China Wants Legally-Binding Climate Agreement, But Has Many Demands

The degradation of the environment is China's biggest challenge. Remember March of this year (2011), when the Chinese government released its 12th Five-Year Plan it emphasised sustainable economic growth and came up with policy objectives and quantitative targets that foster green technology. It also announced that there must be a 16 percent cut in energy consumption per unit of GDP by 2015, see here. 600 billion dollar is projected to, among other sectors green energy, environmental protection and innovation, read here. Great, so the Chinese government finally seems to take the environment serious? Not so fast. Let us see what China's role will be within the Conference of the Parties (COP 17). This United Nations Framework Convention on Climate Change is taking place from 28 November to 9 December 2011 in Durban, South Africa, to discuss how to stop global warming. 

China might be willing to sign a climate deal...
Do not hold your breath.
On second thought, 
you'd better hold your breath.
Photo: Danny Friedmann

The economic troubles in Europe and the U.S. are probably not conducive to get an extension of the non-binding Kyoto commitments. India and South Africa are repeating the argument that developing countries are exempt from obligations to cut carbon dioxide, because they cannot afford to jeopardise economic growth for more environmentally responsible production. However, China seems open for a legally binding agreement for the period starting in 2020, according Marlow Hood's Agence France Presse article, under certain conditions: 

- China wants the Kyoto commitments to become enforceable.

- European Union and "other countries" sign on to a new round of enforceable pledges under Kyoto.

- Countries need to invest in a 30 billion U.S. dollar "Fast start" climate fund for poorer countries for the period 2010-2012. 

- Countries need to invest in a 100 billion U.S. dollar per year Green Climate Fund by 2020.

- The process started during the 2009 Copenhagen summit and continued in Cancun, Mexico must move forward. So, deals must be made about technology transfer, adaptation, helping vulnerable nations cope with impacts, and new rules for verifying that carbon-cutting promises are kept.

- The effects of China's carbon-cutting measures can be reviewed as of 2013. And to keep some diplomatic wiggle room China expects that "established principles in which historical responsibility for creating the problem of climate change, and the respective capacity of countries to fight it, are respected."

That is quite a wish list. And making your commitment or obligation contingent on the fulfillment of all these conditions is a recipe for failure. However, each condition seems reasonable. But the real question of course is what China is willing to agree upon. Mr Xie did not say anything about that. From a diplomatic point of view that is probably wise. We will see what kind of results will pan out of this conference. 

Follow the conference live, here.

Green Innovation Should Be Patent Free Zone?

Since the environment is such a big problem, should not green technology be free of patents to that technology transfer and absorption goes fastest. I have not read any studies on this particular topic, but it probably will hold back investments of some companies in new green innovation. Patents can stifle innovation when licenses are too expensive (and then there are compulsory licenses, which have never been used in China, yet), but they can also be an incentive for other companies to invent around it, so that newer and sometimes better technology will be invented.

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What R&D Is Being Done And Where In China: An Inventorisation Of Science Parks

Richard Jun Lin, Xavier Xie (analysers), Zhuo Zhang, Jerold Wang and Chris Hartshorn (data contributors) have worked on a project to inventorise China's 1,531 provincial and national-level industry parks: 'Seeing the Forest and the Trees: Navigating China’s Industry Park Innovation Engine'. It "reveals the need for a specific focus on 87 university science parks and tough decisions on how broadly efforts should focus geographically." Read more here.

It would be interesting to know what the IP climate is in all of these places. Are there schemes that encourage/subsidise patents and is there attention to the protection and enforcement of IPRs?

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IPO Candidate Tudou Is Building Its Patent Portfolio For Future Growth, Promoting Chinese Creativity

With 90.1 million registered users, 

Tudou 土豆, which means potato, 

is no small potato. 

The site for investors 'Seeking Alpha' gives an analysis of the Chinese online video site Tudou.com 土豆网 (for which they use the symbol TUDO) in relation to its competitors, before it is going for an Initial Public Offering (IPO) at NASDAQ Stock Exchange in the US. The IPO was planned last November, but because of a quarrel between the founder and his ex-wife it was delayed. 

For the valuation of what a company is worth, and to valuate the price per share, one should take into account the IP portfolio of a firm. In case of technology firms such as this online video company patents play an extremely important role. They can be used for defensive or offensive purposes. Seeking Alpha took a  look at the intellectual property of the IPO candidate: "INTELLECTUAL PROPERTY -- TUDO owns one utility model patent in China relating to a unique search engine system, and is in the process of applying for 32 additional patents to protect core technologies with respect to online video distribution and search."

Read the analysis here.

Effective measure against copyright infringement: create copyrighted works
Huang Ying has an interesting China Daily article about how Tudou is supporting the creation of Chinese films and TV drama, read it here.

