Chinese companies may have filed the most patents globally last year, but that doesn’t necessarily equate to breakthroughs in innovation, said Ryan McCarthy, the principal and chief representative at the Shenzhen office of intellectual property (IP) law firm Fish & Richardson. He called for efforts to boost the quality of these filings.

“When you see more patents filings, that’s typically a very clear sign of innovation,” he told TechNode in an interview at TechCrunch Shenzhen 2019 on Monday. “But the number of patents that are actually issued is probably a better sign of quality.”

The National Intellectual Property Administration of China, the country’s top patent office, received some 1.54 million patent applications in 2018, accounting for nearly half of total filings globally, according to World Intellectual Property Organization (WIPO) report last month.

China’s rise to become top patent-filer worldwide coincides with the country’s push for complete technology self-reliance amid its ongoing trade conflict with the US.

Subsidy push

McCarthy said a lot of patents that were filed locally by Chinese firms purely to qualify for government subsidies.

Among the vast amount of patents filed, only around 25% of those from local firms gained patent office approval. The approval rate for non-Chinese companies in the country is about 50% to 60%.

“There is a very significant quality issue [with those filings],” he said. “My impression of the reason why there are so many filings is that the Chinese government, from what I’ve seen, has been really promoting intellectual property.”

Forced technology transfer by Chinese companies and governments was a key sticking point in the trade negotiations between China and the US, with the US asking for better protection of American IP in China.

McCarthy, however, deems the transfer of technologies to be “a cost of doing business“ in China because they can choose not to create joint ventures with local partners and find other ways to enter the market.

“But again, they are still here doing business, and that’s because they decided that it’s worth that cost to continue to do business,” he said.

Late last month, one of China’s vice-commerce ministers promised that the country would no longer force foreign firms to transfer technologies to access the market. Beijing pledges to bar the use of “administrative tools” to making companies hand over trade secrets.

“But if that is changing, where there is not any type of required technology transfer, I think that’s going to improve things in terms of companies from outside of China being more encouraged to come into China,” he said.

Writing about semiconductors and telecommunications.

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