How China became king of the global patent landscape

The economy is not the only area in which China has claimed the top spot. The country has finally taken its place as the world’s most prolific patent filer. The eastern giant has long set its sights on becoming the world’s largest owner of intellectual property and in 2013 this goal became a reality to the tune of more than 600,000 patents.

Even more impressive is that Chinese innovation is no longer just a foreign import. In just over a decade, the ratio of domestic to foreign applications has also shifted from just under 50% to nearly 80%. As a result, the Chinese rate of patent growth over a 10-year span dwarfs that of all competitors, as the country increased its overall invention patent applications from 40,000 in 2003 to more than 600,000 in 2013.

With China’s patent production decimating that of all other countries, many are left to wonder how China managed to accomplish this feat, what is next and what it all means for the global innovation landscape. A recent Thomson Reuters study, China’s IQ (Innovation Quotient): Trends in Patenting and the Globalization of Chinese Innovation, answers these questions by identifying how China has achieved this massive output. The report also identifies key areas on which the government has focused its attention and provides insights for IP professionals to develop a set of best practices to capitalise on these trends.

Claiming the throne

China’s rise to patent dominance has long been predicted and its pace of filing within the last three years led many to forecast that it would soon eclipse Japan and even the United States. In 2013 China not only surpassed but dwarfed both countries’ patent output.

It continues to overshadow other countries in published patent applications, publishing 629,612 patents in 2013, over 200,000 more than the United States. This push has been driven by a five-year plan in which the country has set itself the goal of reaching 2 million applications for patents for inventions, utility models and designs by 2015.

Boom driven by pharma and utility patents

The pharmaceutical industry has received the lion’s share of attention as China’s mammoth patent portfolio has taken shape. The country has nearly 80% of the world share in patents for alkaloid/plant extracts and around 60% of the global share of pharmaceutical activity and general patents. However, these filings are held by thousands of individual inventors with a handful of patents each, rather than the types of portfolio maintained by universities or corporate entities which are seen Stateside. As a result, there remains a question mark as to the quality of this intellectual property.

In addition to its 600,00-plus invention patent portfolio, since 2009 China has filed more than 300,000 applications for utility model patents. Virtually non-existent in the United States and rare in Europe, the utility model patent is a less rigorous, less expensive patent which requires no substantive review process and which provides just 10 years of protection (as opposed to 20 for invention patents). It is also the key to claiming first-mover advantage in the lightning-fast Chinese marketplace.

Burgeoning Chinese multinationals

While China as a whole is doing substantially less international patent filing than other regions around the world, a few leaders have emerged in the global patent landscape, including Huawei, ZTE Corp, Shenzhen Huaxing Optoelectronic, Alibaba Group, BOE Technology Group, Lenovo, Tencent, BYD, SMIC and Sany.

Despite their increasing presence in foreign patent offices, overall 80% of China’s patents were still filed domestically in 2013, leaving China’s foreign year-on-year growth flat. The number of inventions filed abroad from China grew from 13,005 in 2008 to 33,222 in 2013. However, overall patenting has grown from 239,663 in 2008 to 629,612 in 2013.

The next five years

Given the progress of the last decade, China’s next steps will be critical, with the Chinese National Patent Development Strategy highlighting the country’s plans through 2020. China will set its sights on seven strategic industries positioned for growth: biotechnology, alternative energy, clean-energy vehicles, energy conservation, high-end equipment manufacturing, broadband infrastructure and high-end semiconductors.

With China asserting itself as one of the pre-eminent players in the IP economy, any global IP strategy must account for the country’s continued foray into the innovation landscape. By getting an insight into these strategic areas of focus, astute firms can gain an advantage into this ultra-competitive emerging market.