New figures released by the Taiwan IP Office show that mainland Chinese firms are playing a greater role than ever in the local patent environment. Both resident and non-resident firms upped their filing rates in 2017 as the island managed to reverse several years of falling applications. Among the biggest corporate TIPO users, invention patent filings increased by nearly 25%.

The last year in which Taiwan patent applications increased year-over-year was 2012, when they reached a peak of 51,189. The headline figure from 2017 was well below that figure – coming in at 46,122 – but it did represent 5% growth over a 12-month period. Both resident and non-resident applicants were more active.

One key metric that TIPO tracks is the trends among its top 100 users – a group that includes corporates, universities and research institutes. Among the corporate contingent, invention patent filings were up 24%. Within Taiwan, TSMC again dominated the league table, more than doubling up the invention patents filed by closest competitor Hon Hai, whose boss Terry Gou three years ago pledged to shift the company’s focus away from quantity.

Much more intriguing is the top 10 list of non-resident filers. Alibaba came ahead of Qualcomm for the top spot, with a total that makes it second only to TSMC overall. Oppo also debuted in the rankings as the seventh-biggest filer, pipping giant competitor Samsung to that spot.

I looked back over the last 10 years of TIPO reports, and found no previous instance of a mainland company among the 10 biggest filers. Just twice did one crack the top 20 (Alibaba in 2015 and a firm called Innocom Shenzhen in 2012). Hong Kong-domiciled FIH, which is run by Terry Gou, appeared on the list in 2009 and 2010.

Mainland firms have traditionally made very limited patent filings in Taiwan – in 2014, for example, they accounted for just 2% of overall applications. In 2017, the mainland and Hong Kong (I believe Alibaba filed its TIPO patents through a Hong Kong entity) combined to account for 6% of total applications.

That is significant growth, but it doesn’t look like a national trend. Instead it appears driven by just a handful of companies – led by Alibaba and Oppo. There are obvious political dimensions to why mainland tech firms have traditionally chosen not to file many or in some cases any patents in Taiwan, even as their patenting rates at home and abroad have skyrocketed. It’s also obviously a fairly small market without much reputation as a litigation centre. Nothing about those underlying conditions has changed – but apparently certain firms’ calculations have.

Alibaba and Oppo have decided that now is the time to step up their protection on the island. One obvious reason might be growth of their businesses in Taiwan. Oppo, it seems, has enjoyed sales success in the smartphone sector, while Alibaba recently announced a big investment fund for the island, possibly indicating its ambitions in the market.

Another potential factor is that it occurs against a backdrop of increased patent assertiveness on both sides of the Taiwan Strait.

The most recent example was provided by Innolux, an affiliate of the Hon Hai Group. The panel maker hit a Chinese competitor called HKC Corp with 17 patent infringement suits in the Guangzhou IP Court and Ningbo Intermediate People’s Court on 12th February. According to local media, Gou said that the company “could no longer tolerate the patent infringement of Chinese firms”, suggesting that the cases are meant as a signal to the whole market. There is also some evidence that other Taiwanese corporates, including HTC, may be exploring the potential for monetising their sizable Chinese patent portfolios against mainland firms.

Faced with these potential challenges, more mainland companies may decide to follow Alibaba and Oppo in building portfolios in Taiwan – if the conditions remain right. Given their collective innovative output, such a trend could upend the market as we know it.

2017 patent filings by non-residents

Rank

Company

Origin

Invention patents

Utility Model

Design

Total Patents

1

Alibaba Group Services Limited*

Mainland China

761

1

0

762

2

Qualcomm Incorporated

United States

604

0

0

604

3

Applied Materials, Inc.

United States

461

24

8

493

4

Intel Corporation

United States

429

0

0

429

5

Semiconductor Energy Laboratory Co., Ltd

Japan

352

0

0

352

6

Tokyo Electron Limited

Japan

347

1

1

349

7

Guang Dong Oppo Mobile Communications Corp., Ltd*

Mainland China

309

0

14

323

8

Samsung electronics, Co., Ltd.

South Korea

256

0

23

279

9

Nitto Denko Corporation

Japan

274

0

0

274

10

Mistubishi Electric Corporation

Japan

187

0

55

242

*New entrant

Source: Taiwan Intellectual Property Office

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