China And Patents

Long cited as a major source of patent infringement, it may seem ironic to some that China is poised to become the world’s largest registrant of new patents. According to The Economist (October 16th – 22nd), the Chinese government and major employers have been offering a variety of incentives to encourage innovation through patent registration.

While concluding that the program is in some respects successful, The Economist highlights that there are two classes of patent – ‘invention patents’ and ‘utility-model patents’. The former represent true innovation; the latter are associated more with process. It is the utility-model variety that has flourished. It requires far lower scrutiny and there are suggestions that such rights can simply be bought.

Overall, the trend is interesting. First, adopting a widely accepted patent system is likely to increase pressure from within China for broader compliance with IP rights. Second, what will happen when Chinese patent owners seek to exercise their rights against foreign companies, especially if they take action in courts outside China? A few years from now, it may be the US and European nations that are being accused of failure to honor IP rights!