UPDATE: August 19, 2011 Can NASDAQ Fund Chinese Piracy?

Tom Cheredar of Venture Beat gives the update on the Tudou IPO: they raised 174 million US dollar at the NASDAQ, read more here.
Greg Pilarowski wrote on July 27, 2011 also for Venture Beat about how a possible Xunlei IPO could lead that Chinese piracy would be funded via NASDAQ, read here.

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Must Read Monday: Kan Zu On The Art Of Patent Enforcement

Medium shifting from Sun Tzu to Kan Zu:
patents instead of arms,
LED screen instead of bamboo

Sun Tzu wrote about the Art of War. Competition between companies is a kind of war, whereby the only potential fatality is the bankruptcy of a company. The offensive and defensive weaponry are patents. Kan Zu, attorney at Unitalen, wrote as a modern day Sun Tzu a highly interesting treatise on patents: 'The Influence of New Patent Law and Interpretation on Patent Enforcement in China'. It deals with double patenting, design patents, claim construction and interpretation, doctrine of equivalents and file wrapper estoppel, means-plus-function claims, prior art defenses, declaratory judgments and remedies.


Prepare for battle, read Kan Zu's article here.

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Sobering Statistics Put China's Innovation Into Perspective

In the graphical perspective,
things become smaller if the distance
from the observer increases

Professor Anil Gupta and Haiyan Wang, writers of the book 'Getting China and India right', put China's innovation statistics into perspective.

Patent filings in 2008

• U.S.A. 400,769 filings
• Japan 502,054 filings
• China 203,481 filings

Gupta and Wang have a point when they argue that the Chinese inventions patented outside China are a more objective measure than the ones registered by State Intellectual Property Office (SIPO).
The most compelling statistic is the number for triadic patents or triadic patent families (patents that origin from one country but that are patented by the European Patent Office, United States Patent and Trademark Office and the Japan Patent Office).

Triadic patent families according to Organization for Economic Cooperation and Development (OECD) in 2008

• Europe 14,525 filings
• U.S.A. 14,399 filings
• Japan 13,446 filings
• China 473 filings

See the Compendium on Patent Statistics for 2008 here (pdf) on page 6. 

However, I would argue that these patent filings are not the best measure. Patent registrations would be a far more better indication of patent quality. 

Professor Gupta and Mr Wang wrote: in 2010 China accounted for

• 20% of the world's population
• 9% of the world's GDP
• 12% of the world's R&D expenditure
• 1% of the patent filings with or patents granted by any of the leading patent offices outside China. 
• 50 % of the China-origin patents were granted to subsidiaries of foreign multinationals   

Professor Gupta's and Mr Wang's Wall Street Journal article 'China's Innovation Is A Paper Tiger' can be read here and should not be confused with the title of my thesis 'Paper Tiger Or Roaring Dragon, China's TRIPs Implementations and Enforcement'.

UPDATE August 2, 2011: 
Joff Wild, editor of Intellectual Asset Management gives an update since 2008. In short: the growth in the number of China's triadic patent filings/grants paints a rosy picture. However China's innovation prospect is much bleaker. On this I concur with Mr Wild. Read more about the relation between innovation and intellectual property and innovation and censorship here.

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Joint-venture with technology transfer no panacea for market access to China's aviation industry

China's 12th Five-Year Plan (2011-2015) states that the general aviation industry's development will be
promoted, reform the airspace management system as well as increase the efficiency of the allocation and utilization of airspace resources. Bright sky for China's aviation industry. But what about foreign aviation companies, will they be able to takeoff or will they stay grounded.

Like all governments the Chinese government is giving its national aircraft corporation, the Commercial Aircraft Corporation of China, Ltd. (COMAC), support. The government made it obligatory for foreign aviation companies that want to supply to China to partner with COMAC and establish joint-ventures to get technology transfer via the ARJ21 and C919 projects. No company, including Western companies wants to give its intellectual property away without compensation. Therefore those Western companies that agreed to the terms of technology transfer for the C919 did so with old versions of their technology.

飞机

Cliff, Ohlandt and Yang write in their report 'Ready for Takeoff' sponsored by the U.S.-China Economic and Security Review (USCC) that joint ventures per se do not guarantee effective market access, but that the inverse, “those that do not provide access to coveted technologies or—even more problematically—are perceived to compete against domestic producers are not likely to receive preferential treatment and may indeed face severe obstacles.”

Read Roger Cliff, Chad J.R. Ohlandt, David Yang, Ready for Takeoff, China's Advancing Aerospace
Industry RAND National Security Research Division, sponsored by the U.S.-China Economic and
Security Review Commission, 2011, available here.

