going to be some shifting of the pendulum.  The issue I think for the U.S., is how long it’s going to take the courts to absorb all of that …

QUINN: Right.

WILD: …the sense is that a lot of judges don’t like hearing patent cases and so they do whatever they can to get rid of them as quickly as possible.  And if that means dismissing them or finding reasons for them not to take place, or what have you, then they’ll do it.  So there is certainly an understanding that things have gone too far in that pendulum that you’re talking about.  It’s now seeing that play through into the patent office and into the courts.  That’s why I was saying in the beginning, that may take a little bit longer than some people might hope for, but it doesn’t mean it won’t happen.

QUINN: No, I would agree with that and you know ironically if patents were to get stronger and owners were to have some kind of ability to get injunctions in the U.S., then it would tip the balance and create more fear on the part of the infringer and I think you would start to see again a lot more settlements and the judges would see a lot fewer of these cases anyway.

WILD: Yes, that’s probably true.

QUINN: It would get through a lot more status quo because I think they’ve seen a lot of these cases right now simply because patent owners don’t have any choice you know.  The only choice they have is to sue.

WILD: Absolutely.  Yep.

QUINN: But now what is the – oh go ahead.

WILD: No I was just going to say maybe just to finish here – it was interesting, I don’t know if you saw the latest, the first core of statistics from Unified Patents the other day – I think for the first time in a long, long time operating company lawsuits, patent lawsuits, filings outstripped NPE filings in the first three months of 2018.

QUINN: Yes.

WILD: Which I thought was quite an – it was an interesting development.  So you know operating companies are actually initiating more patent suits than they have in the past which indicates they still see the long-term value of patent assets.

QUINN: Yes, yes, that is very interesting and that should send some kind of message I would think because that hasn’t been the case for quite a while.

WILD: Absolutely.  Well I mean I think it kills this whole narrative of the U.S. being overwhelmed by patent trolls. No one can now say that with a straight face, it’s just you know…

QUINN: Well I’m glad you added that qualifier because you know they’ll still say it.

WILD: Oh, I know, but look you know and I know and even they know they are being deeply dishonest when they say it.

TO BE CONTINUED… In part 3 we preview the upcoming IPBC 2018, which will take place in San Francisco at the Palace Hotel from June 10-12.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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 1 Comment comments.

  1. Greg DeLassus April 26, 2018 9:52 am

    Really excellent interview, Mr. Quinn. Thanks for publishing this. I wish more people understood innovation nearly half so well as Mr. Wild. The whole interview was just littered with little gems of insight.