Chinese Junk Patents Flood Into Australia, Allowing Chinese Companies To Strategically Block Innovation

from the perverse-incentives dept

Techdirt has been writing for a while about China’s policy of providing incentives to file patents — regardless of whether those patents have any worth. That’s led to a naïve celebration of the large numbers now being granted, as if more patents corresponded to more innovation.

Until now, this problem of junk patents has been confined to China, and the companies that operate there. But last year China went even further with its subsidy system, offering to pay the fees for filing overseas, presumably to encourage Chinese companies to build up patent portfolios in foreign markets that can be used for defensive or even offensive purposes. We’re now beginning to see the effects of this further distortion to the patent system, as Australian businesses struggle with the flood of new patents there. The Patentology blog explains:

A Chinese government scheme providing financial incentives for small and medium sized enterprises, public institutions or scientific research institutions appears to be resulting in abuse of the Australian patent system, and the ‘dumping’ of numerous low-quality innovation patents on the Australian Register.

These ‘junk’ patents are not being examined or certified. They therefore represent no more than potential enforceable rights. Even so, they generate costs to companies operating legitimately in Australia, which may need to obtain advice on the likely scope and validity of these patents in order to avoid possible infringement. In extreme cases, the existence of junk patents could result in an Australian business choosing not to take the risk of bringing a new product to market, even though the Chinese owner of a patent is not itself offering any products or services in this country.

This is a perfect example of how granting more patents actively harms innovation. Thanks to China’s incentive scheme, which encourages patent quantity rather than quality, Australian businesses must now spend more time searching through them all to see if they are likely to affect their own products, deciding if they are a threat, and what to do about it. All that costs money that could have been spent on real innovation, developing new products. Thanks to the patent system, and China’s new incentives, that money will now go to the lawyers.

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Comments on “Chinese Junk Patents Flood Into Australia, Allowing Chinese Companies To Strategically Block Innovation”

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Anonymous Coward says:

I say – “good on ya, China!”
If the Australian patent office doesn’t have the manpower or the will to check every patent that goes their way, then they should have thought of that before opening the floodgates! And if they would actually do their job, then the “junk patents” would not have been granted anyway.

Not an Electronic Rodent (profile) says:

Re: Re: Re:

hopefully as this move starts actually eroding Australia economy (and other economies elsewhere) the patent systems will actually be put under scrutiny and review…

To be hoped for surely… but the cynic in me says the much more likely outcome is that the problem will be “dealt with” using a sticking-plaster-over-sucking-chest-wound type law specifically aimed at junk patents that ultimately makes things worse instead of better.

Ninja (profile) says:

Re: Re: Re:

Ah, the metrics… Yes, it’s easy to measure the quantity of patents granted. The quality is trickier. But the real measure that should be taken into account is how those patents are actually encouraging further progress and injecting money into useful activities.

Too complex to politicians usual little minds.

The Real Michael says:

Re: Re: Re: Re:

It doesn’t matter either way. They’ll continue to file patents until the repurcussions begin to spill over into the Australian economy. Then, once the damage has been done, they will look into reforming the system.

China is taking its cue from the US, using patents to lock out innovation and create a potential war zone of litigation, e.g. Apple vs Samsung. Expect to see more Chinese companies pursuing legal avenues to block innovation (market competition) and be given a free handout for no effort whatsoever. And why not? They have the Chinese government backing their efforts.

anonymouse says:

Re: Re:

I am just waiting in anticipation for the Chinese to use Americas own weapon against them, if they dump a few million patents every year and they are approved which most of them probably will in America by American standards, American innovation will come to a complete standstill , or businesses will find they have to pay the Chinese for doing almost anything where patents are involved.

Who wants to take a bet that America will force through changes so that they don’t have to pay, lol, maybe this is what we needed to have real change in the patent system, someone coming up with more junk patents than Americans so that Americans do not benefit from their own patent system , and if the Chinese are backing these patents then legal fees to sue will be available for every single one of them.

Mark Summerfield (user link) says:

Re: Patenting the wheel, and other myths

As the author of the blog article on which this story is based, I would like to highlight some things that many people seem to have missed in their rush to criticise the patent system, and innovation patents in particular.

Firstly, the Australian patent system does not suffer from the biggest problems currently blighting the US system. In particular, there are no patent trolls operating here, and I am unaware of any Australian patent suit in which a non-practising entity has sought to restrain or tax the activities of an innovative operating Australian company. I once wrote an article on why I think the troll phemomenon is as American as apple pie!

Second, while the innovation patent system has been the subject of some criticism, and could certainly do with a few tweaks, by and large it has been working well for the smaller Australian companies and inventors it was designed to benefit. I have written about that as well.

