The State Intellectual Property Office (SIPO) conducted a survey on patent holders of valid patents by the end of 2015 and their valid patents. The highlights of the report are shown as follows:
I. Low Satisfaction for Patent Protection Demand
More than 80 percent of patentees considered intellectual property protection in mainland China should be strengthened, wherein 60 percent of them advocated strengthening gradually, and 20 percent of them advocated strengthening dramatically. A similar profile presents among yet different types of patentees. Individual patentees showed a stronger demand for intellectual property protection than other types of patentees, with 28% of them considered the protection for intellectual property should be enhanced dramatically.
The satisfaction rate among patentees for patent protection provided by the Chinese government was only 56.2%. More and more patentees tended to deter acts of infringement through means of administrative enforcement. 61.3% of them hoped the patent administrative authorities would ex officio initiate proactive law enforcement and investigation. 51.3% of them would actively report incidence of infringement to the patent administrative authority. Only 25.8% of them chose resolve a dispute via negotiation, whereas only 23.6% filed a lawsuit to a court. As can be seen, those that adopted judicial approach occupied only a low proportion.
Fig. 1: Actions Taken by Patentees Against Infringement
According to data of patent surveys in the recent 5 years, the proportions of various types of patentees whose patents were infringed declined substantially, hitting the bottom in 2015, and then slightly rose back in 2016 in respect of infringement suffered by corporate and university patentees while the proportions of institutional patentees and individual patentees who suffered infringement continued to drop.
The most difficult part in the proceedings of a patent infringement dispute is to prove the infringement facts by presenting evidences. This factor also directly affects patentees’ degree of satisfaction of with judicial patent protection. The top 3 most dissatisfied matters of patentees with the current judicial protection are: 1. Difficulty in evidence collection (>50%); 2. Prolonged trial period (34.3%); 3. Difficulty in enforcing a judicial ruling (27.6%).
Difficulty in receiving a preliminary injunction grant
Difficulty in evidence collection
Prolonged trial period
Low damage award
Difficulty in enforcing a judicial ruling
Over-expensive litigation costs
Table 1. Most unsatisfied matters with regards to the current judicial patent protection (Unit: %)
Regarding amount of damage awarded by the courts in rulings for patent infringement, nearly 50% of the patentee responded "No damage ", 28.9% for "Less than RMB100,000", and 18.8% for "RMB100,000-500,000". According to the local practice interviews and investigations, the average litigation costs per case was about RMB400,000-500,000. So for most cases, the patent litigation costs could not be covered fully even if it was awarded with a winning ruling.Besides, it was found in a survey on "expectable revenue per patent if the patent is intended to be sold" that enterprises’ average expectable revenue per patent ranged from RMB100,000 to RMB500,000. As can be seen, the costs of judicial resolution against infringements are more than an enterprise’s expected profits from selling patents.
II. Patent Implementation Rate Rising Slowly and Stably and Industrialization Rate of Enterprise Patents being High
During the period from 2006 to 2016, the patent implementation rate fell within a range from about 57% to about 75%, and was 74.1% in 2013. The rate began to drop to 69.2% in 2014, and further down to 57.9% in 2015, then slightly rose to 61.8% in 2016.
In view of the same year, in 2016, the patent implementation rate was 61.8%, wherein the enterprise implementation rate (67.8%) was the highest amongst all. As for the same rate with respect to different types of patents, the implementation rate of design patents (65.8%) was the highest amongst all.
Table 2.: Patent Implementation Rate (Unit: %)
For the degree of patent industrialization, the industrialization rate was 46.0%. Amongst different patentees, industrialization rate of enterprise’s patents took the first place (51.5%), whereas by comparing different types of patents, design patent has highest rate (52.4%) than the other two.
Table 3. Patent Industrialization Rate (Unit: %)
Patent implementation rate varies depending on the number of patents owned by a patentee. As the number of number of patent ownership increases, the patent implementation rate tends to rise first and then drop afterwards. Taking invention patent as an example, the implementation rate when the number of patent ownership is between 1 and 2 was 55.3%, whereas the implementation rate when the number of patent ownership is between 10 and 29 was 64.7% (the highest), but the implementation rate when the number of patent ownership is over 100 was only 41.0%.
