• Jeremy Rutman

The Red Wave

Updated: Nov 19, 2020

The WIPO issued a report in April 2020 [1], where amongst other findings it was shown that China had surpassed the rest of the world in terms of patent grants. In fact this seems to have occurred earlier than 2019 as the report states:

This is true whether you look at grants by filing office (where the patent was submitted to, above) or by country of origin (where the applicant resides, below).

Both show that as early as 2014-2015 China had surpassed the US and Japan (the next largest patent grantees) in terms of grants. But the trend actually began much earlier, which we can tell by looking at the number of applications instead of granted patents. The patent grants we are seeing today are a result of applications made years ago (the delay being on the order of 2-5 years).

China surpassed the US and Japan in terms of applications already back in 2011. The trend has since continued unabated, with China seeing a steep rise in total filings to their patent office, as well as the number of Chinese applicants for patents in and out of China. Both the number of applications by filing office [2](below)

PCT and direct patent pplications by filing office

and the number of applications by applicant origin country over time [3](below) reflect the same trend - the red wave for both grants and applications continues while both Japan and the US, the next largest sources of invention, have hit plateaus.

Patent applications by applicant origin country

China again proceeds along a more-or-less exponential curve, while the US has plateaued and Japan declines.

Due to the 3-5 year delay between application and grant, we can expect to see China reach three times the US grant rate in 2021-2022, even if current trends do not continue.

Its interesting to see how much of the patents are being filed at home vs. abroad. As you can tell from the following two graphs, the total filing by residents are far higher than the filings abroad for China, while for the US there are about as many filings abroad as there are at home.

A lot of the activity in China appears to come from government subsidides, which are offered to cover official fees, attorney fees, tax breaks and other financial support as well as rewards for use of patents and utility models.

Japan and Korea also offered similar subsidies historically. A number of companies took advantage of the policy, applying for a large quantity of 'junk patents' for the subsidies.

Realizing that they were being taken advantage of, the China National Intellectual Property Administration (CNIPA) issued a notice for monitoring and investigation on subsidies in 2019 including the following points:

  1. No subsidies for domestic patent applications that are not granted.

  2. Subsidies not to exceed the total of official fees and the attorney's fees.

  3. Repeated subsidy at multiple levels of government to be eliminated

  4. Fines and other measures against filers of junk patents (including attorney firms).

Furthermore the subsidies for utility models ('second tier' patents available in some countries, which have shorter terms and less stringent requirements) and design applications are eliminated, and the subsidy for standard patent applications are no greater than 2,500 RMB (around 350 USD) provided that the invention patent application is granted - an amount that is almost half as it was used to be.

On the other hand in order to encourage Chinese applicants to file overseas patents, the overseas patents submitted through either PCT national phase or Paris Convention routes may be subsidized for a maximum of 50,000 RMB (around 7100 USD) and 40,000 RMB (around 5700 USD), respectively, and each invention can be subsidized in a maximum of 5 overseas countries/territories.

[1] https://www.wipo.int/pressroom/en/articles/2020/article_0005.html

[2],[3] statistics gleaned from https://www3.wipo.int/ipstats/pmhindex.htm?tab=pct

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