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Asia dominates IP filing growth

Asia is increasingly leading growth in the filing of international IP rights. James Nurton looks at the latest trends in data published by WIPO, and considers the implications for IP practitioners worldwide

Organisations from the Asia-Pacific region are driving growing demand for international IP rights, led by high-tech companies in China. The trend is particularly pronounced in patent filing, judging by the latest data released by the World Intellectual Property Organization (WIPO). The significant and irreversible shift towards the region, which is likely to accelerate in the next few years, will have a big impact on IP practice and policy throughout the world.

According to statistics published in March 2017, Asia accounted for 47.4% of Patent Cooperation Treaty (PCT) applications in 2016, compared to 25.6% for Europe and 25.3% for North America. It is likely that Asia will account for more than half of all PCT applications by 2018.

The United States remains the number one country for PCT filings (24.3%) but it is closely followed by Japan (19.4%) and China (18.5%) while Korea (6.7%) ranks fifth. India also featured in the top 15 countries for PCT filing in 2016, with 1,529 applications.

The emergence of China has been the biggest story of the past 15 years, and the country has posted double-digit growth every year since 2002. Last year, Chinese applications grew by over 44% and based on current trends China will overtake the US as the largest user of the PCT system within two years. "China-based filers are behind much of the growth in international patent and trade mark filings, making great strides in internationalizing their businesses as the country continues its journey from 'Made in China' to 'Created in China'," said WIPO Director General Francis Gurry.

Seven of the top 10 ranked companies based on PCT publications published in 2016 were from Asia, including ZTE (ranked first with 4,123 patent applications published) and Huawei (ranked second). Mitsubishi, LG Electronics, BOE Technology, Samsung and Sony were the others. More information about PCT trends is available in the PCT Yearly Review 2017, published in July (see charts).

National filing trends

The trends seen at the international level are also clear in filings before national offices. The JPO, KIPO and SIPO are three of the IP5 offices alongside the EPO and USPTO, and the IP5 has published preliminary data on national filing and grant trends in 2016.

These figures show that SIPO received over 1.3 million invention patent applications during the year, an increase of 21.5% on 2015. The USPTO received just over 600,000 applications while the JPO ranked third with just over 318,000. SIPO granted some 404,000 applications (an increase of 12.5%).

But what's really striking is that the vast majority of patent applications in China (including invention, utility model and design patents) are from domestic entities, and these applications are growing at about 25% a year according to SIPO.

With applications in China soaring, and more and more Chinese companies now seeking protection internationally, we are also seeing more Chinese entities involved in disputes in Europe and the United States as well as in China itself. Chinese companies have been prominent in landmark cases on standard-essential patents, such as Huawei v ZTE in Germany and Unwired Planet v Huawei in the UK, and are among the most active companies as both petitioners and defendants at the PTAB in the United States.

Tao Zhang, of Huawei, and Jingui Fang recently co-wrote a book titled "Mining Ideas for Diamonds: Comparing China and US IP Practices from Invention Selection to Patent Monetization". In it they say: "Companies in China and western companies, who want to operate in China in the future, will need to figure out how to manage IP in China … Due to the fact that the IP industry is new to the Chinese market, IP professionals as well as inventors will face similar situations as the United States did 10+ years ago."

The authors identify "a disturbing phenomenon" that is often detected when exchanging opinions with those in the IP industry who manage portfolios in the US and China: "Most of the patent prosecution teams file patents with a 'passive activity' mentality, ie treating patent filing as a mere by-product of R&D programs rather than part of strategic planning." By contrast, in the US, companies are more focused on using their patent portfolios offensively to protect their market share.

This is beginning to change, as the authors argue in the book: "More and more Chinese companies are becoming strategic and proactive in leveraging their patent portfolios … It will soon become a common phenomenon to see sophisticated IP strategies being practiced by both US and Chinese companies." And, as Zhang told Managing IP in an interview published earlier this year: "China and the US are very different, and a lot of people don't leverage this part as much. Everybody is globalised but they don't seem to pay enough attention to the differences between China and the US."

Trade marks and designs

Outside of patents, Asian entities have not made quite as big a mark on international filing trends – at least not yet. Figures on the Madrid System for International Trade Marks show that applications from China soared by two-thirds to 3,200 in 2016 – meaning the country ranked fourth behind the US, Germany and France. Two other Asian countries featured in the top 10: Japan in eighth place and Australia in ninth.

However China has been the number one country based on the number of Madrid System designations since 2006. Last year, it had 22,314 designations, slightly ahead of the EU and the US. India, which joined the Madrid System in 2013, received 11,105 designations.

The highest placed Asian company, judged by Madrid applications in 2016, was Daiichi Sankyo of Japan, ranked 15th with 56 applications.

Statistics for The Hague System for Industrial Designs, meanwhile, show that Korea and Japan have made their mark since joining the system in 2014 and 2015 respectively. Korea ranked third for applications, with 1,882, with Samsung ranked second and LG Electronics ranked third in the list of users.

Japan ranked eighth in the list of countries, but international design applications from the country grew by 109% on the previous year, and are surely likely to grow further in the coming years as companies become more familiar with the system. Kabushiki Kaisha Bigwest was the highest ranking Japanese company, in 20th place: it filed 104 designs in 2016, compared to zero in 2015.

Goal setting

Throughout the region, governments are promoting the development of IP protection and enforcement. China's 2014-2020 National IPR Strategy Action Plan aims to build a "strong IPR country" and sets out aims that address both quantity and quality of IP rights, In Japan, meanwhile, in response to the Japanese government's 2016 Japan Revitalization Strategy, the JPO has set numerous goals to be implemented, which have been revised for fiscal year 2017. These span all IP rights and fall into three groups: enhancing quantitative goals; setting quality goals for quality aspects of examination; and expanding the scope of quantitative goals to its entire business operations. There are 43 separate goals in total, which are set out on the JPO's website.

The growth of IP in Asia is being driven by both governments and businesses, by both innovators and consumers. The impact of this growth will be the biggest trend for international IP practitioners over the coming decade, and no one can afford to ignore it.

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