WIPO has published its World Intellectual Property Indicators 2016 report, which details a healthy growth of intellectual property filings in 2015. Overall, the statistics demonstrate a positive trend in global innovation for the year, with patent filings increasing by 7.8% and trade mark filings increasing by a staggering 15.3%.
Driving this strong growth were filings in China, which in 2015 became the first country to receive over one million patent filings in a calendar year – 1,101,864 applications, to be exact. This was up 18.7% from the previous year, and accounted for 84% of the total growth of global patent filings. Its closest rival, the United States, received just over half this number of patent filings, with 589,410 filings. In third place, Japan received 318,721 patent filings. To provide some perspective, Australia received 28,605 patent filings in 2015.
However, around 88% of the 2015 patent filings in China were local filings, meaning 968,252 of those patent filings were, in fact, filed by Chinese applicants. Based on the data published in the report, it is evident that in 2015, non-Chinese applicants still viewed the United States as the premiere global market.
The question remains whether the United States will continue to dominate international patent filings, or whether we will see a swing toward applicants favouring the Chinese market and seeking IP protection in China.
What is driving IP growth in China?
With China’s economy surging ahead, its new “millionaire” patent filing status is perhaps of little surprise. An increasingly competitive market and accompanying R&D investment in China resulted in greater innovation and the ensuing need to seek IP protection. Furthermore, various Chinese government incentives to support local patent filings are believed to have significantly contributed to the surge in Chinese local patent filings, which include direct subsidies on filing fees and financial rewards for granted patents.
Significant tax deductions are also promoting innovation in China. For example, Chinese enterprises that own the IP rights of the technology used in its products and services in China can receive High and New-Technology Enterprise (HTNE) status, which affords a 10% corporate income tax deduction. These policies, and the continual increase in more advanced technologies being harvested in China, have promoted patent filings in China.
Are the one million patent filings in China representative of the international market?
While the number of Chinese patent filings in 2015 is impressive, a closer look at the statistics indicates that the increase in patent filings in China is unlikely to reflect the filing habits of international applicants. This is evidenced by only about 12% (133,612) of Chinese patent filings being filed by international applicants.
Reviewing the published data for patent filings at the top 25 Patent Offices in 2015, applicants of each listed country, when looking to file internationally, still favoured the United States when seeking patent protection. That is, second to its own Patent Office, applicants in 2015 statistically favoured patent protection in the United States. This serves as a strong indication that globally, applicants generally still view the United States as the most attractive international market.
For example, as seen in Table 1 (compiled based on data published in the report), 45,708 patent filings originating from the United Kingdom were made at the top 25 Patent Offices in 2015, of which 33% were local filings, 29% were made in the United States, and just 5% were made in China.
Similarly, and despite being a close neighbour of China, 451,445 patent filings originating from Japan were made at the top 25 Patent Offices in 2015, of which 57% were local filings, 19% were made in the United States, and just 9% were made in China.
It would appear that the number of local patent filings in China greatly skews the overall pattern of global filings, and indeed, the United States is still viewed as the preferred international market.
Table 1: Patent filings at the top 25 Patent Offices in 2015, compiled based on data published in the World Intellectual Property Indicators 2016 report
Interestingly, of those originating from China, the number of patent filings made in the United States has remained essentially constant from 2013 to 2015, sitting at around 2% of the total number of Chinese originating patent filings in the top 25 Patent Offices.
Of further note, the significant increase in local filings in China may be responsible for an increase in Chinese originating patent filings in the United States, accounting for 3% of the total filings in the United States in 2013 compared to 4% in 2015.
So far, and despite the economic growth experienced by China in the preceding years, the data indicates only a slight, and likely non-significant, increase in Australian originating patent filings being made in China. It remains to be seen whether patent filings in China originating in Australia, and indeed those originating in other countries, will begin to reflect the surge in Chinese economic growth.
Significance of China’s increased patent activity
It remains uncertain what such an increase in patent filing activity may have on the quality of individual applications. While the Chinese Patent Office (SIPO) will no doubt have to increase its capacity to handle the substantive examination of the 1.1 million patent filings, the rigour of examining such a large number may potentially result in a decrease in quality of granted Chinese patents. With no metric currently available to compare the quality of a given patent in the different jurisdictions, indicators such as the length of Chinese originating specifications compared to foreign drafted specifications may point to differences in the level of disclosure and value of these inventions. For example, a Chinese granted patent including only one example may arguably not adequately support the invention in so far as a European invention may require support from numerous examples.
Nevertheless, the vast number of new Chinese patents poses an infringement risk for international companies wishing to launch a commercial venture or for those international companies that are currently active in the Chinese market. In addition, the frequency of freedom to operate searches will likely need to increase, no matter what the perceived quality of these local Chinese applications may be. Such a thicket of new Chinese patent applications presents a valuable resource for published prior art documents, which will facilitate examination and third party oppositions, though may also prove a valuable source of technical information to spur innovation in the community. This is, of course, the altruistic purpose of the patent system.
It is inevitable that the large number of local filings in China will result in an increase in the development of China’s modern patent system, and will additionally play a significant role towards the advancement of global innovation.
The question remains, given the ongoing economic growth in China, will we see a shift in the number of international applicants preferentially filing in China, as opposed to the United States?
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