This week the Intellectual Property Department here in Hong Kong played host to the annual meeting focused on IP developments on the mainland and its two Special Administrative regions (Macao being the other). One of the main topics was university tech transfer issues, and it was in this area that SIPO officials most frankly acknowledged the need for significant reform. Based on their comments, there could be big changes ahead in the field.

Patent filings by Chinese universities took a major leap in 2016, reaching over 300,000 in total. Applications for invention patents, which are typically the highest quality and most valuable rights, grew by about 28% year-on-year. These impressive numbers reflect huge investment in research on a national scale, as well as recent reforms that give universities more autonomy to set their own patent strategies.

But Deng Yiyou, a deputy division director in SIPO’s Intellectual Property Development & Research Centre, says that the vast majority of these rights are not being utilised. As many as 96% of them are never commercialised, he said, meaning no product has been produced encompassing the protected technology.

Deng shared some data from the SIPO’s massive annual survey of users of the IP system which he said was not yet publicly available which suggests university TTO managers are hesitant to licence out or transfer patent rights. Asked to state the major focuses of their patent programmes, self-commercialisation and outright patent transfers were both more popular among university IP manager than licensing. “Usually universities are not very willing to licence patents”, Deng said.

For one thing, as IAM has noted before, many of the key decisions on patenting and patent strategy are still left to lecturers. “Collaborating with enterprise on patent rights does not gain them much vis a vis their academic careers”, Deng pointed out. Another major hurdle stems from the fact that most Chinese universities are state-run. Though China passed laws somewhat similar to the Bayh-Dole Act back in 2007, there’s still major uncertainty around the ownership of inventions that emerge from government-funded research.

China’s Technology Transfer Law was reformed just two years ago, with changed aimed at boosting commercialisation rates. The legislation provided for researcher to keep up to 70% of commercialisation proceeds. But it seems as though such activity remains thin on the ground. Deng acknowledged that there are contradictions in the various laws in this area and between the bodies that are supposed to enforce them. “There should be a dedicated government agency” to implement tech transfer reforms, Deng said, noting that it would have to have plenty of authority to do so, given the large number of interests involved.

Even as patent litigation has skyrocketed in China, we have not seen university assertions on a scale that has registered among industry players. The same is largely true for government-run research labs. A case filed earlier this year by the Chinese Academy of Sciences, the biggest such entity, against US LED maker Cree could prompt more IP managers in government and academia to consider a more aggressive approach. If that happens, the risk environment for all tech companies in China will shift significantly.