Development Trend of Patent Agency Industry in Triple Context

By Doris Li, Photo by Jody Lu, China IP,[Patent]

The third revision of the Patent Law, which went into effect on October 1, 2009, has drawn great attention in the industry. Its amendments to the terms of foreign-related patent agency are more eye-catching. Moreover, the Development Plan for Patent Agency Industry (2009 -2010) issued in June 2009 and the Guiding Industrial Standards for Patent Agent Services enacted on August 20, 2009, are also indications of the promising future of the patent agency profession.

In order to learn more about the status quo of China’s patent agency profession and provide a more detailed study on the professional development, the Magazine and People’s Daily Online jointly organized the 6th IP salon activity. We invited the President of the All-China Patent Agents Association Ma Lianyuan, Deputy Head of Patent Agency Administration Division under SIPO Law and Treaty Department Ding Huiling, Lawyer and Patent Agent of Beijing Globe Law Firm Xu Jianghua, as well as the former Head of the Design Complaint Division of SIPO Zhao Jiaxiang to discuss the developing trends in China’s patent agency profession under a triple context.

In addition, during the discussion, the guests also gave suggestions to enterprises on how to choose patent agencies.

I. The team of patent agents shall be enlarged.

The Development Plan for Patent Agency Profession (2009 -2010) mentioned that by the year 2015, the total number of Chinese patent agents is expected to increase to ten thousand. According to available data, the number of qualified professional agents is 10,339, while the number in actual practice is only 6,003. Can the expected increase in patent practitioners catch up with the high-speed growth of the Chinese economy? Can the existing system and methods play a positive role in expanding the team of patent agents?

Ding Huiling: From the source terms, compared with the bar exam, CPA exam and other larger professional examinations, patent agent qualification examination is still of low awareness in society. How can we solve this problem?

Firstly, it is necessary to intensify publicity and attract more talents to take this exam.

Secondly, the State Intellectual Property Office (SIPO) issued a reform program for the patent bar examination, which has brought in very significant changes. The patent bar qualification exam contains three tests. In the past, the examinee had to pass the three tests at one time in order to receive certification. According to the reform program launched this year, an examinee’s passing test results will remain valid for three years. Within three years, examinees may choose to retake any tests that they didn’t pass in previous exams and will be permitted to receive patent agent qualification certificate upon passage of all three tests. This is much like to the makeup mechanism in college.

Besides, there are a lot of people that pass the exam but don’t work as patent agents, whose proportion reaches about 40%. Although they have the qualification certificates, they are not real practitioners. After promoting more and more people to take the exam and get qualified, it is another problem how to attract these people to engage in practice. Therefore, the patent agency industry as a whole, including government, industry associations and agencies, should work together to develop this industry to attract more practitioners.

Ma Lianyuan: There is an urgent need to increase the quantity of agents. Agents must practice in real business and work hard to exercise because the qualification exam alone is far from enough. With an insufficient number of patent practitioners, every agent is under great pressure and therefore can not improve the quality quickly. The experience gained from spending one day on an application is certainly quite different from the quality of education earned spending five days on an application. Thus, the industry should first make efforts to increase the total number of patent agents. Quantity is the precondition of quality.

II. How can we improve the quality of patent agency service?

Zhao Jiaxiang: Competitiveness is empty talk without quality. Quality is extremely important under the current competitive market.

Xu Jianghua: In general, as patent agents, we are now more concerned about the quality of service. In the past, the market was occupied by several foreign-related agencies designated by the Government. However, under the current market competition, agencies must win customers on the basis of quality and features, so we now attach great importance to the quality of service. Of course, we also value the quantity of cases. We still hope that the agency can provide better service, win more customers and get access to more cases.

Ding Huiling: From SIPO’s perspective, we have been intensifying training in the past few years and treated it as a key project. On the one hand, science and technology is developing rapidly. On the other hand, in the past 20 years, the patent law has been amended three times and patent agents should study hard after every revision. In addition, international rules also keep changing, which has prompted people to learn.

In order to improve business standards and elevate the industrial service quality, SIPO plans to work with local IP offices and agent associations to organize various training programs in the industry. The agent qualification examination has screened out a number of unqualified people from entering the industry. Starting next year, we will combine the annual business training for patent agents with the annual check-up. The issue of “Standards” has in fact put forward specific requirements and restraints for the services provided by agents and agencies.

