Chinese IP Law Updates
August 12, 2016

An Interpretation of Statistics Report on China Patent 2015(II)

–a look at unreasonably low utilization rate of valid patented invention

Chinese?State?Intellectual Property Office published Statistics Report on China Patent 2015(the “Report”) which contained statistics information throughout each phases of patent research and development, use, management and protection.

The Report brings to light some patent-related phenomena and issues. Low utilization rate of valid patented invention held by foreign-invested enterprise is particularly worthy of attention.

According to Year 2014 statistics, among China-based companies, patent implementation rates in domestic enterprises of valid invention patents, utility patents and design patents remain 68.2%, 67.5% and 69.0%, in the most balanced way. On the other hand, the data hinted at apparent imbalance concerning the rates of valid design patents and invention patents, i.e. 77.0% and 60.4% respectively, in foreign-funded enterprises (excluding enterprises with funds from Hong Kong,Macau and Taiwan).

Meanwhile, ratios of patents converted into finished and marketable products to valid patents show that the implementation rates for different types of patents have become increasingly imbalanced in the foreign-invested companies mentioned above. Such disparity is mainly manifested in the proportion of design patents being changed into finished and marketable products in relation to valid design patents has reached 62.8%, whereas such ratio regarding patents of invention is only 42.0%.

Based on the statistics, a peculiar phenomenon has emerged that foreign companies see unreasonably low implementation rate for valid invention patents, as well as the ratio of patents being transformed into finished and marketable products to the total of valid invention patents.

As stated by the Report, the fact suggests a localization trend in products made by foreign-invested enterprises.

If the Report is precise in presenting such view, that means product localization has reduced the need to integrate patent of invention with actual product. The base of invention patent is generally larger than those of utility patent and design patent,given that Foreign-funded enterprises have long been paying attention to the protection over patented invention with high technology content. During the course of product localization, it is only natural that limited need for invention patent will result in unusually low utilization rate for invention patent, in contrast to persistently high utilization rate for design patent.

Besides, compared to the old trend where enterprise used to exploit patents on its own, progressive development and frequent patent reserve and technology licensing may serve as an important factor in the low utilization rates of valid invention patents owned by foreign-invested enterprise.

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