Wonderful characters 飞 fei 机 ji mean literally "bird machine" = airplane

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Reptilian reportage

IP Komodo may have a forked tongue, but he speaks the IP truth! He has trawled this weeks China IP news and the hottest topic appears to be sightings of IP Dragon, with fiery tongue, sighted in the vicinity and very unamused by IP Komodo's blogjacking. IP Komodo may need to beat a hasty return to Indonesia.

IP Trading a disappointment. Quanzhou Trademark Trade Center in Fujian has more than 5,000 trademarks on its books for sale, but "only 30 deals have been completed, despite the fact that many people have shown interest" Holding out for high prices, most trademark owners are declining offers. The news doesn’t tell us what is for sale.

Dilution difficulties. Swiss watchmaker OMEGA has sought to cancel a local Shenzhen company’s AOMEGA mark for cosmetics on the grounds of similarity, but lost at the Trademark Review and Adjudication Board (TRAB). OMEGA has appealed to the courts. This is one of a constant succession of such well known mark dissimilar goods cases.

China patent stats increase! Domestic applications for invention patents increased 27.9 percent in 2010 from 2009, said a senior patent official here Tuesday. SIPO received more than 391,000 applications for invention patents in 2010, the world's second most, said He Hua, State Intellectual Property Office deputy director, at a Nanjing meeting of heads of local intellectual property rights offices. 74.9 percent were submitted by domestic applicants, he said.

Guest post by IP Komodo Dragon

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China’s global patent docket

The People's Daily reports that in 2010 China filed 6,552 invention patent applications at the USPTO, 2,049 at the European Patent Office, 1,001 at the Japan Patent Office and 496 at the Korean Intellectual Property Office. IP Komodo had some research done a while back on Asian emerging markets which showed that China was consistently filing over 6,000 PCTs a year now. By comparison, India is around half that - in 2008 Indian inventors filed 2,879 patents. More detailed data on the comparatively much lower SE Asia filings is on my IP Komodo blog here

Is this more evidence that China is blazing a trail towards developed country levels of patent filings and leaving its Asian emerging neighbours far behind? We know there are some poor quality patents China’s global docket – patents filed because government grants paid for them and otherwise disinterested applicants filed them anyway. Or patent thickets created by some of China’s global IT players to find a way into the pools and standards groups. IP Komodo would be interested in seeing how many Chinese triadic patents there are – that is patents filed in the US, EU and Japan. This by virtue of the cost and difficulty reaching grant is a better measure of strong patents and thus innovation at a fundamental level. In 2005 Europe, US and Japan still accounted for 88% of triadic patents, with Korea as a close 4th. Does anyone have any up to date data on whether China is increasing its triadic patent count?

Guest post by IP Komodo Dragon

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Patents in Hong Kong

Hong Kong has for many years had only a deposit-type patent system. Applicants re-register patents covering China or the UK, (including European Patents designating UK) and they are granted without substantive examination. It is a simple and cheap 2 step process.

But there is a growing call for change from Hong Kong business. In the past the government has said HK does not need a full system, citing high cost, lack of patent examiners and current user satisfaction. It is not clear that these are real objections, since cost could be covered by the fees, examination can be outsourced to other countries and current users are mostly MNCs. HK inventors have largely been ignored.

At a seminar to discuss whether HK should have a full patent system last Monday at HK's Science Park, friends of IP Komodo told of the differing views of industry and lawyers. Academics and SMEs have for some time complained that such a basic patent system stifles the ability of local businesses to get proper patent advice. There are lots of solicitors who claim patent expertise. A small number of firms employ patent attorneys who are invariably foreigners. A local patent attorney profession does not exist (although a lot of lawyers spend a lot of time arguing otherwise). Those businesses that have a lot of volume often send their patent drafting and examination work offshore. Ironically this includes many HK government funded bodies (that's HK taxpayer money being paid to attorneys abroad bypassing the struggling local profession).

What the Hong Kong government is missing is that patents are not local. HK businesses are interested in HK patents of course, but in the context of today's globalised world they need a base home patent upon which they can build a global patent family. The lack of a local first filing and substantive examination system means no local expertise can be built up, so all the work must go offshore, perpetuating the cycle.

Thus there was an evident split at the seminar last week, between the solicitors who are comfortable with the status quo and businesses who complained that they need a full patent system. Much as HK hates comparisons with Singapore, this one does bear looking at. A healthy patent system and patent attorney profession exists there 15 years after Singapore launched its full patent system. And Singaporeans file many more US patents than HK nationals, despite being a smaller economy.

The HK government has set innovation as a key policy goal (now it is clear that finance is not a sufficient foundation for an economy). Yet it leaves important components like a full patent system out of the innovation ecosystem. Mark Twain put is thus: "A country without a patent office and good patent laws is just a crab and can't travel any way but sideways and backwards" in A Connecticut Yankee in King Arthur's Court in 1889.