The Association (All-China Patent Agents Association) is now developing the training guide and outlining it very carefully. The Association has initially passed it and now discussions are under way. We will now discuss how to implement the outline. From this perspective, we have always placed great emphasis on quality.

Ma Lianyuan: Targeted at quality in the patent agency industry, the Development Plan for Patent Agency Industry (2009 -2010) as well as the Guiding Industrial Standards for Patent Agent Services listed a large number of specific measures. Currently, we are discussing how to strengthen training; that is, agents must practice in a law firm for at least one year before getting the practicing certificate and there must be an instructor to supervise them. Assessment for instructor qualifications will be conducted by the agency association. I think this mechanism will be much more effective than a few days of induction training. Of course, SIPO will take further measures to increase the quantity of patents to ensure the quality of the industry.

III. How can we prevent frequent job-hopping?

Ma Lianyuan: Agents in patent firms, especially the more qualified agents, change jobs very frequently. Talent flow is originally a good thing, but I am afraid that it can not be called “reasonable” if job-hopping is too frequent.

I think the major problem hindering the industrial development is training. Before the restructuring, a lot of firms were state-owned. Although the state-owned agencies had numerous defects, these state-owned firms, in general, input quite a lot into the training of personnel, including in-house training, domestic training as well as overseas training. After the restructuring, the current problem is that firms prefer to employ experienced and mature agents instead of training its own staff. Moreover, frequent job-hopping makes firms even more reluctant to increase investment in nurturing talents. This creates a vicious circle: patent firms do not develop their own talents but look for skilled agents, which leads to talent-digging between peers and drives up the market price.

From my opinion, there are two methods to solve this problem: Firstly, patent firms should level the differences in pay, remuneration, benefits so as to prevent job-hopping generated by payment; secondly, the total amount of patent agents should be increased to meet the market demands.

Ding Huiling: There are two reasons for the personnel flow: Firstly, there is still a serious lack of talented patent agents in the industry. If the number of agents becomes oversupplied, job-hopping will become less frequent.

The second issue is credibility construction in the industry. Low credibility is the reason many agents choose to quit. They feel the salary is unsatisfying salary or feel cooperation is lacking within the patent firms.

To solve this problem, government, industry and enterprises must work together to reduce the negative impacts. From the perspective of administrative supervision, according to related provisions of the Patent Agency Regulation and Patent Management Ordinance, a patent agent is not allowed to quit one patent firm for another if he serves the first firm for less than one year. If the patent agent quits within one year, the second agency will not receive the practitioner’s certificate according to the regulations, which is an institutional guarantee. From the perspective of industrial self-regulation, the agent association must intensify the training and education on professional ethics.

From a business point of view, the patent agencies should strengthen its internal management. The agency industry should allow the rational flow of talents, which will promote the industrial development. However, the current irresponsible and casual job-hopping phenomenon should be prevented.

IV. How should enterprises choose patent agency?

Although the quantity and quality of the patent industry is being upgraded, enterprises and individuals still find smoke and mirrors when choosing among more than 700 patent agencies. The quality and price is quite varied and there is no standard of measurement. How can enterprises and individuals choose the proper patent agency in this market-regulated industry?

Ding Huiling: In our daily work, we often receive phone calls like, “We want to apply for a patent. Could you please recommend someone to us?” To be honest, as a government agency, it is difficult for us to recommend.

The All-China Patent Agents Association has done the relevant research work with the purpose of formulating standards for assessing and grading the credibility and operation level of patent agencies. We should learn from other industries, such as the hotel star standard. Therefore, the client or applicant could fully consider their own circumstances and choose from the responding grades in service quality, personnel structure, fee and other aspects of patent agencies.

Ma Lianyuan: Now there are more and more agencies engaged in similar businesses. The Plan also set the goal of “developing high-level professional, outstanding and featured patent firms.” If we can achieve this goal, it will be much easier for the customer to choose patent firms.

Xu Jianghua: From our view within the practice, customers are often concerned with the following aspects when choosing patent firms: Firstly, “How far away is your firm from our company? Is there any branch in our city?” This raises the first concerns: distance and the convenience of communication. Secondly, “What is your price? Is it higher or lower than other firms?” This is the second concern: price. Thirdly, “Do you have any corresponding professionals to deal with our cases?” That is a concern of the service team.

