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Patent Filings Surge in China

Applications are rising by 20% a year on the mainland, a sign of growing concern for intellectual-property rights. But could they be trouble for multinationals?

Add one more item to the list of things being cranked out in huge volume in China these days: patent filings. That may come as a surprise to many, since the country has long been known for paying little heed to intellectual-property protection. According to recently released data, China's State Intellectual Property Office (SIPO) received 694,000 patent applications in 2007. That puts it far ahead of both the U.S., with 484,955 applications, and Japan, with 443,150.

The volume of filings offers just one measure of the pace of innovation in a country. But in China, the recent surge—applications have been increasing at 20% a year—also signifies something else: a growing recognition that securing legal protection for inventions there is worthwhile. Indeed, a report issued in May by Evaluserve, an intellectual-property analytics company, notes that over the last two decades, China has taken a variety of steps to enhance its patent system, including creating an online, searchable patent database and a hierarchy of courts for handling intellectual-property disputes.

Nearly 200,000 of the applications filed with SIPO in 2007 were for so-called utility model patents, which last for 10 years, and are not available in the U.S. These are easier to obtain than full-fledged, 20-year "invention patents." But even considering the number of filings for more robust invention patents, China is on pace to overtake the U.S. by 2012, according to Evaluserve estimates. About one-third of filings for invention patents were made by businesses based outside China, "which clearly suggests that filing in China has become an intrinsic part of most multinational companies' IP strategies," Evaluserve states.

Challenge for U.S. Patent-Seekers

Looking at 2006 data, the latest indivudual-company statistics cited in the Evaluserve report, Shenzhen-based telecom company Huawei Technologies was the leading filer for 20-year patents, with 5,593 applications. Samsung Electronics was the largest foreign filer, with 3,779 applications. IBM (IBM) was the only U.S. company on the top 10 list for 2006.

The newfound respect for IP rights in China may be good news for many, but the explosion in applications there also creates a challenge for companies pursuing patents in the U.S. or other countries. A key step for applicants is informing patent examiners about "prior art"—existing inventions often described in other patent applications—and explaining why the patent they are seeking is different. Harold Wegner, a patent attorney and professor in Washington, D.C., noted in an e-mail bulletin, "Huge numbers of Chinese patent applications are becoming prior art upon their publication—and [appear] only in their Chinese version." It may be time for U.S. patent practitioners to bone up on their Mandarin.

Orey covers corporations for BusinessWeek.

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