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Chinese Patent Vs Innovation Dilemma

Chinese Patent Vs Innovation Dilemma

Known primarily for creating counterfeits and imitations, China has never been taken seriously with respect to inventions and innovations. However, its phenomenal contribution towards global economic development has finally motivated the Chinese government to take concrete steps in creating remedies to make up for this deficiency. A document worth referring to here is the second report published by Thomson Reuters which dealt with patent related developments in the nation. It forecasted that China would leave America and Japan behind in the number of patent filings by 2011. Although America still emerges as a clear winner in patent filing activities registered through 2010, China is registering a growth while America is on a marked downslide. The number of patent applications filed by China reached the 1.2 million mark in 2010, which is a clear growth of 56% from the previous year just as America recorded a drop for the 3rd year in a row.

The forecast put forth by Thomson Reuters is completely in sync with the National Patent Develop Strategy (2011-2020) published by the State Intellectual Property Office of the People’s Republic of China, published in November 2010. It primarily dealt with the tactics adopted by China to strengthen its patent strategy. The projected aim is to hit the 2 million patent filing mark every year by 2015, doubling international and domestic applications. The strategy document deals with some of the means to be incorporated for achieving this in the long run.

The prominent ones include increasing the rate of patent examination and the efficiency of granting approvals by reducing waiting periods to as low as three months and almost doubling the number of examiners engaged in the job to about 9000. Besides, the benefits associated with utilization of patents and protection of intellectual property rights would be enhanced by bringing about suitable improvements in the patent regulations and legal bindings. The strategy surely seems to be an ambitious one, especially when considering the fact that China did not have any legal patent system until as recently as 1985! This has given way to skepticism towards this patent explosion that is likely to create a huge discrepancy between quality and quantity of patents.

To begin with, Chinese patents can be categorized into three major types. There are design patents, invention patents and utility model patents. Chinese patent regulations support the practice of double patenting. Hence, applicants can simultaneously apply for a utility model patent and an invention patent. The former protects the structure and shape related features of a product and typically does not require any extensive examination. Therefore, it is granted practically in no time. It is often used as a place holder prior to the receipt of the invention patent which would typically require a lot of time. However, one must abandon the utility model patent before the invention patent can be granted for the same item or product. Typically, utility model patents would be utilized to prevent the usage of new ideas to transform existing products or technologies. Therefore, the rise in the number of patent filings could actually be an artificial inflation. Some three years ago, the standard for patent filings in China was reportedly so low that even the age old wheel could pass through without much of a hindrance. However, several amendments have been included in the law since that time for raising the quality bar for Chinese patents so that they can compete with international standards. However, evidences of a truly original innovation burst of technical origin are yet to surface.

Next, we have the usage of state funded incentives for promoting patent filing, including residence permits, cash bonuses, fee waivers, tenure, awarding of government contracts and tax rebates or breaks. These inducements are further percolating to companies, then to the employees working in them and subsequently to workers engaged in the patent office who are paid extra for approving more patents. Although these moves are adequately justified in increasing patent filing numbers aggressively, this is somewhat like an artificial inflation that’s painting an unreal picture of China. The crux of the problem lies in the fact that the incentives are basically granted for patents and not for true innovations.

The strategy, however, suggests that China is aware of all such concerns and is putting in relentless efforts for improving the quality of patents while enhancing the quality and efficiency of the examination process. They are probably more inclined towards establishing themselves as market leaders in numbers first and then go on to refining the quality. Although there is a possibility that China might eventually end up with its load of unusable patents, some do feel that they are indeed on the right track of innovation. A landmark development in this regard is that Chinese technological companies have upped their research and development expenditures from 25% to almost 45%, through 2009 even as American firms continued to make cost compromises in similar domains.

Note: The preceding is a summary of an article found though our research, and is provided here with editorial comment for members only. Please see the full article at the following link for full original content – http://www.iposgoode.ca

The New Asia Innovation Team

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