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Patent Incentives in China A Changing Focus

May 28, 2019 • GLOBAL ECONOMY, BUSINESS & INNOVATION, China

By Tim Jackson

Like many countries China provides support for its innovative sector. As part of the wider ‘Made in China 2025’ policy to move China’s economy from a manufacturing to an innovation base, this has included direct financial incentives to file for patent protection locally and internationally. Perhaps unsurprisingly, Chinese companies have caught on quickly.

 

Like many countries, China provides support for its innovative sector. This support has been provided in a variety of forms, from financial to legislative, and includes direct financial incentives to file for patent protection. This forms part of the wider Made in China 2025 (MiC2015) policy to move China’s economy from a manufacturing base to an innovation base in 10 years. To achieve this, a fundamental change to the way businesses were run was needed. It was not enough to have access to foreign technology, the businesses needed to want to innovate. Part of that process involved understanding and using the patent systems that were in place to promote innovation. To assist this, Chinese companies were provided with incentives to use those systems. This included the direct financial incentives to file for patent protection locally and internationally.

 

Part of the inefficiency of any incentive system is the potential for it to be abused. This has undoubtedly happened in China, but it has probably been accepted as a necessary risk of promoting a wider use and understanding of the patent system.

Chinese companies caught on quickly. In 2017 CNIPA received a total of 1,381,594 patent applications (invention/design/utility model). Of these, 1,245,709 were from Chinese applicants (90.2%). WIPO reported that in 2018 China filed 53,345 PCT applications (second only to the US at 56,142). To put this in some perspective, in 2007 China only filed 5,470 PCT applications. However you read the numbers, there is no doubt that Chinese companies have learnt to use the patent system. From China’s MiC2025 perspective, the provision of incentives has been a success. It may not have been efficient, but it has been effective. 

Part of the inefficiency of any incentive system is the potential for it to be abused. This has undoubtedly happened in China, but it has probably been accepted as a necessary risk of promoting a wider use and understanding of the patent system. The open nature of the incentives and the acceptance of those risks involved have now both changed.

SIPO (now CNIPA) issued a Notice in September 2018 which directly addressed this issue (http://www.ipraction.gov.cn

This Notice starts by noting that the 19th National Congress of the Communist Party of China had pointed out that China’s economy had shifted from a highspeed growth stage to a high-quality development stage and in line with that said:

• Only granted patents will be funded

• The total amount of funding received by the patent grant recipient shall not be higher than the official fees and the total patent agency fees actually incurred.

• Funding for patent agency fees will only be provided for fees from agents with patent agency qualifications.

• Repeated or multi-level access to subsidies is not allowed.

• Patent agencies and applicants who file abnormal applications will be dealt with seriously.

 
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About the Author

Tim Jackson is a Principal at international IP consultancy Rouse in China and the Head of Patent Strategy and Development. Based in Shanghai, he has worked in the IP field for over 25 years specialising primarily in patents, along with copyright, registered designs and trade marks.

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