Why China Should Top Your List of Countries for Foreign Patent Filing

Bruce D. Sunstein

By Bruce Sunstein. A member of our Patent Practice Group

June 2017 IP Update

China’s revamped patent system and its giant economy have now put China front and center on the patent map—even though, until recently, China was an intellectual property backwater, off of most radar screens as a place for filing patents.

This picture has changed. In 2015, more than 1 million patent applications were filed in China,[i] whereas the 2015 total for patent filings in the United States was fewer than 600,000.[ii] In 2015, China issued 359,316 patents,[iii] whereas the US issued 298,407 utility patents.[iv] In that same year the Chinese courts accepted more than 109,000 new IP cases, of which 11,607 were civil patent cases.[v] By contrast, 5,830 patent litigations were launched in the U.S.[vi]

In 2014, China established specialized IP courts in Beijing, Shanghai and Guangzhou.[vii] Chinese courts issue injunctions over 99% of the time to the winning parties,[viii] whereas in the United States, the Supreme Court’s 2006 eBay decision[ix] has reduced the rate at which injunctive relief is granted to less than 75%.[x] In Beijing IP court patent litigations, foreign plaintiffs have won about 81% of the time, a success rate that is similar to that of domestic plaintiffs.[xi] In addition to the ready availability of injunctive relief, the prospect of serious damages is now real in China.  The Beijing IP court awarded $7.2 million in December 2016 to Watchdata Data Systems Co. Ltd. in an infringement action brought against Hengbao Co. Ltd. [xii]

China’s new focus on intellectual property protection is not altruistic, but is motivated by China’s desire to foster the advancement of its science and technology.  Nonetheless, this emphasis has also benefited foreign companies.[xiii]

Moreover, the size of China’s economy and its role as a major exporter of goods make China’s patent system even more important. By some measures, China’s current gross domestic product (GDP) has reached approximately $11 trillion. (Other measures make it even larger.) China’s economy stands second only to that of the United States, with a GDP of about $19 trillion. By comparison, the GDP of the entire European Union, made up of approximately 28 member countries, stands at approximately $16 trillion.

On May 18, 2017, at a meeting of the American Intellectual Property Law Association, Roger Martin, Chief IP Counsel of the global juggernaut Qualcomm, proclaimed the policy of Qualcomm to file a Chinese counterpart application for every application Qualcomm files in the United States.

Qualcomm’s practice reflects the new reality, one that some of our own clients have begun to appreciate.

China now has a world-class patent system and its patents are enforced. If you are considering filing patent applications outside the United States, you should always give China serious consideration.

 

[i] See Wayne Sobon, “The surprising rise of China as IP powerhouse,” Tech Crunch, posted April 11, 2017, available at https://techcrunch.com/2017/04/11/the-surprising-rise-of-china-as-ip-powerhouse/; WIPO Press Release November 23, 2016, available at http://www.wipo.int/pressroom/en/articles/2016/article_0017.html
[ii] Sobon, id., and USPTO statistics available at https://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm.
[iii] WIPO, id.
[iv] USPTO, id.
[v] Sobon, id.; Eugene Low, Skip Fisher and Deanna Wong, Hogan Lovells, “The big picture on IP litigation in China,” LimeGreen IP News, posted May 27, 2016, available at http://www.limegreenipnews.com/2016/05/the-big-picture-on-ip-litigation-in-china/.
[vi] Sobon, id.; Lex Machina 2015 End-of-Year Trends, available at https://lexmachina.com/lex-machina-2015-end-of-year-trends/
[vii] Erick Robinson, “Defending a patent case in the brave new world of Chinese patent litigation,” Intellectual Asset Management (issue 81) January/February 2017, page 9.
[viii] Robinson, id.
[ix] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
[x] Christopher Seaman, “Permanent Injunctions in Patent Litigation After eBay:  An Empirical Study”, 101 Iowa L. Rev. 1949, 1982 (2016), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2632834
[xi] Sobon, id.; see also Robinson, id.
[xii] Matthew Bultman, “China Becoming More Attractive For Foreign Patent Owners,” Law360, April 19, 2017, available at https://www.law360.com/articles/914779/print?section=ip.
[xiii] Robinson, id.; Bultman, id.