China has been filing patents at far greater rates than any other nation on earth in recent years. This week, a Thomson Reuters report broke down that growth and compared it with other leading nations on the basis of innovation.

The report entitled, “China’s IQ (Innovation Quotient): Trends in Patenting and the Globalization of Chinese Innovation,” is available here [pdf].

The report clearly shows the rapid rise and dominance of China in patenting. According to the analysis, China is set to meet its 2015 target of two million annual applications for patents for inventions, utility models and designs. The target is part of the Chinese National Patent Development Strategy (2011-2020). This is far above the next in line, the United States and Japan.

A chart in the report shows China hitting 900,000 “invention patents” by 2018, compared to less than 400,000 for the US and Japan.

And in a key statistic, the vast majority of growth in invention patent applications in China is originating domestically.

“The surge in innovation that we see is increasingly being driven by domestic entities,” it states. “From roughly parity in 2007, last year around 80 percent of Chinese patents originated from China.”

China saw an overall increase of 16.3 percent in patent applications from 2012 to 2013, but there is some question about the quality of its patents. The country is on a campaign to move from “Made in China” to “Invented in China.” But a large portion of its applications are for utility models and design patents, rather than innovations. The report said that SIPO figures for 2013 show there were applications for 825,136 inventions, 892,362 utility models and 659,563 designs.

It explains that a utility model application is “not subject to substantive examination; in principle it is possible to obtain a utility model patent on the wheel) and so are likely to be of lesser quality than invention patents.”

For the analysis, Thomson Reuters compared Chinese innovation patents with those of other countries.

It found the biggest area of patenting in China is in the alkaloid/plant extracts category. China has nearly 80 percent of the world share in patents for alkaloid/plant extracts and approximately 60 percent of global share for pharmaceutical activity, general patents,” it said. It turns out that much of this patenting relates to traditional medicines, and are from thousands of small, individual inventors rather than universities or corporate entities.

Meanwhile, the report said China “has a portfolio of innovation in the digital computing/processing/communication tech sectors comparable to those of the United

States and Japan in these technology areas. China mirrors them in terms of its robust and comprehensive protection by corporations and universities.”

On an interesting measure of the value of a patent – how many average forward citations it gets in later published inventions – China (1.17) is far behind the United States (6.72), but comparable to Japan (1.82), Europe (1.31), and South Korea (0.76). This is not a perfect measure of value, and language may be a factor, the report said.

The report also shows a significant rise in patent litigation in China, and analyses the changes in outcomes of cases over time.

It also may surprise some to show that foreign parties do not appear to be treated less well than domestic ones in patent litigation. But it does find “notable variation” in outcomes depending on geographic location within China.

In another area of analysis, the report shows trends in filing of Chinese patents outside of the country. It founds that, “The general trend is that the United States, Europe and China are filing less globally in 2013 than in 2008, while foreign applications originating from Japan are increasing.” For China, the numbers were flat from 2008 to 2013, which the report said could have an economic impact for the country.

The report broke down Chinese patents filed abroad in the technology sector, with the largest amount (nearly one-quarter) in the digital information transmissions category. In general, the foreign filings reflect the country’s domestic growth in high-tech areas, it said.

“China continues to dominate in terms of the sheer number of published patent applications as it moves from a manufacturing to a knowledge economy,” Bob Stembridge, senior patent analyst at Thomson Reuters, told Intellectual Property Watch. “Our research at Thomson Reuters Intellectual Property & Science shows that not only is China filing more patents, but the distribution is also shifting across more filers, meaning fewer patents per holder. Areas like digital computing and pharma are particularly strong right now. However, China could look to increase the amount of patents it files abroad in order to drive global economic value from its intellectual assets.”

The report summarised: “Although there is recognition at the national level of the importance of IP, this does not always translate down to the enterprise level. Major Chinese corporations are making strides in embracing and using IP as an integral part of their business strategy as they seek to drive revenue growth, gain market share and deliver cost benefits through the protection of innovative technology. But as data in this report shows, this is still the exception rather than the rule.”

Image Credits: Thomson Reuters, Thomson Reuters