At present, I think some companies are a little blind in choosing a patent agency. For example, some pay too much attention on price, distance or convenience. From my point of view, science and technology will drive social development in the future. I believe patents will become the key to occupying the market or to enhancing the competitiveness of the key. Even if enterprises now pay slightly more for patent applications, it will still be a very small proportion compared to value of future market interests. Therefore, enterprises shall pay more attention to the quality of service, that is, whether the patent firm has professionals to deal with the case with good quality.

V. Some interpretations for the Plan and Standards  

Ma Lianyuan: The Development Plan for Patent Agency Industry (2009 -2010) is a very important document. In fact, born with the enactment of Patent Law, the patent agency industry has gone through the developing process from small to large and from low level up to a relatively mature one. However, the industrial development has always been passive to the progress of the patent system and patent work. After the industrial restructuring, the patent agency industry has made great progress along with the great development of China’s patent work, but it still follows up the development passively. The formulation of the Plan was generated from this perspective. As a programmatic document to guide the future industrial development, the Plan is of great significance. Several practical and important objectives are raised:
The first is to enhance the service capability and level remarkably.
The second is to enlarge the scale of patent agents. From 1985 to 2000, a total of one million patent applications (three kinds of patents added up) were handled. From 2000 to the end of 2007, the amount reached four million, with an increase of three million. From the end of 2007 to this March, the number of patent applications was up to five million, of which the amount of patent applications in 2008 was 820,000. This indicates that the amount of patent applications has been growing rapidly in recent years, with an average annual rise of 20% or so. Comparatively, the number of patent agents has grown rather slowly, amounting to only six thousand now. It is clear that the population is unable to meet the increasing demand of applications, which also leads to the frequent job-hopping in the patent agency industry. The Plan clearly puts forward the goal of increasing the practicing agents to 1 million by 2015, which I think is a very good objective.

The third objective is to balance the regional development of the patent agency industry. Now patent agencies in Beijing, Shanghai and Guangdong are developing well, but the overall development in the country is not balanced. In the western region as well as other economically less developed areas, the patent agency industry is also underdeveloped. SIPO and Patent Agency Association have done a lot of work accordingly. Now that this goal has been incorporated into the Plan, relevant organs will promote this work with concrete plans and purposes. I believe with continual efforts, we will narrow the regional disparities. In this sense, I think that the Plan is very important. Without the Plan, I am afraid that the industrial development will remain to be passive and sometimes even blind.

Ding Huiling: The Development Plan for Patent Agency Industry (2009 -2010) issued in June 2009 gives us a more comprehensive goal of development, pointing forward the direction and objectives for the work of governmental departments.
From my perspective, I am more concerned about the issue of strengthening the legal system. The laws and regulations related to professional agents can be divided into two levels. The first level is the provisions on agency in the Patent Law, which is with strong principles. The second level is the Patent Agency Ordinance, which is the real standard specification document for the patent agency industry. This Ordinance was promulgated in 1991 and has not been revised for more than ten years. The most intractable problem we face now is that the Ordinance has seriously lagged behind the development of the industry. As the most fundamental industrial regulation, the outdated provisions make it difficult to carry out related work. In recent years, SIPO has been working to advance the amendment to the Ordinance, because related regulations including the Patent Agency Management Regulations, Patent Agent Disciplinary Regulations as well as the implementation methods of patent qualification examination, the examination rules, departmental regulations, etc., must be revised on the basis of the Ordinance. Only after the related rules and regulations are amended accordingly, can our work obtain a real legal basis so as to provide a better market environment.

Xu Jianghua: I would like to use two words to describe the Plan- “timely” and “comprehensive.” Timeliness lies in the fact that the third revision of the Patent Law is soon to be implemented. In such a transitional phase, many patent agencies are confused about the future development of the patent industry. The Plan provides us with a wind vane and we now have a clear direction.

By “comprehensive,” I mean the Plan has made a comprehensive summary of the industrial progress and puts forward a clear plan for the development in the next seven years.

At the same time, the Plan also mentions featured services, namely, “to preserve, and to develop more than 100 distinctive patent agencies.” In my opinion, if patent agencies can break outside the confines of simple agent service, broaden their horizon, stand on a higher position and deepen the services, it will be possible for them to set up their own brands and develop their own characteristics!

(Translated by Li Yu)

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