Q&A with Justin Simpson and Xia Zheng – Webinar Recap

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Last week we held a webinar with Managing IP on the topic of China IP Trends: The Shift in Patent Filing. We were delighted to be joined by Justin Simpson, patent attorney and founder of inovia, and Xia Zheng, founder and president of AFD China. As experts in their field, they offered a great insight into filing trends in China as well as advice for those looking to file. Below you can read the answers from the Q+A segment of the webinar where Justin Simpson asked Xia Zheng questions.

Question 1 – What’s driving the fast increase in filing volumes coming out of China? Is it pure innovation from large companies like ZTE and Huawei? Is it a push from the CN government?

It is a result of years’ implementation of the National Intellectual Property Strategy with the vision to build China into a nation with fairly high level of IP creation, utilization, protection and administration. Chinese governments of different levels encourage innovation and set up policy to support it. For example, governments provide subsidies/reimbursements for overseas filing.

In parallel, it is a fact that large companies became more aware of the importance seeking IP protection aboard, especially when they have launched products and used technologies out of China. Companies like ZTE and Huawei have done it for years and started to take IP not just as a demonstration of its capability but a powerful tool to create barriers for competitors.

We also noted that medium- and small-sized companies have started to grow IP portfolio outside of China.

Question 2 – With such large numbers of filings it’s easy to assume they are incremental/low quality inventions. What’s your view?

I don’t think it stands. Yes, some companies may want to have a beautiful number to show out. But they are minority. Companies are running a business; they will pursue cost-effectiveness in each and every aspect. So why paying big money for low quality stuff? The filing fees are not cheap, especially in the developed countries. I don’t think any business will waste efforts and come to nothing.

Yet another angle, going through the rules of some of the government policies concerning patent subsidies and financial incentives, you will find clauses asking the candidate companies to prove that their patent applications have novelty and inventiveness, to prove that their patents have commercial values, for example the companies have been using them, have licensed them to others, or making profits from exploring them.

Question 3 – Large Japanese companies often file multiple applications for a single innovation to bump up their stats. Is that a practice you’ve seen with Chinese applicants?

It is not a valid strategy in the long term. Again, a business stands on cost-effectiveness. Unless the number will help it get something, I don’t think it is a common conduct among the top filers. Quota is usually a temporary or short-term conduction.

Big companies, as you mentioned, ZTE and Huawei, are familiar with IP practice. They have professional IP teams; they have long-term IP strategies; and they set clear direction and aims. They monitor and evaluate their technology from the date it was created, and prioritize the technologies when considering seeking filings and protections. Such conductions must be for particular reasons.

Question 4 – What tips do you have for non-Chinese applicants in light of these increasing volumes?

It sounds like a question to finish up our presentation today. My answers will be – go ahead filing in China. File as early as possible. And craft your strategy as comprehensive as possible, seeking multi-dimensional protection by making good use of the system – which Justin would talk about in the next slides; generating appropriate, effective, and well-covered scope for your technology, brand and business, etc.

Specifically with respect to patent practice, please keep in mind that every jurisdiction has its own and independent requirements for filing and examination. For example, China has different requirements on non-prejudicial disclosure comparing to the US, you need to pay attention if making a disclosure before filing; China does not have continuation/continuation in part applications, so comprehensive scope needs to be reflected in the original application documents; invention substantially conceived or created in China must go through secrecy review before filing aboard, etc.

To save time and energy, it is advised to work with local experts. It won’t be a shame to turn to professionals – like RWS and AFD – for help.

Is it more important than ever to file into China?

The answer is positive. Patent is an indicator of innovation and innovation requires resources. All will fundamentally be attributed to finance. China has become one of the biggest markets, and is taking actual steps to protect intellectual properties. Filing in China will become as at least as important as filing in the US, in Europe, in Japan, and in Korea. Why not catching up with the trend, taking advantage of China’s improvement on IP practice and protection?

Should non-Chinese firms be doing more patent searching of Chinese databases?

After the restructure earlier this year, the SIPO has become the biggest IP office in the world. No doubt it will have more influence on IP issues. And as Chinese filings grow at a fast speed, documents from China will and may have already become an unignorable part for patent search. Since most jurisdictions adopt absolute novelty criteria, searching in Chinese databases would be a help.

