What about US?
Chinese innovation is slowly but surely chipping away at the market share of the traditional dominant players, and patent owners are reacting

Trade and foreign relations are rarely out of the headlines, with the EU and UK about to begin negotiating the terms of their future relationship, and US President Donald Trump promising to make everyone pay for access to the US market, including China.

The US-China relationship, as it has played out in the patent arena, acutely identifies changing dynamics as domestic and foreign actors bid to carve out a share of the US market.

At the heart of this is China’s rise to global prominence, particularly in innovation.

Chinese inventors filed more than a million patent applications in 2015, pushing global patent filings to a new record high. According to the latest World Intellectual Property Indicators report from the World IP Organization (WIPO), 2015 saw nearly 2.9 million patent applications, with more than a million attributed to Chinese inventors.

The next most prominent filers were US-based, with 526,296 patents filed in 2015, then Japan with 454,285.

Chinese patent applicants filed mainly within their own borders, however, with only 42,154 filed outside of China, though this has risen steadily over recent years. Comparatively, US inventors filed 237,961 patent applications abroad.
Further, China’s patent office received 1,101,864 patent filings in 2015, including Chinese natives and overseas inventors, making it the first office to achieve more than a million applications in a single year.

These new stats represent a 7.8 percent increase in global patent applications filed since 2014, indicating a rising demand for patent protection, particularly from Asian inventors. WIPO director general Francis Gurry said late last year: “As policymakers seek to invigorate growth around the world, it is encouraging to report that intellectual property filing activity saw healthy progression in 2015. While China continues to drive global increases, IP use grew in most countries in 2015, reflecting its increasing importance in a globalised knowledge economy.”

This demand for protection, particularly from China, has come at the same time as Chinese companies have increasingly encroached into the US, inviting the wrath of established players.

Semiconductor company Qualcomm turned to the US International Trade Commission (ITC), which has the power to block imports of infringing products, and complained about four mobile technology companies. The ITC agreed in November to launch an investigation into electronic mobile devices produced by the companies that include hardware and software components, such as integrated circuits, cameras, capacitors and system-on-chips.

Complaints aren’t only coming from the semiconductor market, however, with the commission launching an investigation, also in November, into the unlawful importation of an artificial sweetener after a complaint of patent infringement from technology and specialty materials company Celanese.

China is proving a prime target for US patent owners and, as Duane Morris of counsel Richard Thurston explains, innovation and China’s increasing interest in the US are why.

Sticking with the semiconductor example, Thurston says: “Overtime, Chinese semiconductor competition will grow in its ability to compete for larger market share with non-Chinese companies outside of the mainland China market. As the Chinese semiconductor manufacturers enhance their manufacturing knowledge and efficiencies, and strengthen their original innovation base (protected by growing patent portfolios), they will become very formidable.”
“Thanks to heavy Chinese government investment and favourable government market assistance in their domestic market, the Chinese semiconductor manufacturers are developing the skill sets necessary for global competition,” Thurston says.

“The competitiveness of Chinese semiconductor manufactures will also benefit directly from the expansion of product and service companies, such as Huawei, ZTE and Haier, as they manufacture more integrated circuit devices themselves.”

“Finally, the Chinese will ultimately succeed in their acquisition of both fabless and fab-lite foreign semiconductor companies, which will enhance their ability to become more competitive globally.”

Commenting on the effectiveness of the ITC in dealing with this issue, Thurston points out: “It can be very useful only if the US petitioners move for and obtain injunctive, exclusionary judgements and do not settle for broad cross-licences.”

Thurston warns that US companies in the semiconductor space cannot rest on their laurels if they want to maintain their dominance.

He says: “If US companies continue to use patents solely for generation of licensing revenues and allow the licensing of all semiconductor manufacturers to their entire portfolios, those patents will not protect market share over time.”

“US market share will continue to erode unless and until the US companies either start to use their patents to block competitors (without licensing them) or are able to stay ahead of their foreign competitor with significant development of new patented innovations and license only portions of their patent portfolios.” IPPro

“A greater problem is that Chinese and other foreign companies are also becoming adept at using their own US patents to litigate against US competitors in the US market.”

Features
The latest features from IPPro Patents
With UC Berkeley appealing against the US PTAB’s decision in the CRISPR-Cas9 case, what’s next for the groundbreaking gene-editing technology? Kevin O’Connor, partner at Neal Gerber Eisenberg, explains
Least developed countries can now more easily obtain compulsory licences during public health emergencies, but some have been slow to take advantage. Vítor Palmela Fidalgo of Inventa International explains why
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Diana Portna of D&L IP Group explains how Ukraine’s compulsory licensing laws could be opened up for the public interest, and how rights owners could react
Facing unacceptable pendencies in 2003, the Canadian Intellectual Property Office dug deep to make the patent prosecution service more efficient
TC Heartland’s Supreme Court question may see patent owners going cold on the Eastern District of Texas
It is incumbent on practitioners and applicants to take care in drafting and prosecuting applications, says Bea Koempel-Thomas of Lee & Hayes
Is American chipmaker Qualcomm in trouble? Joachim Frommhold of Weinmann Zimmerli examines the facts
IP arguably sits on the periphery of any discussions about what a post-Brexit UK will look like, but that hasn’t stopped the country’s patent-granting authority from getting on with its job
Country profiles
The latest country profiles from IPPro Patents
Bruno Nunes of BN IP explains how patent prosecution and licensing works in Macau, a market dominated by gaming and pharma
Tran Viet Phuong of Duong Tran offers a handy guide to patent prosecution
IPPro Connects

Visit our sister site
the worlds biggest and best IP directory

ipproconnects.com
The Andean Community has stood firm in the defence of its owns interests, says Jesús Cuba and Kelly Sánchez of OMC Abogados & Consultores
The first preliminary injunction granted by a China IP court was awarded to Christian Louboutin. Dr Weili Ma of Chofn Intellectual Property explains
Patent prosecution in South Africa rarely favours the inventor, but recent reforms are aiming to change that, one little bit at a time
The Tanzania Patent Office is a useful partner in the prosecution process, says Sunday Godfrey Ndamugoba of ABC Attorneys
Dominic Ogega Mwale, managing partner at Mwale & Company, explains how to patent in Kenya
Patent owners looking for an attractive place to seek protection in Asia need look no further than Singapore, says Max Ng and Gerald Mursjid of Gateway Law Corporation
Interviews
The latest interviews from IPPro Patents