Briefing: A large number of China’s patents are actually worthless

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China Claims More Patents Than Any Country—Most Are Worthless —Bloomberg

What happened: China holds the largest number of patents in the world but most of them are discarded by their fifth year to avoid paying fees. Patents in China are divided into three categories: invention, utility model, and design. Invention patents represent an advancement in technology but they only make up 23% of all patents. Since 2013, 37% of all invention patents have ended up discarded.

Why it’s important: Although China’s technology ecosystem is quite different now than it was in 2013, the number of useless patents points to a bigger problem. China incentivizes the high production of patents among universities, private companies, and individuals with tax breaks and subsidies. This has led many companies to file for patents in the less inventive categories like utility and design which have a shorter approval process. Government bodies, however, have begun to take notice and revoke some of these high-tech licenses over forgery, IP violations, and fake innovation.