Wednesday, 16 April 2014

10 Points on How China is Dealing with the Patent System

This is based on a paper by Peter Drahos, ‘The US, China and the G-77 in the era of responsive patentability’, Queen Mary Journal of Intellectual Property, Vol. 2, No. 4, pp. 315-28.

1.  The patent system continues to evolve, but is selectively responsive to the wants of business interests to the extent that some question whether it actually encourages innovation.

2.  Two important things happened towards the end of the 19th century which are relevant in this context: completion of the foundation of the international patent system in the form of the Paris Convention, and the emergence of the modern multinational enterprise which would influence evolution of the patent system.  However experimentation with the patent system by states continued until it was constrained by TRIPS.

3.  The rise of the BRIC countries has made the world more polycentric. However this has not translated into bold experimentalism with the patent system, and the BRIC countries have now essentially adopted the patent system in its current form.

4.  Brazil and India have abandoned their leadership of the G-77 coalition of developing countries.  The result of this is that poor countries have no real hope of changing the patent system to better protect their interests.

5.  China, India and Brazil are investing in their domestic patent office infrastructure. China has an ambitious target of 3.3 invention patents for every 10,000 head of population by 2015.

6.  The US gains the most from the present patent system in terms of wealth obtained.

7.  In terms of innovation China has a venture market, but has still to develop a corresponding entrepreneurial culture.  Further it is still in the process of obtaining core technologies, but has the power to negotiate with multinationals to do so as part of joint projects.

8.  China is probably looking to the future when it can benefit from the patent system as part of wealth maximisation. By allowing foreign patents into its territory it is forcing its companies to learn to cope in such an environment.  The long-term aim must be to use patents globally, including in the US, to obtain maximum gain.

9.  The US is worried about losing technological leadership to China and the resultant effects of Chinese owned patents in the US.  However the US is not averse to using anti-trust laws to protect its interests, e.g. the anti-trust action which led to the breaking up of AT & T in the 70’s.  It used compulsory licensing in the 40’s and 50’s where 40,000 to 50,000 patents were affected.

10.  In view of this the change in position of the US caused by China may trigger a change in the balance between antitrust principles and IP.

Drahos’ paper is available here.

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