Should China Overhaul Its Patent System?

A European business group is calling on China to make big changes to its patent system. The European Chamber of Commerce in China argues that the current Chinese patent system hinders the country’s ability to innovate and may be detrimental to foreign companies. The group released a report recommending a total of 52 changes.

Below is a short summary of several issues addressed in the report:

  • Patent quality. The report suggests that China’s progress in patent quality lags behind its rates of patent filings. According to the Chamber, “While patents are exploding in China and certain innovation is also admirably on the rise, this has not necessarily translated into a proportionate rise in patent quality and in some sense the strength of China’s actual innovation is overhyped.”
  • Government targets. The report finds that patent targets imposed by the Chinese government may be hindering patent quality. It notes, “China has emphasised a range of quantitative patent targets, which while ambitious may not encourage quality let alone highest-quality patents and related innovation as efficiently and effectively as envisaged; in fact, they may actually discourage highest-quality patents and at worst may sometimes actually encourage development and filing of low-quality patents.”
  • Rules and procedures for patent application review. The report highlights a number of concerns regarding the Chinese patent process. It specifically notes the overly burdensome Confidentiality Review process for all foreign patent filings for inventions made in China’s territory. It calls on the Chinese government to limit what constitutes a solution that “relates to the security or vital interest of the State.”
  • Patent enforcement. The report emphasizes that patent rights in China are prone to abuse, stating one source that suggests that over 50% of patents in China are filed for the sole purpose of being used for retaliation and/or to first initiate litigation. “These concerns, where patents are used as first-attack and/or tit-for-tat weapons, make businesses reluctant to establish or expand operations in China, especially IP-based operations,” the report notes. Other concerns include difficult in securing preliminary injunctions, confusion regarding the country’s anti-monopoly law, and the submission of prior art.

The European Union Chamber of Commerce in China says it looks forward to a productive discussion with Chinese officials on the issues and recommendations discussed in its report. The full text is available here.

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