Life after the Chinese Patent Tsunami

Gert Frackenpohl, Lighthouse IP

II-PIC, Bangalore, 2.-3. Nov. 2017

CONTENT

– The Chinese Patent Tsunami

– Deeper look into the volumes

– Challenges (fake products, China and IP)

- Innovation opportunities

- Innovation in the global landscape

- So now what

The Chinese Patent Tsunami

2017

0

200000

400000

600000

800000

1000000

1200000

1 2 3 4 5 6 7 8 9 10 11 12 13

Chinese Patent Publication volume 2005-2016

From a small authority that started in 1985 publishing patents to one of the leading publishing Offices in 2016:

- In 1990 the Chinese patent office published 9,739 patent applications

- In 2016 the Chinese patent office published 1,047,553 patent applications

Chinese development

IP applications / WorldWIPO Statistics Database

IP applications / WorldWIPO Statistics Database

Patent applications / 10 POWIPO Statistics Database

Patent applications / TOP 11WIPO Statistics Database

Utility Model applications / 9 POWIPO Statistics Database

Utility Model applications / TOP 10WIPO Statistics Database

IP applications / WorldNon- / ResidentsWIPO Statistics Database

Patent applications / WorldDirect / PCTWIPO Statistics Database

Chinese patent publications

0

200000

400000

600000

800000

1000000

1200000

1 2 3 4 5 6 7 8 9 10 11 12 13

Chinese Patent Publication volume 2005-2016

Non- / ResidentWIPO Statistics Database

Resident and abroadWIPO Statistics Database

Chinese applicants abroad

USA EPO

Japan

India

Korea

AustraliaBrazil

WIPO Statistics Database

Applicant’s originWIPO Statistics Database

CN

US

JP

Applicant’s origin from abroadWIPO Statistics Database

JP

USDE

KR

Applicant’s origin via PCTWIPO Statistics Database

JP

DE

US

KR

– Politically driven• Country wanted to move from being the worlds factory

- Business support who files patents

- Law changed for international filings, obligatory to first file in China

- World only looks at quantity not at quality- are all patents really innovative

- Financial Times writes that China is one of the most innovative countries in the world

- Based on volume China is the # 1 in the world

- Many patents do not get filed outside China

- No innovation leadership, but developing

Chinese background

CHALLENGES (fake products, China and IP)

– Approximately 20% of the Chinese GDP is directly or indirectly depending on fake products• Sometimes done and has to be accepted

– Volkswagen partner setup a new factory to create exact copies of DSG gearboxes

– Unemployment would be an issue

- Courts still benefit Chinese companies- Example of North Face

- Fined RMB 50,000 this is EUR 6,500

- Stop production in 6 months

- However, changes are coming

- Judges being trained by German IP Judges

- Slowly cultural awareness of the importance of IP

CHINESE ALWAYS DO SOMETHING FOR A REASON

– Example – Investment in the port of Piraeus, Greece

• First and closest port of entry

• EU tax and customs zone

• No checks

• Within 12 months EU flooded with fake products

– China will continue to develop using IP as a way of protecting its change

– Additionally this will make it more challenging for foreign companies to enter the Chinese market

– However, if you want to go into China, you need to focus on IP

INNOVATION LINKED TO GDP DEVELOPMENT (source WIPO)

INNOVATION LINKED TO GDP DEVELOPMENT (source WIPO)

SO NOT COMPLETELY INFLATED

– German GDP went from 3091 in 2001 to 3586 in 2015

– German patents went from 137,000 in 2001 to 175,000 in 2015

– China GDP went from 5029 in 2001 to 18,374 in 2015

– China patents went from 31,000 in 2001 to 1 million in 2015

- Ratio for both countries is approx. 20 GDP/Patents

INNOVATION OPPORTUNITIES

– Principle of a patent family

– If Chinese patents are not filed elsewhere they can be used without limitation

- Protection is not possible

- Also applies to all other countries

- New ideas should be monitored, and may create simple ways to innovate

- Vast collection of ideas described in detail that can be applied

- Look at patents in other countries, before thinking of exporting

INNOVATION IN THE GLOBAL IP LANDSCAPE

– Many SME’s not aware of IP rights (and obligations)

– When a company states “Patent Pending”

- Even foreign companies protect innovation in your home market

- If you manufacture you should be aware and monitor what is being protected

- If you feel an application is trying to protect your product, you need to object

- If companies file patents in other markets protecting your (non-patented) innovations, you should still consider objecting

SO NOW WHAT?

– Chinese Tsunami of patent publications did not change the IP world in general and is going on

– Innovation can still be claimed

– Patents lead to patents

– Even if you are a small business enterprise only operating in a local market, still look at patents (even for trading companies)

- Secure legal position in own country (are you really licensing something?)

- Setup a (simple) patent strategy

- Companies with strong patent focus (strategically) are statistically more successful

QUESTIONS?

• Thank you very much for your attention

• Please visit the Lighthouse IP booth in the exhibition area