Whitebook on IP Protection in 2010: Is White the New Black?

Photo Danny Friedmann

A: "Milestones of the past 

don't equal

 beacons to the future" 

B: "That is so 2010!"

The 12th Five Year Plan (2011-2015) has already started but its interesting to see what happened during the last year of the 11th Five Year Plan (2006-2010). If you don't know your history, you don't know your future, as Bob Marley already sung, right? The State Intellectual Property Office (SIPO), although it is only responsible for the protection and enforcement of patents, published a rather self-complacent "whitebook" on Intellectual Property Protection in 2010. Let us put it this way, it is great to say what has been done, but on the enforcement front there is still a lot of work to be done.

Readers of this blog know that its author does not believe in mass campaigns such as Operation Strike of the Sword and Swordnet. Not because they do not sound cool, they do. The problem is they do not work in the longer run, read more here.

This time I skip Benjamin Disraeli's phrase, because Thomas Miles, who researches judicial behaviour cracked a relevant joke during the 2011 Coase Lecture in Law and Economics: "Lawyers have only two reactions to a statistical analysis: it's either obvious, or wrong."

Statistics about patent applications are interesting but in the end only the granted patents count:
SIPO granted 814,825 patents: a year-on-year increase of 40.0%.

• 740,620 were granted to domestic applications, representing 90.9% of the total and a year-on-year increase of 47.6%; 
• 74,205 were granted to foreign applications, representing 9.1% of the total and a year-on-year decrease of 7.5%. 

So how to explain the decrease of patents granted to foreign companies/individuals, while the applications year-on-year rose by 13,9 percent?  

Percentage of domestic patent applications granted: 740,620/1,109,428 = 67 percent
Percentage of foreign patent applications granted: 74,205/112,858 = 66 percent.
So that is nearly the same. Are we seeing now the delay of the financial crisis or a lack of trust in the Chinese patent system in Europe and the U.S., which resulted in not many applications before 2010, so that in 2010 there is a decrease? And that in 2010 the applications increased?

However, although the information was not provided, I think one must also know about what kind of patents we are talking. In former years foreign companies/individuals often applied and were granted a much higher percentage of invention patents, while Chinese companies/individuals often applied for and were granted utility patents (to harness incremental innovation).

The aggregated information for both domestic and foreigner companies/individuals:

• 135,110 invention patents were granted, representing 16.6% and a year-on-year increase of 5.2%.
• 344,472 utility model patents were granted, representing 42.3% of the total and a year-on-year increase of 69.0%; 
• 335,243 industrial design patents were granted, representing 41.1% of the total and a year-on-year increase of 34.3%. 

For the 12th Five Year Plan the Chinese government wants to increase invention patent ownership from 1.7 per 10,000 people to 3.3. The arguments against using this kind of ratios to achieve innovation I give in my post Patents in China: Quantity obsessed, quality challenged.

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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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