It is ironic that while critics of the existing US patent system are calling for reforms including a shorter term for software patents, which are believed generally to involve lower levels of inventive merit, something like the Australian innovation patent is being touted as part of the problem, when in fact it might just be a pointer to a solution. If we took the basic concept, but gave it fewer ‘teeth’, e.g. a ban on injunctions, a limit on damages, etc, we might have something pretty well-aligned with the requirements for a more balanced software patent right.

Finally, that whole ‘wheel’ thing was beaten up out of all proportion. Thanks to some shameless self-promotion by the applicant, the story about getting a patent on the wheel was reproduced everywhere, generating the intended ridicule of the innovation patent system. What was not reported was that the Australian Commissioner of Patents exercised her power to review the patent, and revoked it just three months after it was filed (details here), thus proving that the system provides appropriate checks and balances where appropriate.

The problem here is largely on the Chinese side, not the Australian side. There might be something that could be done through diplomatic channels. And not issuing formal patent certificates on patents that have been through no more than a formalities check would help, also.


G Thompson (profile) says:

Re: Re: Patenting the wheel, and other myths

Exactly, and welcome to Techdirt.

That’s why I tried to state below (and seems my comment was highlighted above as a ‘first word’ comment) that the patent’s in question are not standard patent’s and there are benefits to them as well as major limitations when it comes to trying to enforce the patent.

Patents in Australia, especially the new patent reform that is currently about to happen, is totally different to the weirdness that is currently happening within the USA, which could be vastly improved with a bit of tort reform (ie: loser pays would be a great start).

I agree with yourself that the ‘official’ look & feel of the certificate needs to change to mitigate confusion, though the education of small business’s with respect to patent law and what these innovation patents really mean with the ability to have them examined needs to be better and less onerous. The IP Australia information about them should have more information on how to challenge for a start.

Your suggestion for a Registration number is (and always has been) a good idea though there is an easy way to stop foreign parties taking out numerous and dubious innovation patents, especially since they were originally designed for SME’s within Australia. Remove the ability for foreign companies to register them unless they have a provable, consistent, and historical (not less than 2-3yrs maybe) presence within Australia, otherwise some examination needs to occur before they will be allowed.

Or just remove “legal practitioner” from s210 🙂 Most solicitors I know turn white and instantly point towards a patent attorney at the mention of patents and the complexities involved and I don’t blame them one little bit. I’ll stick with Forensics and Digital Evidence with its ‘normal’ complexities under Australian and International law thank you very much 😉

Seegras (profile) says:

Re: Re: Patenting the wheel, and other myths

The problem here is largely on the Chinese side, not the Australian side.

Oh, no, it’s not. The Chinese obviously found the hole in your system, and are exploiting it.

Actually, the Chinese found the really big hole, and it turns out it’s the patent system as a whole. They are now able to stifle innovation in a big style, in any country that adheres to international patent treaties, or that even HAS a patent system and allow . And, of course, they themselves can just ignore any foreign patents as they wish, to not enchain their own economy.

Besides; your advertisement of your system as “a more balanced software patent right” is absurd in the first place. Software, being math, is not patentable. Nowhere on earth. So there can’t be any “software patent right”, because patenting software is illegal anyway. I would suggest you fix the illegal doings of your patent office first, if they’re granting software patents.

Doubting Thomas says:

Re: Re: Re: Patenting the wheel, and other myths

First- I find it difficult to disagree with much of what you’re saying here. The patent system originally was created for something entirely different than it is being used for now. It was intended to allow the original inventor of something to develop and sell it, so someone couldn’t copy it and undercut him or her, without paying royalties. Now it’s primarily used for trololololololing.

However, I must dispute that software is just math. Everything is “just math” when you boil away everything else. As a software engineer, and a laser physicist, I can speak with some knowledge of both subjects.

The idea of a patent system isn’t the problem, it’s what it’s been turned into that is the problem. China is doing what the banks on Wall St and Broadway were doing. That is, finding loopholes and exploiting them, regardless of the costs to everyone else.

That One Guy (profile) says:

Re: Re:

Well they have so much to teach each other after all. The US can teach China the best way to sabotage their economy by penalizing innovation and new technologies while encouraging the outsourcing of local jobs, and China can teach the US the best way to put a government controlled information control and censorship system in place.

That One Guy (profile) says:

‘These ‘junk’ patents are not being examined or certified.’

Okay, I really hope I’m misreading or misunderstanding that, as if australia has set up a patent system that allows people to get patents without having them reviewed or looked over by someone… then this isn’t a fault of china at all, but a well deserved ‘reward’ for such an insanely idiotic system.