If you were not able to join us for the webinar, you can watch the recording here or  you can receive the slides here. Please contact your local RWS office if you would like more information about filing in China.

Webinar Recap – China IP Trends: The Shift in Patent Filing

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On June 28th, RWS and Managing IP presented a webinar of the topic ‘China IP Trends: The Shift in Patent Filing’. Guest Speaker Justin Simpson of RWS (founder of inovia) reviewed filing data and trends from WIPO, comparing Chinese filing data to statistics from Japan and the US and predicted how filing statistics may look over the next 5-10 years. Simpson introduced fellow guest speaker Xia Zheng, founder and president of AFD China Intellectual Property, with a Q&A of what the figures mean for IP owners outside of China. Zheng discussed important strategies for filing in China including types of patents, enforcement options as well as tips for filers based on Zheng’s vast experience in the industry.

The webinar concluded with two case studies prepared by AFD China and gave listeners a chance to hear real-life solutions to filing problems. During the Q&A period, audience members asked questions directly to Zhang and Simpson. We have received excellent feedback from attendees who specified that the information provided will help them as they file into China.

If you were not able to join us for the webinar, you can watch the recording here or  you can receive the slides here.

RWS is one of the largest foreign filing providers in the world. Our clients include the corporate intellectual property (IP) departments of major multinationals, as well as leading firms of patent attorneys.

Our model is simple: we combine technology, world class translations and a global network of foreign associates to create value for our clients. inovia offers a “one-stop shop” experience so that our clients can save both time and money on foreign filing work. Click here to get your free inovia account today.

Please contact your local RWS office if you would like more information about filing in China.

Reading Between the Lines: Patent Filing in China

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Justin Simpson of RWS explains recent filing trends in China and outlines why if the rest of the world can’t beat China, it should join it.

Fluctuations in market trends and domestic policies can cause dramatic shifts in the intellectual property landscape year after year, making it difficult to track considerations beyond one’s own borders. Analysing the context of relevant data and identifying key marketplace indicators, such as filing trends, can help guide decisions of where to focus attention and resources. Markets indicating decline or even stability should not be ignored, but markets indicating consistent growth deserve a second look with respect to how they factor into long-term IP strategy.

Consider the example of China, which has posted stable growth for the past 10 years. In 2017, China surpassed Japan as the number two patent cooperation treaty (PCT) filer according to recent data published by the World IP Organization (WIPO). With 48,882 PCT applications filed, China now trails only the US, which filed 56,624 applications in 2017.

In the last decade, China has never posted PCT application totals less than 13 percent over the prior year, and its 2017 numbers reflect a nearly 700 percent increase over its 2008 filings. The greatest changes in percentage filed over prior year during that 10-year stretch occurred in 2010 and 2016, in which China posted 56 percentage—12,301 (2010) over 7,900 (2009)—and 44 percent increases—43,091(2016) over 29,838 (2015).

In part, China has modelled its strategy after another one of the most successful patent-filing nations in the world—Japan. When two Japanese companies have a patent fight they do not get into the minutiae of the breadth of the claims of patents. Instead, they say, for example, you have 845 granted patents, we have 950 granted patents, therefore you need to pay us royalties on the difference. In Japan, with patent portfolios, size does matter and the company with the biggest portfolio wins. China’s aim to become the world’s largest patent filer is based not just upon the inherent status of such a claim, but upon the associated commercial bargaining power it brings.

Looking at the data, it is clear that 2010 was a turning point for China in terms of filing. Both 2010 and 2016 were outliers for growth in filings relative to the other years since 2008. You may remember that the third revision of China’s Patent Law, also known as China’s National Intellectual Property Strategy, was released in June 2008, adopted in December 2008, and took effect in October 2009. The third revision saw the change from domestic (relative) disclosure to international (absolute) disclosure, the cutting back of avenues for “patent hijacking” and the encouragement of Chinese residents to file abroad. As reflected in the sudden growth of PCT filings during the 2008-2010 timeframe, the newly placed importance on international awareness was not lost on China’s IP holders. Growth in recent years has been unwisely written off by some outsiders as artificial; this is a dangerous assumption to rely upon given the observed data trends.

