Trouble with Chinese IP? You bet!

It is a fairly common fear of those whose businesses rely on intellectual property rights: the worry that the Chinese manufacturing juggernaut will thumb their nose at their IP rights and ride roughshod over them by sheer weight of numbers, unencumbered by the need to respect IP rights or the responsibility of doing their own research and development.

Looking to the future, I think Chinese companies will continue to present serious IP challenges, although perhaps of a different kind to those of the past.

There is no doubt that enforcing IP rights against Chinese companies, especially in China, has been difficult in the past. However, it would be wrong to think that China is akin to a lawless land, inhabited by IP cowboys.

Some interesting facts to consider:

• There are over 697,000 valid Chinese patents, and 351,000 of these are owned by Chinese companies. For the first time, more than 50% are owned by Chinese companies.

• In 2009, over 30,000 lawsuits were filed in the Chinese IP courts (absolutely dwarfing the number of cases filed in Australia).

• Approximately 90% of IP lawsuits in China involve Chinese companies suing one another.

• China is ranked 4th behind the USA, Japan and Germany in the number of international PCT patent applications filed, and they are growing more rapidly than any other country.

• Chinese companies ZTE and Huawei are ranked 1st and 3rd on the list of top PCT patent applications published in 2011, having had 4,657 PCT applications published between them – that’s over 12 patents filed for every day of the year!

So what does this mean? Chinese companies are filing, and will be granted, a massive number of patents at home and around the world; they are used to IP litigation and they won’t be afraid to use it, especially in the more established Western legal systems.

So what does this mean for you? The real problem you will have with Chinese competitors and IP rights is that soon they will be enforcing their rights against you, in your backyard. So you need to be prepared, not caught thinking about how it used to be.


by Adam Hyland