Intellectual Property Registration Still Nascent in China, but Growing

China's National Bureau of Statistics (NBS) issued a report on March 17, 2008 on the rates of patent and trademark registration there. The report studied a range of companies, including the 300,000 large industrial companies in China that produced some 90% of that country's industrial output in 2006.

Only a minority of these large companies have formalized intellectual property rights, however. Fewer than nine percent (8.7%), or 26,000, applied for patents from 2004 through 2006. Fewer than one-quarter (24.3%), or 73,000, registered their trademarks, although more than one-third (38.4%) registered their own brands. Finally, only about one-fifth (20.7%) had company policies to protect their trade secrets.

This last statistic is interesting. The limited enforceability and enforcement of formalized intellectual property rights in China contribute to the perception of their value as investments for companies. Trade secret policies, however, have relatively little cost associated with their implementation, but high value in terms of preventing proprietary information and know-how from leaking out to competitors.

Enforceability may be one reason that trade secret policies are so scarce. There is no trade secret law as such in China. Rather, enforcement occurs under contract, employment, and other civil laws, which may or not be recognized by the courts there. A lack of professional training about intellectual property rights and communal cultural perspectives may provide other reasons.

The NBS report also examined patenting practices in a broader range of Chinese companies, including small to medium enterprises, and non-industrial companies. Among this broader range of companies, some twenty-seven percent (27.5%) of domestically-owned companies filed patent applications in 2006. This compares with about twenty-one percent of foreign-invested joint ventures (20.6%) and Hong Kong-, Macau-, and Taiwan-invested companies (20.8%).

Despite the currently low adoption rate for patenting in China, the trend is toward increased patenting. The State Intellectual Property Office earlier reported an impressive seventeen percent (16.9%) increase in the number of registered patents in 2007 over the previous year. In 2007, those registered patents totaled 850,043. For more statistics on patenting in China, please click here.

Intellectual assets are sure to play a increasing role in China's economic might and integration within the World Trade Organization and the global economy. Speaking before the 11th National People's Congress on March 5, 2008, Chinese Premier Wen Jiabao, pictured above, stated that China will adopt the National IP Strategy and will systematically promote individual innovation.

For more information about international protection for intellectual property rights, please contact us at +1.208.939.4472 or info@technologylawgroup.com.