Hoping to Leapfrog the US, China secures huge numbers of patents and trademarks at home and abroad

Beijing has made it clear that it wishes China to be a global innovation leader and leave its copycat image behind. It has made giant strides to achieve that goal. However, the strategy and speed it is employing is in need of close scrutiny by the U.S. and other nations.

For the first half of 2020, a total of 29,500 PCT international patent applications were received by the Chinese National Intellectual Property Administration (CNIPA), with a year-on-year increase of 22.6%, reports Lexology. China is now the leading filer of PCT patents in the world, surpassing the U.S.

Paying cash incentives to encourage a higher volume of trademarks and patents, some questionable, is a part of Beijing’s strategy to the innovation challenge. Deftly implemented, it can slow and make more questionable the IP review and issuance process, and create potential obstacles based more on nuisance value than invention or branding expertise.

“The current patent regime playing out in the United States could not look more different when compared with the recent actions being taken by China,” writes Steve Brachmann in IP Watchdog.

Globally, a total of 3.1 million patent applications were filed by Chinese businesses or the government with patent offices worldwide during 2016, an increase of 8.3 percent over 2015’s filing numbers and the seventh straight year in which saw a year-over-year increase in global patent application filings.

About 1.3 million patent applications were filed with China’s State Intellectual Property Office, a record number of patent applications received by any patent office in a single year. “China’s 2016 patent application total,” reports Brachmann, “is greater than the combined total of patent applications filed in 2016 in the United States (605,571), Japan (318,381), South Korea (208,830) and Europe (159,358).”

Is China playing catch-up with the intention of competing in innovation or merely playing the system with quantify over quality?

On one level, China appears to be taking a similar route to that of Japan in the 1980s, aka “Japan, Inc.,” filing reams of questionable “paper” patents with little intention of enforcing them. But with a greater tolerance for litigation than Japan, and a desire to monetize its IP to prove its value, do not be surprised if China uses its patents more aggressively.

With the Chinese government and it State Intellectual Property Office directly behind filers with financing and incentives, “China, Inc.” is much less a metaphor than a stark reality. (Beijing is has gone so far as to commute prison sentences in exchange for patent filings — this also may be an indication of the prison population.)

12-Fold Increase

“Trademark applications from China have grown more than 12-fold since 2013 and for fiscal 2017 totaled thousands more than the combined filings from Canada, Germany and the U.K.,” reports the Wall Street Journal. “About one in every nine trademark applications reviewed by the U.S. agency is China-based, according to government data.

“Patent and trademark officials say cash incentives could be a factor. As part of a national effort to ramp up intellectual-property ownership, China’s provincial governments are paying citizens hundreds of dollars in Chinese currency for each trademark registered in the U.S.

“Many Chinese applicants list addresses in the southeastern city of Shenzhen, often referred to as the Silicon Valley of China. Shenzhen pays companies and individuals as much as roughly $800 for a U.S. registered trademark, according to the city’s intellectual-property bureau.”

Record High Filings

Worldwide filings for patents, trademarks and industrial designs reached record heights in 2016 amid soaring demand in China, which received more patent applications than the combined total for the United States of America, Japan, the Republic of Korea and the European Patent Office. (WIPO data.)

“From what I hear, China is paying for IP filings,” a long-time China observer told IP CloseUp. “It doesn’t make sense to me but China seems to think by registering more of its trademarks locally and in other nations, it will enhance its IP reputation. While this might work to some degree with patents, trademarks are another matter.”

China’s State Intellectual Property Office (SIPO) received the highest number of patent applications in 2016, a record total of 1.3 million. It was followed by the United States Patent and Trademark Office (USPTO) (605,571), the Japan Patent Office (JPO) (318,381), the Korean Intellectual Property Office (KIPO) (208,830) and the European Patent Office (EPO) (159,358). On a per-capita basis, patent filings in China ranked behind those in Germany, Japan, the Republic of Korea and the U.S.

Josh Gerben, a Washington, D.C., trademark lawyer, said fraudulent trademarks could cause costly delays for other filers if their names are too similar, a grounds for a refusal. “The significant number of fraudulent trademark filings being made from China is disrupting our trademark system.”

The vast majority of the Chinese filers are tiny merchants hawking online goods, such as pocketbooks, binoculars, phone chargers and knit hats, “under an array of sometimes vowel-less brand names.”

Application Leader

Just 35 years ago China did not have an IP office. Today, the nation leads the world in patent and trademark applications, if not quality. It is not hard to imagine what it will look like 30 years from now. U.S. patents still mean a something, especially in bio-pharma, but the the system is less reliable than in the past, both for U.S. and foreign filers. China is the number two filer in the U.S.

WIPO Stats on Patent Application Filings Shows China Continuing to Lead the World

WIPO reports that worldwide filings for PCT patents, trademarks and industrial designs reached record heights amid soaring demand in China, which received more patent applications than the United States, Japan, the Republic of Korea and the European Patent Office.

“China’s rapid growth to become the top filer of international patent applications via WIPO underlines a long-term shift in the locus of innovation towards the East, with Asia-based applicants now accounting for more than half of all PCT applications,” said WIPO Director General Francis Gurry. In 1999.

Leapfrog Gets Dirty

According to a report in the South China Morning Post, “China wants to leapfrog the U.S. [in technology] and it may get dirty.”

The South China Morning Post, the primary English language Hong Kong daily, now owned by Alibaba, one of the largest companies in China, says that “Beijing knows it is too far behind to win the present-day intellectual property race; instead it is preparing to dominate in burgeoning fields such as artificial intelligence and aerospace.”

Image source: WSJ/USPTO; scmp.com/Reuters