Many people do not understand the seismic shift in IP that has taken place in China. It is on the verge of becoming a major IP-based economy based on innovative technology and IP, creating a tidal wave of patents likely to wash over the US and Europe’s shores in the next two decades, enabling China to dominate significant technology areas. This stems from the recognition inside China (largely missed by foreign observers) of the fundamental importance of IP to economic growth as well as the natural creativity and inventiveness of the Chinese. By contrast the real, but poorly understood, issue is that the West, particularly the US, continue to weaken their IP systems on which their competitive and innovative advantage over the past 200 years has been largely built.
The role of IP in China is much more advanced than many people realise:
- IP law in China is now of a high quality by global standards.
- The quality, cost and timeliness of the “rights” (patents and trademarks) granted to foreign firms under Chinese law compare very well with the rest of the world.
- Enforcement of patent rights is much cheaper and faster than in most developed countries. The courts, including the IP Tribunal of the Supreme Court, are handing down some very sophisticated analyses and judgements. Foreign companies have a much higher probability of enforcing their patents in China than in the US. The ability to enforce varies in different localities in China. The penalties for infringement have been relatively low but steadily increasing.
- There remain some issues, including: possible requirements to have Chinese JV partners in some sectors; possible requirements to have PRC or Party directors on the Boards of joint ventures; and the ‘Made in China 2025’ could have mercantilist risks to China and discourage some technology collaboration and partnerships.