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Fiscal support buoys China's patent applications

Administrative policies are helping makers take copyrights more seriously. But most manufacturers still wait for buyers to request for IP protection before filing petitions.

Encouragement from the central and local governments is driving more China suppliers to apply patents for in-house designs. But although the number of cases is on the rise, there is still a long way to go before protected ODM models will dominate exports.

Fiscal support buoys China's patent applications
China's patent applications to the US, Europe and Japan grew 19, 7 and 16 percent, respectively, in 2009.

The country's Ministry of Finance set out a provisional regulation in October 2009 that allowed funding for SMEs, public institutions and research facilities to apply for patents overseas. Each request can include up to five countries with total endowment capped at $15,000.

City administrators offer similar incentives. The Shenzhen Intellectual Property Office, for instance, subsidizes up to $556 per case through the city's Finance Bureau.

Of the 7,946 cases filed via a Patent Cooperation Treaty in 2009, 1,847 applications are from Huawei and 1,164 are from ZTE, both of which are leading telecommunications companies. China Petroleum & Chemical Corp. and telecommunications specialist Datang are also among the top 10 patent applicants.

Most manufacturers, however, rely on their buyers to protect the integrity of designs. For instance, all of the MP3 and MP4 players Shenzhen Neostra Technology Co. Ltd markets to domestic clients carry patents. But only six of its export designs are protected, following buyers' requests. Three of these were filed in the US and another three in the EU. All were appearance and utility model patents.

Shenzhen Getian Opto-Electronics Co. Ltd has a similar approach. While the LED supplier releases several ODM products every month, it does not apply for patents.

Nonetheless, there are a growing number of China suppliers that are taking design protection seriously.

Blood pressure monitor maker Shenzhen Kingyield Technology Co. Ltd has applied for 19 patents in mainland China, Hong Kong and Japan since 2003. Software, sensors, pumps and valves are covered. Of these, appearance and utility model cases each accounted for six and innovation patents constituted the rest. These were all granted in 2009.

The maker spends roughly $400,000 annually on copyrighting in-house designs. Doing so has also helped with marketing efforts. By publicizing the patent marks and numbers, the company is able to highlight how the technical performance and functions of its protected models stand out from others.

Increasing, but not the most

Despite 2009 being a difficult year for international trade, China outpaced the growth in patent applications overseas. In fact, while the country's cases grew last year, others showed a decline in petitions.

This is because most countries cut down spending during the financial slump to maximize their cash flow. The budget for copyrighting designs is one of those that had to be let go.

Application fees depend on the type of patent and where it is filed, but costs approximately $130 each for appearance cases, and between $30 and $360 for innovation and utility models.

Even though the growth in China's applications is on the rise, the number of petitions filed by developed countries is still higher. The US, for example, listed 45,790 international copyright requests, down 11 percent year on year but five times as many as China's.

A March 2010 report from the country's State Intellectual Property Office showed 6,116 innovation patent applications were submitted to the US in 2009, up 19 percent. There were 1,604 cases filed in Europe and 891 in Japan, reflecting an increase of 7 and 16 percent.

Note: This article "Fiscal support buoys China's patent applications" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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