Quantity First, Quality Second

Issue 31 By Doris Li, China IP,[Patent]


According to statistics released by the State Administration for Industry and Commerce in 2005, there were 3.5 million domestic enterprises. In 2008, the Ministry of Commerce reported that newly approved foreign-invested enterprises numbered 27,514, a slight reduction from the previous year.

Compared with the annual increase of enterprises, data from the Development Plan for Patent Agency Service (2009-2015) revealed that the number of certified patent agents jumped to nearly 6,000 in 2008. However, according to Ma Lianyuan, President of All-China Patent Agents Association, the actual number of practitioners in this field only topped 4,000. Many enterprises showed their concerns that most of the top agencies are in Beijing and seldom in the second and third-tier cities.

On February 27, 2006, the State Council officially announced the notice of implementation regarding the Outline of the State’s Plan for Mid-Term and Long-Term Scientific and Technological Development (2006-2020), which relates to the technological innovation of enterprises. Consequently, the preferential policies encouraging technological innovation of enterprises were on the rise. The measures to some extent, had effectively encouraged enterprises, especially small and medium-sized, to invest in research and innovation.

Huge discrepancies between home and abroad

The investment by enterprises in research and innovation has led to the increase of patent applications on an annual basis, which in turn, pushes the need for patent agents. In recent years, patent applications filed by Chinese enterprises have been “bullish all the way”. According to latest statistics released from the World Intellectual Property Organization, Huawei Technologies Co., Ltd. ranked No. 1 in the world for the first time among all business and individual applicants under the Patent Cooperation Treaty, with 1,737 patent filings in 2008, followed by the previous No.1 Japanese Company, Panasonic Electronics.

This journalist learned that Huawei had implemented a “special strategy” in its overseas patent filings. The company trained a number of full-time translators, which focused on the work prior to the patent applications in Japanese, German and other languages. “In house” employment of translators does not cast doubt on the ability of patent agencies; rather it saves huge costs.

While interviewing enterprises, it was found that there is little price difference in domestic patent filings either by an individual enterprise or through patent agencies. However, there is a huge price variation for overseas patent filings between work partially completed by an enterprise (mainly translation) and work concluded through patent agencies. The cost-saving measure may be a typical “Chinese” strategy, contrary to that of foreign enterprises.

A number of law firms have shifted part of their focus to domestic enterprises with an increasing number of domestic patent filings. Presently, many firms rely economically on patent filings by foreign enterprises, largely due to the 10-fold price difference between domestic and foreign enterprises.

Yang Xuri, technical supervisor of the Technology Management Division with the Founder Group, said in an interview: “For domestic enterprises, large law firms don’t necessarily have advantages. Relatively, large law firms concentrate more on foreign applications, with higher fees. The applications of foreign cases are basically complete and the major work for domestic law firms is translation, which does not require comprehensive knowledge from patent agents.”

In 2008, patent applications in China filed by the Founder Group reached nearly 400. The company has 30 professional patent agents and precise methods to choose patent agencies. Yang Xuri said, “After a period of cooperation the enterprise will get to know exact details. Patent agent qualification is just like a key to the door. People with such qualification may not do a good job and vice versa.”

The enormous price difference between foreign and domestic application representation has driven many patent agents to unswervingly engage in foreign-related applications. The low fees paid by Chinese enterprises for patent applications have pushed some law firms to put domestic enterprises on a waiting list. 

“The field is widely split. Patent agencies charge higher fees from overseas cases than that from domestic applications. Law firms tend to engage in foreign-related applications. 10, 000 Yuan per application versus 100 Yuan per application, surely, more are better.” The remarks of Yang Xuri indicate a “double track system” existing in China agent industry. He also believes that it may be a long-standing issue. This discrimination may vanish when domestic enterprises have gained an equal position with foreign enterprises after ten or twenty years’ development, or even longer.

Huge regional discrepancies

A number of Beijing enterprises, especially domestic, do not think that there is lack of talent or patent agencies in the field of patent applications. During an interview, Yang Zhe, division chief of China Petrochemical Corporation, said: “not lacking at all, enough, too many!” While to some regional enterprises and law firms, Beijing is somewhat of a “stuffed man who does not know how hungry a starving man is.”

In China, some cities lack patent agents, while in other cities they are like “rare animals”. By way of example, in Hunan Province, only two patent agents pass the qualification examination each year based on preferential lower passing marks. Due to the preferential passing marks, those who pass the examinations are able to practice only in the local areas. However, the average fee for a patent application ranges from 500 Yuan to 1,000 Yuan in second or third-tier cities. Though inexpensive locally, many enterprises bring important cases to Beijing. The cost is higher, but the quality can be assured. “Enterprises seldom choose to file applications locally because of the regional discrepancies and difficulty in communications, and, the local ability is really limited,” said Yang Xuri.

A variety of factors have pushed the top patent agents to Beijing. Local law firms are worried about the lack of employees, and certain local enterprises are concerned over the uneven distribution of patent agents.

Panasonic IP Chief Ren Feng said: “Many patents involve only work on applications and there is not any question if all come to Beijing. However, Panasonic has some research and development institutions in other cities across China. These institutions wish to communicate with patent agents on a regular basis to ensure the validity of patents. Then we find it is rather difficult to find a local patent agent.”

Panasonic headquarters in Japan has 100 certified patent agents, while in China there are only six. However, patent filings in China account for more than 10% of the global patent filings. Panasonic has more than 2,000 patent filings in China every year, and this is far from enough. In addition to the deficiency of “own people”, “outfit clashes” may embarrass the company from time to time when in cooperation with patent agencies.

Due to the absence of high-quality patent agencies, different enterprises may choose the same patent agencies on identical products, making conflict inevitable. Therefore, both the agencies and enterprises have to make a choice.

Regionally, economic orientation has made it difficult for patent agencies to change within a short time. Therefore, enterprises have to find other avenues for patent agencies.

Search for quality among quantities

In 2008, domestic patent filings reached 717,144, including 194,579 invention patents, 223,945 utilities patents and 298,620 design patents. In terms of quantity, China has made a gigantic stride in patent applications, however, if the “extra water” in the figures is squeezed out, will it be possible to raise the quality and decrease the workload of patent agents?

Both domestic and foreign enterprises have reached a rare consensus on the percentage of quality and quantity of patent applications. Enterprises generally believe the figures that show a soaring number of China’s patent applications, regardless of the numeric accuracy. In terms of quality, they feel that in the absence of quantity, there is no quality.

“In other countries, such as Japan and the United States, where patent applications started early, most domestic enterprises come atop on the list of domestic patent applications. While in China, for the previous two years, Panasonic ranked No. 1, but in recent two years, Huawei has come to the top. I think it is very natural, and inevitable. With the development, I estimate that more and more enterprises in China will come to the top of the list.” said Ren Feng.

As for the development and quality of patent agencies in China, various enterprises have recommended the following measures: shortening the economic barriers between patent agents, narrowing differences between home and abroad, and nourishing a team of patent agents with working experience in countries where patent applications started early, and of course, raising the quality of domestic patent agents.

 (Translated by Wang Hongjun)



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