In the past few years the world witnessed a bulging surge of patent applications in China, but the number of patent litigations has not increased proportionately. This article aims to explain the discrepancy and forecast the trend of patent litigations in China.

The sharply increasing number of patent applications in China does not mean that China has become a powerhouse of innovation overnight. In 2014, China became world leader in patent applications, with 0.928 million new invention applications, namely 1/3 of applications worldwide. 0.801 million new applications were filed by domestic applicants (86.3%). In the same year 0.233 million invention patents were granted, among which 0.163 million was granted to domestic applicants (70.0%). The problem is that the quality of patent applications in China is still very poor, and market value of granted patents remains low. It is said that only 5% of patents owned by Chinese applicants are really implemented.

The “Big Leap Forward” campaign launched by Chinese government in patent applications contributed to this “patent bubble”. China dreamed of turning from the nation of production (“Made in China”) to creation (“Created in China”). Like the GDP, the number of patent applications became one of the performance indicators of local governments. As a result the local governments tried every way to encourage patent applications. Subsidy (including tax reduction) and government awards are convenient means. Locals file patent applications not out of inner needs, but from abetment from the government. Now the government has realized this problem and uses the number of granted patents as indicator, but the market value of such patents are still dubious. It is doubtful how much incentive the patentees have in seeking protection of such patents, especially when patent protection in China can be troublesome and costly.

In the past few years, civil IP lawsuits also experienced explosive increase like patent applications, but the increase of patent lawsuits remains rather steady. In 2009, the courts of China accepted 30,626 IP civil lawsuits of first instance, among which 4,422 lawsuits involved patents; in 2013, the courts of China accepted 88,583 IP civil lawsuits of first instance, among which 9,195 involved patents.

The following is the year by year data of new patent lawsuits in China:

2009:4,422 cases

2010:5,785 cases, increase by 30.82%

2011:7,819 cases, increase by 35.16%

2012:9,680 cases, increase by23.80%

2013:9,195 cases, decrease by 5.01%

Invention patent infringement disputes are a fractional portion of all patent disputes.  In 2014, the courts winded up 8,220 patent lawsuits, among which 1,239 cases involved invention patents (15.1%), 3,603 cases involved utility models (43.8%), and 3,378 cases involved designs (41.1%).

IPO actions have diverted and will continue to divert some patent infringement disputes from the courts. In 2012, the IPOs handled 9,022 cases; in 2013, the number increased to 16,227; in 2014, the number increased to 22,479 cases, including 7,671 patent infringement disputes, an increase of 6.26% compared to 2013. Among the 7,671 disputes, 521 cases involved foreign parties, an increase of 43.9% compared to 2013 (totally 362 cases involved foreign parties).

Conclusion

Despite the increase of patent applications and IP civil lawsuits, in the coming years the number of patent litigations may remain steady in China. Local IPOs will compete with courts in handling patent infringement disputes, and the State IPO is revising the “Measures on Administrative Enforcement of Patents” to make IPO actions more attractive to patentees. We will tackle this matter in the next issue of WHD IP Express.