The relevancy of PCT application filings trends should not be understated. Simply looking at the raw output of a country’s IP authority in terms of domestic IP filings paints an incomplete picture of that country’s participation on the international stage and strong IP is rarely confined to the country from which it originated. While an application on its own is not necessarily an indicator of quality, it does demonstrate a high level of confidence in one’s IP, especially when considering cost and time commitments. China is set to become the number one filer of PCT applications in the next three years. For those outside of China, it is increasingly important that you secure your rights there, as the flow of interdependency between securing priority and developing business continues to grow in China’s direction. From a high-level overview, one should consider three key takeaways: understand the process, amend when you can and the importance of translation quality.

Understanding the system

While parts of China’s reformed approach to patent law are borrowed from Japan, others, such as the application process, more closely mirror that of the European model. To start an application in China you can either file directly via a Paris Convention filing within your 12-month priority period or a PCT application entering China at the 30-month date (with a 2-month grace period for translations). Within three years of the priority date, you must request examination, with options for voluntary amendments and then office actions are issued until grant or rejection.

You have opportunities at two points in the above process to amend your patent and you should carefully consider using both of them given the fair basis rules, which closely align with European patent law and differ quite greatly from the US process. The first opportunity comes when you request examination and the second lasts three months from notice that substantive examination has begun. It is imperative that you use these opportunities to your advantage and carefully review whether you need to amend or not; doing so after the fact will be extremely difficult.

You will also want to consider translations and the problems they can present. Before you even start the filing process, you will want to ensure that any relevant foreign-language prior art is accurately translated, including translations for foreign competitor patent claims. While machine translations can serve as a functional starting point, a poor translation can severely hinder the timeliness of your filing. Differences between languages are often technically complex and errors quickly compound, given most patents are already technically complex in subject matter. For example China does not use articles such as ‘a’ or ‘the’, and no distinction is made between singular and plural nouns. Word for word translations between English and Chinese can result in a translation that does not read properly, and in the other direction, too much subjectivity can stray from the intent of the source document. A literal approach of conveying meaning without broadening the scope of patent, striking a balance between the obvious challenges, is preferred. Improper translations are one of the most common barriers to timely securing IP rights outside of your native country.

Looking forward

With the rapid pace at which Chinese patent applications are being filed, how do the rest of us compete?

One approach is filing a very narrow sets of claims. This results not only in faster prosecution and grant, but also allows three or four applications to be filed for an invention that could quite comfortably sit in one broad set of claims. This also builds out your patent portfolio in size, impressing both investors and competitors alike.

A helpful question to ask might be: would the CEO of your competitor be more impressed that you held 50 granted patents or five very broad patents?

While an IP practitioner who toiled for many hours crafting a perfect claims set might find it crude, the commercial reality is that 10 narrow patents are valued more highly than two very broad patents.

Or perhaps you should consider a strategy used by Kia Silverbrook, one of the most prolific inventors of all time. According to former in-house counsel, one such strategy utilised by Silverbrook was to file 300-page priority documents covering an array of inventions, and then comb through that for specific inventions, filing as many divisional applications as possible. Once again, the commercial realities of the marketplace simply do not wait for creativity and inspiration. Find a strategy that works and use it.

For the rest of the world watching China’s IP acceleration this is the takeaway: we cannot beat them, so we might as well join them. Even more, you need to understand both what they are doing and how to operate within their system. The numbers do not lie—if you have not been paying attention to what China is doing, you should be, because it is working for them, and it can work for you too. IPPro

“For the rest of the world watching China’s IP acceleration this is the takeaway: we cannot beat them, so we might as well join them.” – Justin Simpson, RWS

To read more, click here for IPPro Patents issue #56.

IP Watchdog Features Our 2017 Global Patent & IP Trends Indicator

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We recently launched our 8th annual Global Patent & IP Trends Indicator. The report gives patent professionals an insight into the IP world and highlights how your colleagues are affected by the changing patent landscape. IP Watchdog recently covered the Indicator and sat down with RWS ‘ Justin Simpson for an interview.

IP Watchdog mentioned several statistics from the report including that more than 73% of respondents filed patents in four or more countries in 2016. This is something that Simpson accounts to the increased globalization within the intellectual property space. 87% of respondents have been filing into BRIC countries for the last five years, showing that the world is getting smaller. 

