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WORLD IP TODAY REPORT
PATENTED IN CHINA – THE PRESENT AND
FUTURE STATE OF INNOVATION IN CHINA
Eve Y. Zhou, Ph.D. and Bob Stembridge
Scientific business of Thomson Reuters
OVERVIEW
• World IP Today latest issue to be published, analyzing
patent activity in China using data drawn from Derwent
World Patents Index (DWPI)
• Report looks at current patent trends and speculates how
the world of patent information will look in five years
• Patent volumes and trends are explored, as well as the
underlying causes of increased innovation in China,
including economic and government policy factors
KEY FINDINGS
• China has become the third largest patent office in the
world in a very short space of time and, if current trends
continue, will dominate the patent information landscape
by 2012
• Analysis of patent volumes over the last five years from the
five major patent offices shows that inventions from China
have been growing at a faster rate than any other region
• Government incentives in place to embrace innovation
• China’s shift from a manufacturing-based economy to a
knowledge-based one requires foreign companies to reexamine their global IP strategies
METHODOLOGY
• Measurable attributes used to track innovation trends:
– Total patent volume
• Two components – domestic filings (basics)
– foreign filings (equivalents)
– Basic patent volume
– Ratio of basics to total volume
TOTAL PATENT VOLUME 2001-2007
AGGREGATE TOTAL PATENT VOLUME 2001-2007
BASIC PATENT VOLUME 2001-2007
AGGREGATE BASIC PATENT VOLUME 2001-2007
TWO YEAR GAP - TOTAL VS BASIC VOLUMES
RATIO OF BASIC TO TOTAL VOLUME
Ratio of Basic to
Total
JP
US
EP
KR
CN
2001
2002
2003
2004
2005
2006
2007 Average
65.5%
49.8%
29.4%
43.2%
29.7%
60.9%
46.6%
24.0%
45.3%
33.6%
59.4%
47.8%
19.2%
46.5%
32.8%
58.2%
43.0%
20.3%
45.6%
30.2%
55.9%
48.6%
20.2%
44.1%
36.4%
54.2%
46.2%
18.1%
43.4%
37.8%
49.5%
47.0%
18.1%
40.0%
40.7%
57.5%
46.8%
20.9%
43.8%
36.0%
FUTURE PREDICTIONS
• Based on average growth rates over the last five years,
projections into the future for patent volumes from the five
major patent offices are given for total patent volume and
basic patent volume
Region
Average Total
Volume Annual
Growth Rate
Average Basic
Volume Annual
Growth Rate
JP
US
EP
KR
CN
2.0%
14.4%
5.6%
3.8%
26.8%
-2.7%
13.0%
-2.4%
2.6%
34.3%
TOTAL PATENT VOLUME PROJECTIONS
Forecast
BASIC PATENT VOLUME PROJECTIONS
Forecast
DOMESTIC VS. FOREIGN PATENT APPLICATIONS
CHINA’S INVENTION PATENT APPLICATIONS OVERSEAS
• Chinese 11th Five Year Plan highlights innovation as a
focus for the economy with the objective to become an
"innovation-oriented" society by 2020
Patent Office
Oversea Invention
Applications by
China in 2007
Increase from
2006 by China
Increase from 2006
by All Applicants
US
4140
9.9%
6.0%
EP
1136
58.0%
3.7%
JP
656
29.9%
3.0%
• File in China first policy can have a serious impact on
foreign companies conducting R&D in China
CHINA’S TECHNOLOGY FOCUS TODAY
CHINA'S WORLDWIDE CONTRIBUTION
Field
Information technology
Worldwide
Worldwide China Records China's
Patent
Growth Rate (2000-2004) Worldwide
Applications (2004 relative to
Share
(2000-2004)
2000)
China’s
Worldwide
Ranking
1,610,938
27.7%
112,766
7%
5th
585,230
12.8%
38,258
8%
4th
556,655
19.5%
46,818
6%
5th
Telecommunications
541,788
12.4%
22,055
9%
5th
Audio-visual technology
478,231
28.3%
33,399
8%
4th
Consumer goods and equipment
441,094
12.1%
5,259
5%
6th
Chemical engineering
245,589
-7.2%
48,761
13%
2nd
Agricultural and food processing,
machinery and apparatus
105,186
4.7%
31,927
5%
7th
Electrical devices, electrical
engineering, electrical energy
Analysis, measurement, control
technology
TECHNOLOGY SHIFT - HISTORICAL PERSPECTIVE
Year
1995
2005
Top Five Fields
Patent Applications
Natural products and polymers
1,854
Other foods, food treatment incl additives
1,209
Fermentation industry
625
Digital Computers
584
Refractories, ceramics, cement incl. mfg.
520
Digital Computers
18,649
Telephone and Data Transmission Systems
12,997
Natural products and polymers
9,146
Fermentation industry
5,334
Computer Peripheral Equipment
4,838
TECHNOLOGY SHIFT - GEOGRAPHIC PERSPECTIVE
Digital computers
Total
Domestic applications
Foreign applications
Domestic Applications %
Foreign applications %
Natural products and polymers
Total
Domestic applications
Foreign applications
Domestic Applications %
Foreign applications %
1995
584
269
315
46%
54%
1995
1,854
1,700
154
91%
9%
2005
19,340
6,355
12,985
33%
67%
2005
9,146
8,195
951
90%
10%
Growth Rate
3212%
2262%
4022%
Growth Rate
393%
382%
518%
GOVERNMENTAL POLICIES AND
GOVERNMENT’S ROLE IN INNOVATION
• R&D Budget
– Growth planned from 1.4% in 2006 to 2.5% of GDP by 2020
– GDP growth targets of 7.5% p.a. to 2010, then 7.0% to 2020
– Represents a 440% increase in R&D funding by 2020
• Tax and Financing
– Tax deductions for R&D expenses
– Increased government-backed lending
– Discounted interest rates for R&D investment
• Indigenous Innovation and Technology Standard
– Royalty payments for local inventors
– Particularly applied in telecommunication and
electronics industries
GOVERNMENTAL POLICIES AND
GOVERNMENT’S ROLE IN INNOVATION
• Government’s role in academia
and enterprise
– Chinese academic sector contributes a
significantly higher proportion of patent
applications to the national total
compared to many other countries
• Monetary Incentive for domestic
inventors
– Additional subsidies and fee reimbursements
available
Percentage of patents
from Academia
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
China
Japan
U.S.
Korea
PATENT QUANTITY VS. QUALITY
• Subsidies are a factor driving rapid growth in patent
applications
• Levels of patent protection in China
– Invention patents
– Utility model patents
– Design patents
• Quality initiatives are on-going in the Chinese Patent Office
(SIPO)
• Quality as measured by success rate of granted patents
yet to be determined over time
CONCLUSIONS
• Foreign companies conducting business in China
– Impact of law changes on IP strategies
– Challenge of recognising quality innovation
• Chinese companies and institutions
– Need for awareness of international prior art and patent positions
• Chinese government agencies and quasi-governmental
organizations
– Identification of technology gaps and potential partners to help fill them
• Information industry
– Challenges posed by huge and rapidly growing volumes of nonRoman character patent information