EPO Patent Index 2020 Underscores Sharp Rise of China as Global Tech Giant

On March 16, the European Patent Office (EPO) released the Patent Index 2020, which gives the public a snapshot view of the filing activities going on at the EU’s patent granting agency during the past year. Total patent application filings declined only slightly during 2020 to just over 180,000 patent applications, a reduction of 0.7% compared to the EPO’s 2019 patent filing totals. Despite a 4.1% decrease in patent application filings at the EPO, the United States still held the top spot among individual countries with 44,293 EPO patent filings. Patent application filing totals also dropped in Germany (down 3% to 25,954 filings) and Japan (down 1.1% to 21,841). The United States, Germany and Japan were ranked first, second and third, respectively, in the EPO Patent Index 2020.

Although it still has some ground to gain, China appears to be making good on its efforts to achieve and maintain a position as a global tech giant. The country made major strides on the EPO’s Patent Index 2020, with a 9.9% increase in filings over 2019’s totals, the largest increase of the top 10 countries in the 2020 index. Although China’s 13,432 patent application filings at the EPO trails Japan’s totals by a sizable amount, it ranks in fourth place ahead of France, which contributed 10,554 patent application filings to the EPO in 2020, a 3% increase over the previous year’s totals. The second-largest percentage increase was seen in South Korea, which accounted for 9,106 patent application filings to the EPO in 2020, a 9.2% increase over 2019.

Are Chinese Patent Law Reforms Democratizing Innovation in a Communist Country?

One of the biggest reasons for China’s rise in ranking in various international patent rankings is due to the patent filing activity of that country’s major telecom firm Huawei, which ranked second in the Patent Index among all entities filing for patents at the EPO, with 3,113 patent applications filed during 2020, nearly one-quarter of all Chinese filings at the EPO last year. Huawei is a major player in the field of 5G wireless technology and its patent portfolio in this space is proving to be increasingly valuable. As of mid-March, Huawei has declared 3,007 patent families to standards setting organizations (SSOs) building technical standards for 5G wireless systems, and research indicates that nearly 20% of those patent assets are currently in use. Both of those totals have eclipsed the 5G patent activity of all other competitors in this space.

Yet China’s strong showing in the EPO Patent Index 2020 must also be attributed to the efforts undertaken by China’s communist government to democratize intellectual property rights and protections. Huawei actually ranked first among all companies filing for patent applications at the EPO in the 2019 patent index, with 3,524 filings that year, so Huawei’s 2020 filings actually decreased at a greater rate than the overall index decline. China had already been expanding patentability in areas like software and business method patents, sectors which have been under great attack by the U.S. patent system in recent years. Last October, China’s top legislature passed the Fourth Amendment to Chinese Patent Law which, when it goes into effect this June, will introduce punitive damages for willful patent infringement, establish a patent linkage regime for pharmaceutical patents and strengthen protections for design patents. China’s large percentage growth in the EPO’s Patent Index 2020, coupled with Huawei’s sizable decline in filings, indicates that the country’s patent system reforms in recent years could very well be a rising tide lifting many boats—notwithstanding the status of many boats as state-owned entities.

Of course, many observers of China’s growing patent system have noted that much of that growth has been spurred on by various forms of government intervention. This January, the U.S. Patent and Trademark Office issued a report showing that higher levels of Chinese patent and trademark filings have been supported by non-market factors such as government subsidies to patent and trademark applicants for their filing activities. Certainly these non-market state-sponsored factors have led to numerous fraudulent and low-quality filings in both the patent and trademark space. However, unlike the U.S., where Section 101 reform can’t get passed in Congress despite widespread acknowledgment that judicial exceptions to patent eligibility are choking off important sectors of innovation, the Chinese government continues to show itself as being responsive to well-founded criticism, announcing in late January plans to eliminate all patent filing subsidy programs put in place by Chinese provincial governments by the year 2025.

Medical Technology, Digital Communications Remain the Top Innovation Sectors in 2020

Among the fastest-growing tech sectors in terms of EPO patent filings, the Patent Index 2020 shows very little change in which sectors are responsible for the largest number of patent application filings. Medical technology (14,295 patent filings) overtook digital communication (14,122 patent filings) to take the top spot among all tech sectors, but aside from some minor shifts in ranking, the top 10 technical fields in 2020 mirror the top 10 technical fields in the EPO’s Patent Index 2019. Interestingly, the EPO Patent Index 2020 attributes most of the increase of patent filings in the medical technology, pharmaceutical and biotechnology fields to the impact of the COVID-19 pandemic in spurring innovation, whereas other 2020 patent rankings released this year indicate that it’s too early to gauge the impact of the global pandemic on patent filing activities just yet.

The EPO Patent Index 2020 also includes a snapshot into digital technologies patent filings, which are increasing thanks in large part to data-driven innovation underpinning the Fourth Industrial Revolution as well as the advent of 5G mobile networking. Both digital communication and computer technology (third-place, 13,097 patent filings) together accounted for 15% of all 2020 patent application filings at the EPO. Huawei was the top applicant in 2020 for digital communications with 1,868 patent filings in that sector at the EPO last year, and the Chinese telecom giant ranked fifth in computer technology with 409 patent applications last year. While Ericsson and Qualcomm rank high in digital communication filings, and top computer technology applicants include American tech giants Microsoft, Intel and Alphabet, much of the growth in these sectors is again being pushed by companies from Asia, including firms like Samsung, Oppo, ZTE, Sony and Fujitsu.