Despite the increased number of international patent application filings, one-third of the survey respondents had their IP budgets reduced during 2016. Simpson accounts this to the patentability of software and the reduced amount of freedom in the sector; whilst inventors may have filed all five of their inventions 15 years ago, now they may just file one or two, thus leading to a reduced budget overall.

Download the full Global Patent & IP Trends Indicator by clicking here. Feel free to get in contact with your closest RWS office with any questions.

WIPR’s feature of Our 8th annual Global Patent & IP Trends Indicator

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Since the publication of our 8th annual Global Patent & IP Trends Indicator, we have been featured in a variety of IP publications. Please see below for our feature from WIPR and get in contact with your nearest RWS office with any questions on our findings.

WIPR considered the Unitary Patent Court (UPC) Research in the IP Trends Indicator which showed that nearly half (47%) of the respondents remain undecided over whether they will use the unitary patent. This is ongoing as the introduction of the UPC remains delayed by the German Constitutional Court.

Justin Simpson, founder of the inovia platform, shared that the America Invents Act (AIA) has created uncertainty as those who filed prior to the AIA start date in March 2013 caused a flood of applications at their 30 month date, leading to a surge in filing numbers. Filing trends as reported in the Trends Indicator are now back to a stable level, gradually increasing throughout 2016. Read the full article here.

Justin Simpson discusses the AIA and China as a common filing destination

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Justin Simpson, of RWS recently sat down with IPPro The Internet to discuss patent filing trends in 2016. A key trend he identified is that filing numbers are still being affected by changes associated with the American Invents Act from March of 2013.

Simpson goes on to explain that in early 2016, because patent applications had been brought forward to beat the AIA deadline, there were far fewer filings in early 2016. Now in 2017, all of that has passed and filing numbers are back to the normal levels that they were before the AIA flood.

He also discusses China as an increasingly common filing jurisdiction and references RWS’ upcoming Global Patent & IP Trends Indicator, to be released later this June.

Read the article in entirety on page seven here

“Britain, your IP costs just went up”

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Earlier this month, our Founder, Justin Simpson published an opinion article with Real Business Magazine discussing how the recent Brexit will effect the upcoming Unitary patent.

The terms of the Unitary patent were agreed in 2012 & 2013 and needed to be ratified by 13 of 25 countries (including the UK, France and Germany). The UK legislation passed the UP by both Houses of Parliament in March 2016. The last thing left was for the UK to notify the EU that they ratified the UPC and wait for two other countries to ratify it. In all likelihood, it would have come into force sometime early next year. But then there was the Brexit. 

Read Justin’s article in entirety here. Do you agree with his argument that there is a slim chance the Unitary patent will come into fruition early next year? We invite you to discuss in the comment section below.

inovia Founder Recognized for Achievements in Entrepreneurism by the Pearcey Foundation

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Justin Simpson recently received the special recognition award for his contributions to entrepreneurism and the technology community in New South Wales.

We are proud to announce that inovia company founder, patent attorney Justin Simpson, has been selected as one of 13 entrepreneurs recognized for their achievements and contributions to the Australian Information and Communications Technology sector by the Pearcey Foundation.  Along with the other recipients, Justin was honored on October 23, 2013 at the New South Wales Parliament House.

Mr. Paul Toole, Parliamentary Secretary for the Deputy Premier and presenter of the 2013 Pearcey Awards, praised the innovators, “This year’s winners and finalists have been selected by industry peers for their outstanding efforts to contribute to New South Wales. The digital revolution is well underway and our digital capability has quickly become a critical tool for the sustainability of many, if not all, businesses”

This distinctive honor is a testament to Justin’s dedication and vision in recognizing the market need for a web-based tool that removes the administrative burden and management of the foreign filing process.  After starting the company in 2002, inovia.com has grown to a user base of over 4,500 and the company has coordinated more than 45,000 foreign patent filings totaling more than $100 million.

“It is a great honor to be recognized by my peers and countrymen and to be in the same company as such innovative and inspiring entrepreneurs who have received this prestigious award,” shares our founder, Justin Simpson.

Congratulations on this monumental occasion, Justin!  As always, for more information about the inovia platform, please follow us on Twitter @inoviaIP.