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    China Business
     Jan 7, 2011

China on patents overdrive
By Raja Murthy

In an extensive campaign significant for the global economy, China is targeting an astounding 2 million domestic patent applications annually by 2015, and wants to be one of the top two patent owning countries by 2020.

The patents hunting master plan, titled "National Patent Development Strategy (2011 - 2020)" follows the "Outline of the National Intellectual Property Strategy", which the Chinese government released in 2008.

Remarkable in its planning and scope of targets for patents, the latest strategy document from China's State Intellectual Property


Office of China (SIPO) is part of a first-of-its-kind intellectual property mission from any government.

The SIPO document follows other recent blueprints in China's great new focus on patents and intellectual property (IP). In 2009, China released an "Action Plan for Implementing National IP Strategy". It had 250 specific measures for various governmental departments.

Another "Action Plan on Intellectual Property Rights Protection" in 2009 listed 170 steps in areas of legislation, enforcement, trials, institutional building, publicity, training and education, international exchanges and cooperation, corporate IP protection and services to right holders.

By 2020, China aims to quadruple both patent applications in foreign countries and domestic patent applications for every one million people. The annual patents transaction financial target is to reach 100 billion yuan (US$15 billion) by 2015.

"Mind-blowing numbers," David J Kappos, director of the United States Patent and Trademark Office was quoted in the New York Times as saying on China's patent strategy for the decade. The US Patent Office gave a translated 15-page copy of the document to the newspaper, which made it available as a link in a related online report on January 1.

To boost domestic patents, China will offer incentives of cash rewards, houses and tax breaks to scientists and innovators. The patent master plan promises infrastructure for quicker filing, examining and granting of patents, funding patent holders, and integrating new patents into the economy.

The rest of the world could hope the new Chinese patent hunger shows greater respect for intellectual property rights in the country, which a US Commerce Ministry advisory has described as having "the most serious counterfeiting problem in world history".

In 2007, the US complained to the World Trade Organization that China lacked legal infrastructure to enforce copyright and trademark protection, following cheap Chinese counterfeit goods flooding US markets.

Any anxiety from China's new patents ambition would be on whether an intellectual property "pirates paradise" can morph into being one the world's biggest patents owners.

Significantly, China's patent proliferation plan conspicuously does not address enhancing patent dispute settling mechanisms, a necessity for a country targeting millions of patents a year.

More nervousness could arise from the China Patent Office strategy document promising to "encourage enterprises to acquire patent rights through innovation on the basis of digesting and absorbing imported patent technology".

China's new patent policy documents assure improving its global intellectual property rights image. Two "Special Campaigns" that China plans to enforce would particularly interest foreign stakeholders: "Campaign Thunderstorm" to fight against patent infringement and counterfeiting and "Campaign Skynet" against patent fraud.

But a pertinent question would be how well China protects non-Chinese patent holders, and how efficiently it prevents hijacking another country's know-how, in the stiff stretch for two million domestic patent applications a year.

Neighboring India, for example, has an unpleasant reason or two to watch closely the Chinese patent drive. In 2010, India foiled a bio-piracy attempt by Chinese pharmaceutical giant Livzon. Livzon was trying to patent "pudina", or the commonly available mint plant, and "kalamegha" (andrographis), as treatment for bird flu or H5N1 avian influenza.

India's Traditional Knowledge Digital Library and the Council of Scientific and Industrial Research stepped in to prove that "pudina" and "kalamegha" have been widely used in India for millennia for treating influenza, epidemic fevers and other ailments. The European Patent Office cancelled its patent to Livzon last June 10.

While Chinese companies patent the properties of plants in other countries, China's domestic law forbids it. Article 5 and Article 25 of the China Patent Law says "methods for the diagnosis or for the treatment of diseases" and "animal and plant varieties" are "unpatentable".

Inconsistencies and contradictions apart, China describes the patent hunt as urgent part of enhancing its "core competitiveness". Economists have mixed opinions about how much increase in patents registration translates to more jobs and growth from innovation.

However, the word "innovation" buzzes in the vocabulary of the world's fastest growing economies such as India and China. Addressing the 98th Indian Science Congress in Chennai on January 3, Indian Prime Minister Manmohan Singh asked his country's scientists to "unleash a decade of innovation".

"Think out of the box," Manmohan Singh urged over 7,000 participating scientists. "Think ahead of the times."

China is doing just that. Its patent proliferation plan includes establishing, by 2015, a national patent data center, five regional and 47 local patent information centers.

A Chinese patents museum is also proposed, perhaps imitating the National Inventors Hall of Fame and Museum in the atrium of the US Patent and Trademark Office building in Alexandria, Virginia.

China seems convinced about the importance of patents. "As a fundamental system to encourage and protect innovation, the patent system is playing an increasingly important role in economic, technological and social development of a country," says the State Intellectual Property Office document that calls the patent drive an “inexorable requirement to deal with fierce international competition".

While growing rapidly in registering patents in foreign countries, China still has considerable catching up to do with US and Japan, the two largest patent-owning nations. The US Patent Office says that out of 167,349 patents for inventions granted in 2009, China owns 1,655 compared with 82,382 US-origin patents and Japan's 35,501.

Out of the total patents the US government issued to foreign nationals and entities from January to December 2009 - for utility, design, plant and re-issue patents - China bagged 2,270, compared with Japan's 38,066, Germany's 10,353, South Korea's 9,566, Taiwan's 7,781 and India's 720. Even so, China had more than quadrupled its patent count, from 402 patents registered with the US Patent Office in 2005.

The Beijing-based State Intellectual Property Office gives far more staggering statistics. It says China received 1,060,632 patent applications from January to November 2010, out of which 957,897 were domestic applicants, with 743,779 patents successfully registered. China plans to double this annual tally of patents in the next five years.

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