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China leads global patent applications in fifth consecutive year

Reporter: Ge Yunfei 丨 CCTV.com

12-28-2016 12:53 BJT

Over the past five years, China has been a global leader in patent applications. The ongoing trend, reported by the World Intellectual Property Organization, is also boosted by Chinese tech firms investing in foreign markets. CCTV reporter Ge Yunfei brings us more on the country's leading role.

In the latest report released by the WIPO, China filed over 1.1 million patent applications in 2015, accounting for nearly 40 percent (39.3%) of the world's output.

ZTE Corporation, one of the largest tech firms in China, ranks third in international patent applications in 2015.

“Since 1996, we’ve already filed nearly 70,000 patents all around the world. Last year, we invested 10 billion yuan into research and development,” said Shen Nan, Chief IP Officer, ZTE Corporation.

And the expert told me just in one mobile phone, there are over 200 thousand patents. The patent lawsuits have been the biggest problem for Chinese companies who want to enter the US market like the US.

Shen Nan, Chief IP Officer of ZTE, now says that ZTE is the fourth largest mobile phone brand in the US in terms of sales volume. But behind this success is a series of IP lawsuits.

"We win all the International Trade Commission cases. We still have over 50 ongoing cases in the US. We’re quite familiar with the rules," he said.

"We know the defendant's strategy and have lots of global strategy partners. And we need to cooperate with other companies like Google."

For big companies like ZTE, who already take part in setting global standards, the huge amount of intellectual property rights they hold reduces the legal risks to a minimum in foreign markets.

But things are a little different for smaller Chinese firms. Section 337 of the Tariff Act allows the US International Trade Commission to investigate and target foreign patent infringements, with Chinese companies being the biggest victims.

“According to statistics, the conviction rate under Section 337 against Chinese companies is up to 65 percent while the average rate is only 26 percent,” said Ma Xianjun, Director Gereral, Guangdong Intellectual Property Office.

“Different markets have different standards for IP infringement. Now with the rising awareness of IP rights, instead of selling products to the whole world, many Chinese companies will avoid some high-alert countries,” said Liu Qun, VP of Legal Affairs, Meizu Technology, Zhuhai.

International patent applications in China’s Guangdong Province account for over half of the country’s entire volume.

Ma Xianjun, director of the Guangdong Intellectual Property Office, says Chinese companies need to actively cope with IP lawsuits.

“There is still a lot of work to do for Chinese companies in terms of abiding by Section 337. We should learn to use the rules to protect ourselves and build an IP risk control system,” Ma said.

But experts also say that the current IP system is becoming so complicated that it might hurt creativity and entrepreneurship. An easier and more convenient version is in great need.

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