China’s patents, royalty income rise as it steps up IP protection amid US trade war

China granted 453,000 invention patents last year, up almost 5% year on year, as the country vows to step up regulations to protect intellectual property amid charges of widespread IP abuses that have been a focal point in the ongoing US-China trade war.

Photo credit: US Department of Agriculture

The total import and export of IP fees from January to November 2019 exceeded US$37 billion, already topping the US$35 billion for all of 2018, according to a statement from China’s National Intellectual Property Administration (CNIPA), as reported by state-run media Science and Technology Daily.

Exports, or the amount foreign companies paid for use of Chinese IP, grew 19.2% year on year to US$6 billion, signaling an improvement in the country’s IP quality, according to the CNIPA.

Chinese applications for international patents are also on the rise with 61,000 submissions last year, up 10.4% from 2018.

Apart from new inventions, around 1.6 million utility model patents were issued last year for minor improvements on existing products, while 557,000 design patents were granted for ornamental product designs.

“China will continue to improve the legal system for intellectual property […] and step up international cooperation in the protection of IP rights as key tasks in 2020,” according to a statement from the patent office on Monday.

IP protection and forced sharing of technology have been a central focus in the ongoing trade war between China and the US, as the Trump administration has accused Beijing of stealing American tech secrets and forcing US companies to transfer critical technology to Chinese partners. The White House cites estimates that Chinese theft of American IP costs the US economy up to US$600 billion each year.

Last May, the US added Huawei to its Entity List, which bans US companies from selling components to the Chinese telecommunication equipment and smartphone maker. Washington has accused Huawei of being a national security threat to the US, which the company has denied.

China is also raising penalties on intellectual property rights violations in an effort to address the issue as part of the trade negotiations, according to a government guideline released in November. Beijing pledged to lower the thresholds for criminal punishments for those who steal IP, but did not elaborate on the details.

The guideline states the country aims to reduce frequent IP infringements by 2022 and plans to make it easier for victims of transgressions to receive compensation.

“Strengthening [IP rights] protection is the most important content of improving the [IP rights] protection system and also the biggest incentive to boost China’s economic competitiveness,” according to the document.

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