China Surge Fuels Rise in IP Applications In 2010; Growth Seen Continuing for 2011

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By Daniel Pruzin  

GENEVA—Filings for the protection of patents, trademarks and the international designs increased in 2010 due to a surge in applications from China, the World Intellectual Property Organization said Dec. 19.

In its annual World Intellectual Property Indicators report, WIPO noted that intellectual property filings worldwide rebounded in 2010 after experiencing a considerable drop in 2009.

WIPO Director-General Francis Gurry also said that filings for the international protection of patents and trademarks through WIPO's Patent Cooperation Treaty (PCT) and Madrid system increased over the first three quarters of 2011 despite the downturn in the global economy.

Patent applications filed with national intellectual property offices increased by 7.2 percent last year to an all-time high of 1.98 million applications worldwide. WIPO said the growth was driven by a steep filing increase in China and the United States.

“In the past decade, the patent office of China has seen the most dramatic increases in application levels,” WIPO said. “Between 2001 and 2010, annual growth averaged 22.6 percent, with patent filings rising from 63,450 to 391,177 in 2010.”

Trademark applications filed nationally increased by 11.8 percent in 2010 to a worldwide total of 3.66 million filings, with China accounting for three-fifths of total growth, WIPO noted.

“The IP office of China received about a quarter of a million additional applications in 2010 compared to 2009—more than the number of total annual applications received by France, Germany and the U.K. together,” the organization said.

In addition, applications for the protection of industrial designs jumped 13 percent in 2010 to a global total of 724,000. China was again the principle driver, accounting for 83 percent of total growth.

“The share of China in the world total increased from 54 percent in 2009 to 58 percent in 2010, which is more than five times higher than the share of the second largest office—OHIM,” the European Union's trademarks and designs office.

Gurry said the rapid rise of China underlined the increasing importance of intellectual property to the country's growing knowledge-based economy, despite continued criticisms of insufficient domestic IP enforcement. He noted that China is the world's second-largest spender on research and development, with $200 billion in annual R&D spending.

“What the figures show is the endorsement by China of intellectual property as an instrument of economic policy,” the WIPO chief declared. “They clearly are investing in it and they are clearly using it.”

China Still on Special 301 List

China remains on the U.S. Trade Representative's Special 301 “priority watch list” for what USTR cites as continued concerns about piracy and counterfeiting, and China's implementation of “indigenous innovation” and other industrial policies that discriminate against or otherwise disadvantage US exports and US investors.

“If you want to say that some part of their system is not functioning as well as someone would like it to, for example the enforcement part, that's a different question,” Gurry said. “But here what we are seeing is an extraordinary investment in the use of the system, so they clearly consider the system to be an important instrument of economic policy.”

“What we can say at this stage is that the Chinese take-up of intellectual property is extraordinary. They clearly have a strategic view of this, and what I think we will see is an increasing embrace of the whole of intellectual property, and that will have positive consequences on their enforcement.

Gurry admitted that enforcement continued to be a weak link in the global IP system but said there was no international consensus on how to address the issue.

“We have a reasonably well-developed legislative system internationally, but there is no development of an international enforcement system,” Gurry declared. “We're not along in that regard, the international community is not good at enforcement for the obvious reason that countries don't like others snooping around in what they're doing.

Nations Must Address Enforcement

“This is a challenge,” he admitted. “How can you hold together an international system in a closely-integrated global economy dealing only with the creation of rights and not with arbitration? That's a difficult policy question on which the international community is not doing terribly well at the moment.”

Gurry said international patent applications filed through the PCT were up nearly 10 percent through the first nine months of 2011 while international trademark applications filed through the Madrid system of trademark agreements were up 7 percent in the same period. The number of international applications filed through WIPO tends to be much smaller than the number of applications filed nationally, although Gurry cited a growing interest in IP rights holders seeking international protection.

Despite continued uncertainty in the global economy, the WIPO chief noted that R&D spending was expected to increase by 5 percent in 2012, fuelling increased demand for intellectual property rights.

“The knowledge component in production is increasing,” Gurry said. “We are so technologically based that there's a huge investment in the intangible economy.”

“There's also a recognition in economic policies and strategies that this sector of the economy, innovation, is a major component of economic growth. It is responsible for competitively and the generation of employment, therefore it's an additional reason why people seek to protect intellectual property.”