In the U.S., the risks of frivolous patent lawsuits is greater because the merits are decided by a group of jurors who lack patent expertise and can incorrectly conclude that a patent is infringed. In China, however, these inefficiencies and imbalances do not exist. The specialized intellectual property courts and tribunals in China are equipped with specialized judges who are able to quickly and accurately identify frivolous lawsuits. Because there is no discovery process and a decision on the merits can often be achieved within one year, the abusive tactics employed by patent trolls in the U.S. can be avoided in China.
The trade dispute between the US and China started with a US accusation of intellectual property theft on the part of China. Is China really “stealing” intellectual property? I’m not so sure. Perhaps the Chinese are stealing trade secrets, and if parties are engaged in such activities they should be punished, but there is a lot of taking that has been legitimized – even authorized – by the Congress and the Supreme Court in recent years. U.S. patent law is today enabling foreign corporations, including Chinese corporations, to legitimately take intellectual property developed in the U.S. That is not theft. It’s just business. And far more damage is being done to the U.S. as the result of legalized appropriation of patented innovations than could ever be done by the theft of trade secrets.
Bloomberg recently published an article providing data analysis on Chinese patent applications to claim that, while China receives more patent applications than any country, “most are worthless.” If you were trying to usher in a culture change, moving from no patent system just a few decades ago to a thriving and high functioning patent system, you would look to incentivize your own citizens and corporations to file patent applications. That is precisely what China has done and is continuing to do. Thus, the mantra about Chinese patent applications being worthless, or nothing of a concern because they are overwhelmingly only filed in China, completely misses the enormity of the change taking place in China, and why it bodes well for the Chinese moving forward.
For many years, foreign companies were reluctant to seek and enforce intellectual property protection in China. A combination of challenging litigation with low damages, the lack of ability to effectively enforce judgments, allegations of protectionism by the courts; a lack of ability to patent certain subject matter, a lack of transparency on legal matters and other factors made China a less desirable jurisdiction. The Chinese intellectual property legal system has matured rapidly, however. From improvements in the scope of allowable patent subject matter to enhancements of litigation options, and a strong desire by China to be seen as having a level playing field for all parties, China deserves a second look… More companies are looking to China as a stand-alone enforcement jurisdiction, as a cost-effective second front to open in conjunction with US litigation.
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… 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.