China Aims to Spur Blockchain With Intellectual Property Focus

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By John Butcher

Chinese tech companies may outpace their foreign counterparts in developing blockchain technology with the help of government moves to foster intellectual property protections, IP attorneys told Bloomberg Law.

National and local authorities have been offering incentives — including subsidizing patent fees, rewards for filings and tax credits tied to patent output — to companies to protect blockchain intellectual property rights in anticipation of its growing importance, according to IP lawyers. Private Chinese companies want to gain ground in the burgeoning technology ahead of overseas competitors, attorneys said.

“U.S. universities and corporations are still doing amazing research and development, but it does not have the same support from the government as in China,” John Eastwood, head of Eiger Law’s intellectual property and technology practice in Taiwan, told Bloomberg Law. “That could lead to China pulling ahead.”

China’s leading tech companies, including Baidu, JD.com and Alibaba, have already “recognized the importance of blockchain as a future technology,” and begun using it to improve their business operations, Ian Liu, senior associate at Deacons law firm’s intellectual property practice in Hong Kong, told Bloomberg Law.

Alibaba and Ant Financial proposed using blockchain as a public ledger for tracing counterfeit wines and liquor, he said, while JD.com piloted blockchain in its supply chain to trace imported food products and Baidu launched Totem, which uses the technology to timestamp digital images for rights management.

Chinese companies have filed a rising number of patent applications in recent years, and a May report on blockchain by China’s Ministry of Industry and Information Technology clarified the protection of intellectual property rights under Chinese law. Further government measures to protect blockchain IP are likely, including potentially classifying it as a national security risk in order bring it under China’s cybersecurity law.

Between 2008 and 2017, Chinese companies submitted 550 patent applications on blockchain technology around the world, surpassing the U.S. and South Korea to become the world’s largest applicant worldwide, according to a report by Chinese media site Sina.com.

The report added to the blockchain drive by acting as a “signal from the Chinese government that this technology is important to the country, and by being important to the country then presumably they are going to protect trade secrets,” Eastwood said.

In April, Beijing announced more than $9.5 billion (60 billion yuan) in tax cuts to drive innovation, aimed primarily at tech companies, according to the Ministry of Commerce.

Liu said China’s cryptocurrency ban may slow its blockchain development.

“In this regard, China is not leading the world in terms of how it recognizes and regulates blockchain assets,” Liu said.

Request Intellectual Property on Bloomberg Law