February 12, 2011

China on the rise

Statistics released from WIPO on 9 February shows that China is rapidly speeding up in its patenting activities. This is both encouraging and at the same time worrisome for western companies.

The total number of new PCT filings totaled at about 162,900 in 2010, which is a 5% increase from 2009. It is positive to see that what possible cutbacks the recent downturn did put on the filings might now be changing. That said, the filings originating from the US did go down ever so slightly together with United Kingdom.

On the positive side, Germany, the third largest PCT filer had an increase with just over 2%. The country also has some of the largest entities filing through the PCT system. Robert Bosch ranked 6th and Siemens 12th.

The graph shows the five countries with the highest number of PCT applications filed in 2010. The five, USA, Japan, Germany, China, Korea might not come as a surprise, and they also account for 71% of all new filings, as shown in the graph further down.

Sweden rank as number 10 on the list, but has taken a serious cutback in number of new filings with 12% down from last year. Mathias Loqvist at Awapatent says to the Swedish newspaper DN that this might be because of some companies file more qualitative patents. Sure, this could explain some of it, but I find it hard to see it account for all. He also adds the explanation that new ownership structures also could have effect on where the patent is initially filed.

Despite the relatively low filing rate for a country of China’s size it is interesting to see that they have increased their PCT filings with whopping 56% over the last year. A large part of the explanation can be attributed to the two telecoms players ZTE Corp and Huawei ranking up as the second and fourth largest filers in the world.

The future

The rise of the Asian, especially Chinese, filers is probably not a one off occurrence and I believe we will see a further rapid increase in new patent filings originating from China and Korea. The telecoms actors which have appeared on the world scene over the last years to challenge the existing dominant players have been exposed to the patent risks and will probably be even more so in the future. They are very much in the same situation as Nokia was in the mid 90’s when they really started to understand the power of patents.

To be able to be competitive and not needing to stack up a too hefty royalty on their products the new players need patents they can counter with themselves to reach cross-licenses. I do believe that we will see a totally different balance of filings in just 5 years, though they still have not yet surpassed the US economy.

Johan Orneblad
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  1. China's recent gains in IP tend to make me think that the US's outsourcing trend has come back to bite us. It seems many US companies that decided to save a few dollars by outsourcing ended up shooting themselves in the foot -- by outsourcing (and often failing to adequately protect their patents and other IP), they armed companies in China and elsewhere with the knowledge and skills to become the US's biggest marketplace competitors. In this sense, the decision to outsource too often seems to be penny-wise and pound-foolish. I certainly hope that one day corporate executives will wake up to the scourge of foreign IP theft and realize that some of their outsourcing decisions harm not only American workers, but also themselves.

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