Chinese IP Fears Debunked!

Many companies are hesitant about pursuing patent protection in China based on a perception of toothless IP protection and that patents there are not worth the paper they’re printed on. After all, this is the country where bootleg and knock-off goods can be found on nearly every street corner.

However, recent data indicates that many of these assumptions may be incorrect (or at least exaggerated).

For starters, it seems China is increasingly recognizing the importance of strong patent enforcement, both to protect its domestic innovations and to encourage foreign investment. In fact, in the last decade, China has replaced the United States as the country with the largest volume of IP litigation.

Additionally, the win ratio of plaintiffs has increased over the past few years, as have average damage awards:

 Year Win Ratio Average Damage Awards
 2008  86%  91,080
 2007  85%  70,208
 2006  83%  89,809

Many applicants worry that Chinese courts will favor domestic parties in litigation – “home field advantage”, if you will. However, the data refutes this as well. Median damages in foreign vs. Chinese cases are higher than those awarded in Chinese vs. Chinese cases (117,500 vs. 90,000 respectively). Furthermore, foreign plaintiffs win more patent litigation cases than native plaintiffs (77% vs. 71%, respectively).

Finally, as we’ve mentioned before, China is increasingly a source of inventive output itself. Year-on-year initial filings by Chinese companies are growing faster than those of just about any other country. China is now in the top five countries for numbers of PCT applications filed, and Chinese telecommunication company HUAWEI TECHNOLOGIES CO., LTD is a strong supporter of the PCT, taking first and second spots for applications filed in 2008 and 2009 respectively.

These numbers illustrate China’s recognition of the importance of beefing up its IP protection. In deciding whether to file for patent protection in China, applicants should not only consider the gains China has made in recent years, but the advances it seems almost certain to continue making in the years to come.


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