Guest post by IP Komodo Dragon

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China Higher and Higher in PCT Applications' Heaven

The World Intellectual Property Organization (WIPO) published statistics of the number of Patent Convention Treaty (international patent) applications worldwide. China's PCT applications from 2008 to 2009 rose an estimated 29.7%, to 7,946 applications, estimated for 2009.




The top PCT applicants of 2009 include two Chinese providers of telecommunication and network solutions:


Rank 2: Huawei Technologies Co., Ltd.: 1,847 PCT applications published in 2009
Rank 23: ZTE Corporation: 502 PCT applications published in 2009



The Economist made a nice visual representation of those WIPO statistics, see here. You see that China ranks fifth, just behind the US, Japan, Germany and South Korea and before France, Britain and the Netherlands. The Economist wrote: "Since 2005 applications from China have grown by 210% as the country has developed a home-grown high-tech sector."

Domestic patent applications: According to WIPO statistics of 2008, China is after the US and Japan the third biggest receiver of domestic patent applications. Read more here.

The statistics of the number of PCT or domestic patent applications are interesting, but of course the number of patent grants are more interesting.

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China's Protectionism Promotes Chinese Patents

IP Dragon's friend Peter Ollier of Managing Intellectual Property reports about the 'Instructions for National Indigenous Innovation Product Application Procedures', promulgated by the Ministry of Science and Technology and the National Center for Science and Technology in September 2009. See Mr Ollier's MIP article here.

In the Third Amendment to China's Patent Law of 2008, China got rid of the requirement that if you want a patent outside China of an invention that was done in China, you first needed to file the patent in China. However, what was the replacement? Article 20 Patent Law 2008 demands a "mandatory advance confidentiality examination" as the IPR2 writers of the excellent booklet 'Third Revision of China's Patent Law' call it, before a patent can be filed abroad; to prevent so called national security issues, has its own disadvantages, about which I will elaborate upon later.
Level Playing Field
China devised the following accreditation principles:

"1. Products should be of great significance. The accredited products must contribute much to or can produce vital influence on the economic and social development;
2. Products should be proprietary. The accredited products must have Chinese intellectual property and proprietary brands, and the ownership and the right of use are clearly defined, without producing disputes;
3. Products should be symbolic. The accredited products must be symbolic products mirroring China’s indigenous innovation capabilities and levels."

So: Economically significant products (vague terms), that are protected by Chinese intellectual property rights. However, the last sentence that the products should mirror China's indigineous innovation capabilities and levels, shows that China will make use of Chinese alternatives if they are available. Read the 'Instructions' translated by US Information Technology Office (a US Government institute that is for example is involved in 'Ruled for Formulating Standards Involving Patents), here.

Photo/Text: Danny Friedmann

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Professor Llewelyn Asks Rhetorical Question About IPRs: "Too Important to Leave to the Lawyers?"

Tonight, IP Dragon is looking forward to attend the lecture of Professor David Llewelyn about the relevancy of Intellectual Property Rights for everybody.

"As Premier Wen Jiabao has been saying since 2004, world competition in the 21st century will revolve around competition for intellectual property rights (IPRs). But what are these rights, what can you do with them and how can we foster the innovation and creativity they protect?"

Professor David Llewelyn is Honorary Professor IPR Law at the University of Hong Kong and King’s College in London. He is also Deputy Chairman and External Director of the IP Academy in Singapore, and Partner and Head of IP at international law firm White & Case in its London office, and Chairman of IPR-X (Asia Pacific) Pte Ltd, a Singapore-based IP strategy and investment company. Professor Llewelyn is one of the world’s leading experts on the protection and commercialisation of IPRs.

Professor Llewelyn is well known for his co-authorship of the book: Cornish, William & David Llewelyn, 'Intellectual Property: Patents, Copyrights, Trademarks and Allied Rights'.

See the blog 'Professor David Llewelyn Explains All IPRs in One Hour' about his lecture here.

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New Red Dawn in Patents: More Chinese than Foreign Companies Filed Chinese Invention Patents

Joff Wild of IAM Magazine has another great blog: 'Major breakthrough for Chinese companies in the patenting stakes' , read here.

Mr Wild observes that according to SIPO's statistics the first half of 2009 show that Chinese domestic companies filed more invention patents than foreign companies. In 2007 only 1 percent of all Chinese companies filed any patent. That is 99 percent to go. Mr Wild: "Can you imagine the numbers involved when, say, 10% of them are making use of the patent system?"

Yes, an exciting era has started.

Picture: Alfred Smith

CC BY-SA 2.0

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