Reduction of China’s Patent Fees Increases Challenges For Patent Quality

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Since 2011, China is the world leader in the number of published invention patent applications (also the number of utility model and design patents is rising). China is in the process of doubling its number of patent applications (from more than 1 million patent applications in 2015). Subsidies and further fee reductions strengthen the incentive to apply for patents, thereby putting more pressure on the State Intellectual Property Office (SIPO) to assess patent quality.

According to China IP News, the Ministry of Finance and National Development and Reform Commission issued the Regulations on Reducing Patent Fees (Regulations) that became effective on 1 September 2016. The budget for the fee reduction is planned to be increased to RMb 4.1 billion per year as of 2016. Compare the budget for 2015 of RMB 3.5 billion.

The rationale behind this reduction is to decrease the threshold for inventors and companies to patent their inventions, and one measure to implement the Promotion Plan for the Implementation of the National Intellectual Property Strategy and acceleration of building an IP powerhouse in 2016, see SIPO’s July announcement here.

 

Article 4 Regulations states that the following groups are eligible for an 85 percent reduction of the patent application fee, excluding announcement printing fee and additional application fee; substantive examination fee for invention patent applications; annual fee for six years from the year the patent is granted; and re-examination fee:

  • Article 3(1) Regulations: Individuals whose average monthly income was less than RMB 3,500 (RMB 42,000 annually) in the previous year;
  • Article 3(2) Enterprises, business units, social organizations and non-profit making scientific research institutes whose corporate taxable income was less than RMB 300,000 in the previous year;

In case two or more individuals or units are co-applications or co-owners of a patent, the fees could be reduced to 70 percent (Article 4 Regulations).

 

Big discounts, big challenges for patent quality

These reductions of patent fees, together with provincial or city subsidies, will lead to an even stronger surge in patent applications and grants, and therefore an even stronger pressure for SIPO to guarantee a sufficient standard of quality.

There probably must be a soft spot between motivating innovators to apply for a patent that without subsidy or fee reductions would never do so, and those patent filers that have claims that are neither novel nor inventive, but try to get a patent anyway. When the SIPO is overwhelmed with patent applications, subpar patents will slip through.

 

“The generosity of China’s incentives for patent-filing may make it worthwhile… to patent even worthless ideas… Patents are easy to file,… but gems are hard to find in a mountain of junk.”Patents, yes; ideas, maybe The Economist, 14 October 2010.

 

See earlier IP Dragon articles about the same topic:

 


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Prof Yahong Li Provides Overview of How China Put Innovation on Agenda, But “Patent Quantity Does Not Automatically Translate Into Quality Patents”

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Dr. Yahong Li (photo: middle), Associate Professor, Faculty of Law, University of Hong Kong, demonstrated how innovation has been prioritised in the People’s Republic of China during the years.

– National Medium and Long Term Plan for Science and Technology Development 2006-2020, which declared sanguinely that China will become an innovation-based economy by 2020!

 

– The State Council “383” reform plan (2013), “Promoting innovation is one of the eight key reform priorities.”

 

– National Patent Development Strategies (2011-2020), “China will rank among the top two in the world in terms of the annual number of patents for inventions.” The total number of patent applications by 2015: 2 million. “The patent system has not become fully integrated with development of socialist market economy, and its role has not been brought into full play in guiding industrial restructuring and upgrading and promoting China’s innovation capacity.”

 

– Outlines of National IP Strategies (2008): “improving the capacity to create, utilize, protect and administer IPRs, and making China an innovative country.”

 

Professor Li’s conclusion that quantity of patents does not necessarily translate into innovation hits the nail on the head. She argued rightly that “national innovation and competitiveness eventually depend on true innovative culture and comprehensive innovation framework including the effective

mechanisms for tech transfer and commercialization.”

Read here Professor Li’s slides: http://www.lawtech.hk/wp-content/uploads/2015/01/HKU-IPD-IP-forum-2015-Yahong.pdf

 

See more of the Worldwide Patent Law Reform and Hong Kong’s Response HKU Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-workshop/.

 


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Grading Chinese Provinces and Cities for IPR Protection But Not Enforcement Useful Exercise?

Danny Friedmann

 

The goal of the China IP Index is to “assess and analyze the different development status of intellectual property capacities in 31 provinces and municipalities of China through setting up a scientific, systematic and formal system.” The result, that only focuses on protection (namely application and registration) of IPRs and not on enforcement and excludes the whole category of copyright is claimed to be of “substantial significance”, by the researchers of the index here. Whether this is justified will be questioned after an overview of the ranking.
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China Launches International Patent Database

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Almost One Million Patent Applications in China in 2009

China’s State Intellectual Property Office (SIPO) reports the following statistics: 976,686 patent applications (up 17.9%) 877,611 domestic (89.9% and up 22.4%) 99,075 from abroad (10.1%, down 10.9%) 229,096 invention-patents (up 17.7%) 308,861 utility model-patents (up 37.9%) 339,654 design-patents (up 13.7%) 581,992 granted patents (up 41.2%) 501,786 patent granted to domestic filers (86.2%, up 42.4%) 80,206 […]

Patent Quality in China: “You could patent a wheel”

Ms Patti Waldmeir wrote a great article for the Financial Times about Chinese patents ‘The value of branding becomes patent’, read here. On the positive side Ms Waldmeir noticed that China is the country where most companies are filing for patents in China. However, she noticed that most patents were utility patents (not really as […]