Last week, China’s State Intellectual Property Office revealed its preliminary data from calendar year 2016 on everything from patent filings to administrative enforcement. As always, there are numerous interesting comparisons to be made with last year’s data. In addition, SIPO appears to have made some significant changes to how it reports key information, which will affect ongoing analysis of the country’s IP development. Here are the five points that seem most important from where I’m sitting.

Is application growth slowing?

SIPO’s headline filing number this year – applications for Chinese invention patents – stood at 1.38 million, which it reported was a 14.2% increase year-on-year. Last year, its headline figure was 1.33 million, which it said represented 21.5% growth. You will notice that the two sets of numbers don’t seem to fit together, and that appears to be because SIPO has tweaked how it reports the key number. Looking closely at the wording, the number from this year represented “applications for invention patents in China”, while the 2016 report said “SIPO handled a total of 1.32 million invention patents”. A contact in China surmises that the top line number in previous years included PCT, Paris Convention and other applications filed through SIPO – now it does not. That makes a direct comparison impossible, but it would seem that the rate of growth may well have slowed somewhat. Nevertheless, a double digit growth rate from a very large base still means a lot more applications for examiners to dispose of, and indicates that there is plenty of room for future growth.

Oppo, SMIC displace Tencent

2017 Rank (2016 rank)

Applicant

Patent grants, 2017 (grants, 2016)

1 (1)

State Grid Corporation

3,622 (4,146)

2 (2)

Huawei

3,293 (2,690)

3 (3)

Sinopec

2,567 (2,555)

4 (5)

BOE

1,845 (1,228)

5 (4)

ZTE

1,699 (1,587)

6 (9)

Lenovo

1,454 (763)

7 (7)

Gree

1,273 (871)

8 (N/A)

Oppo

1,222 (?)

9 (8)

China National Petroleum Corporation

1,008 (867)

10 (N/A)

SMIC

862 (?)

SIPO once again named the top ten recipients of Chinese patent grants. Tencent, which recently completed its first major international patent deal, a cross-licence agreement with Google, fell out of the top ten, as did semiconductor manufacturer Huahong Grace. Smartphone maker Oppo and Shanghai-based foundry SMIC were the patentees that displaced them. It was a higher bar to earn a spot in 2017’s top ten, and Huawei looks poised to take the number one spot soon.

League tables dwindle

What we didn’t see from SIPO was the table of top ten domestic applicants. Last year, that list showed smartphone upstart LeEco surprisingly shoot into the top three filers; with the company now all but bankrupt, it would be a surprise if they had re-appeared. At last week’s press conference, an official confirmed that the office will no longer release this list. It is a good bet that this reflects a wish to emphasise patent quality over quantity. There is certainly an amount of marketing that goes on around these annual lists, and SIPO probably wants to discourage companies from chasing big application numbers at the potential cost of patent quality. This follows last year's move to stop revealing who the major foreign applicants and grant recipients are. Whatever the reason for these changes, they definitely make it a little bit more difficult to get a sense of China’s patent ownership landscape without using commercial databases.

More global players

SIPO handled 51,000 patent applications last year, a healthy annual increase of 12.5%. All of the growth was driven by domestic Chinese filers, and not all of it came from the top handful of companies. Forty four Chinese firms filed more than 100 PCT applications – last year that club had just 26 members. The patent office highlighted Oppo in particular, which filed 142% more PCT rights, possibly presaging further overseas expansion plans. Drone-maker DJI, which already has a strong international presence, filed about 50% more PCT applications.

Invalidation actions increase, re-exams go through the ceiling

SIPO also gave preliminary numbers on activity before its Patent Re-examination Board (PRB). The 15% increase in invalidation requests (4,565 in total) tracks the continued uptick in both licensing activity and patent assertion in China. As in other jurisdictions, validity has become a key battleground in the country’s most high-profile patent disputes. The much busier part of the PRB’s docket was re-examination proceedings. 34,123 petitions last year represented an increase of 160% over 2016. This increased willingness to challenge refusals underscores the key role Chinese rights play in any patent portfolio worth its salt. It could also be interpreted as the clearest evidence yet that SIPO is deadly serious when it talks about focusing on quality – patent owners may be dealing with tougher than ever examiners in the year to come.

Bing Zhao contributed reporting