Industrialization rate demonstrated the same profile with respect to the scale of patent ownership. Industrialization rate was low when the number of patent ownership ranges from 1 to 2 (lower than 40%). The industrialization rate was only 40.4% even when the number patent ownership is over 100. The same rate was topped for the numbers patent ownership stays in the medium between the two extremes. An obviously similar profile of industrialization rates was also demonstrable among all three types of patents.
Among the patentees who own a certain number of valid patents, the more patents are owned, the higher the proportion of unimplemented patents is. In addition to patent implementation, such patentees actually exercise their patent ownerships to build up technology portfolio, set up product standards, create product images, induce publicity effects, exchange for capitals or bargaining chips in negotiation by using patents, or assert limitations or blockage against competitors and so on. These measures were, relatively advanced approaches to exploit a patent.
The scale of an enterprise is also somehow positively related to patent implementation rate large-scaled enterprises are more willing to implement patents. They also have more resources to implement, so their patent implementation rates are higher; whereas the implementation rates of mini enterprises are concentrated in the range from 50% to 60% for all valid invention, utility model and design patents, which are all lower than the same rate of corresponding type of patent for enterprises of other different scales.
From the perspective of enterprise, an enterprise's industrialization rate of design patents is positively related to its scale (larger the enterprise scale, higher the industrialization rate of its design patents); whereas industrialization rates of invention and utility model patents show a profile of single-peak distribution wherein the industrialization rates of medium-sized enterprises are higher than those of other large/mini scale enterprises.
The implementation rate of valid patents of universities is only 12.1%, far below that of enterprises (over 60%). The industrialization rate of valid patents of universities is only 3.3%, which is even far below the national average rate of 46.0%. For patent assignment and licensing, universities’ licensing rate is only 3.3% (national average: 8.1%) and assignment rate is only 1.9% which is also lower than the national average of 5.4%.
III. Small/mini Enterprises’ High Risk of Patent Maintenance and Difficulty in Converting Innovation Results
Although patent pledge is available in China, small/mini enterprises were disadvantaged in acquiring finance support. Their results of technical innovation are difficult to be converted. Their patents were exposed to high risk of infringement and it is also difficult to maintain their patents. According to the conclusion of a survey, there is an obvious “Matthew Effect” in government's financial support for enterprises that the larger the scale of an enterprise, the easier for it to obtain finance support from the government investable in its R&D and patent applications.
The proportion of enterprises whose R&D activities that had ever been financially sponsored by the government is 50.9% for large scale enterprises and only 35.7% for mini scale enterprises. The proportion of valid patents that had ever been financially sponsored by the government for patent application is 45.8% for large scale enterprises, 28.1% for small scale enterprises and only 29.2% for mini scale enterprises. In comparison with large scale enterprises, patents of small/mini enterprises are in the most suffer to be implemented or industrialized due to difficulty in receiving financial assistance for conversion. However it does not mean that these patents have no economic prospects in the market. In fact, the smaller the scale of an enterprise is, because of limited funds, the lower the percentage of insufficiency of marketing channels, usually due to detachment from the market demands, for their technical innovation results is.
In addition, when the enterprise scale is smaller, it was more obvious that there is insufficiency of the an effective financing means to provide necessary funds supporting subsequent industrialization and that the costs for building a sales channel for patents become too high to be affordable. However, to view in a large picture, the problem to be "unable to prohibit other market competitors to copy technical innovation from oneselfs" remains troublesome for both large and small/mini scale enterprises alike.
The risk of patent infringement is relatively higher for mini scale enterprises. For all enterprises, the average risk of patents infringement is 19.5%, wherein the same risk for mini enterprises is the highest as 24.5%. The smaller the scale of an enterprise, the more likely it takes no action after being infringed. Over half of mini scale enterprises did not take any actions when their patent rights were infringed. However in fact, mini enterprises had made attempts. The matters that enterprises had most interactions with the government are administrative enforcements. The percentage for entities who adopt administrative measures is 47.3% for mini enterprises, which is significantly higher than the average percentage for all kinds of enterprises, 40.6%. As can be seen, the reason why small/mini enterprises failed to take any action might be in lack of available route to file a complaint, which further demonstrates the difficulty of small/mini enterprises in enforcing their patent.