At most I’d pity the innocent bystanders, business and buyer alike who will be hosed over by someone taking advantage of the broken system, but with a system like that in place it wasn’t a question of if someone was going to take advantage of the glaring loophole, but when.

Ninja (profile) says:

Re: Re:

I think it means that they fill for those patents and many of these fillings are junk and actually get granted (no surprises here). From what I got, the mere fact that they get shitloads of fillings is starting to make entrepreneurs to think twice since even the worst patents still have a chance of being granted making those fillings potential weapons that may be used (or not) against them in the future. Screwed up.

Lord Binky says:

The biggest flaw with many planned designs such as encouraging innovation with patent protection, is that people overlook or disregard someone just screwing things up for as simple as a reason as being an asshole, much less doing it for profit/power.

The common response from those that denied anyone would misuse it is some form of “Why would anyone do that?!”

Lesson: Asshole humans exist. Plan for it.

G Thompson (profile) says:

Okay one major point needs to be made and I’m not sure even Glyn actually picked up on it when reading Dr Mark Summerfield’s blawg.

These patent applications are only for ‘innovation patents’ which are strange beasties in that they:
* last for 8yrs only
* are designed to protect patents that don’t meet the threshold within Australia for either inventiveness and/or manufacturing process’s
* are designed to protect an incremental (slight some might say) advance on existing technology [ie: innovative not inventive]
* allows the patent holder (innovator) to protect each stage of development before final outcome is reached.
* Are VERY VERY cheap (approx $190US) to apply online for
* Get approved within weeks!

Yes I hear you all state WTF!!! That’s amazing!! that would totally stop people copying and innovating etc.

Yes and No… That’s where the problematical limitations of the innovation patent comes into play. You see if someone allegedly copies or otherwise the patent then if they want to take ANY legal action whatsoever then the innovation patent then needs to be fully examined and certified like any other normal patent first.

This basically means that if you try to enforce your patent through any means (including Cease &Desists) then you better be prepared to have the application fully vetted as per normal AND approved (with all ability to dispute by any party beforehand) before any court will grant you even a mention let alone a hearing. Also using the innovation in a way that claims it is a real patent could be actionable under our Competition and Consumer Act (ss52.

This doesn’t mean that some small business operator could not be intimidated by the mention of “innovation patent” for some product if they didn’t understand the law. And as Dr Summerfield also states the actual physical certificate looks too much like a standard patent certificate and could (and would) cause confusion and so needs to be changed to something less ‘official’ looking.

G Thompson (profile) says:

Re: Re: Re:

No there won’t be. Basically Proview is about Trademarks, and this is about Patents – totally different scenario and also Proview IMHO have an absolute claim to the name no matter what Apple Inc think they can do.

Apple had the same problem in Mexico and they cannot use the iPod name there either. The prefix of “i” is NOT Apple’s invention worldwide.

Apple also had a problem with the trademarked term iView within Australia, though there is NOTHING they can do about it especially since it is owned by the Australian Broadcasting Commission (ABC) which is a government owned entity.

McDonald’s, Microsoft, Campbells (Soup) and a miriad of other organisations (not just Apple) have this very us-centric view in regards to Trademarks (and patents.. though not so much) in that they think just becasue they own the Trademark in one country they by default can bully already legitimate users of the same trademark in the same class in other countries.

Anonymous Coward says:

Re: Re:

Brilliantly Stated, G. Tompson, While Innovation patents can intimidate creativity among the inventive in Australia (Doubt they ever were interested in legalese).

I think Chinese companies file these “Innovation Patents” to exploit “incentives, subsidies, concessions”, provided by the Chinese Government, and might even help them with local officials, by letting them show “good results”.

Chinese Companies like innovation patents because 1. they are cheap, 2. look like the real thing, & can be used to meet state rules.

G Thompson (profile) says:

Re: Re: Re:

No it isn’t, simple reason. No solicitor in Australia touches patents since it is a highly specialised area and why the actual Act states specifically “patent attorney” or licensed practitioner. Why does it distinguish? Because a “Patent Attorney” (and I hate using the word attorney within Australia.. but that’s my pet peeve) specifically specialises in the weird and annoying world of Australian Patent Law.

The amount of Patent Attorneys is bugger all compared to Practising Solicitors, and if you read the actual blog post by Dr Summerfield you would understand all this.

Anonymous Coward says:

Re: Re:

What “bandwagon”? In the US a patent may only be granted after a full examination on the merits. Until this happens there is nothing that can be enforced in a court of law.

Perhaps this is being confused with “Provisional Applications”, which is nothing more than a “filing date” placeholder should a formal patent application later be filed.

Anonymous Coward says:

Re: Re: Re: Re:

I could easily cite Alexander Grahm Bell. His idea wasn’t the first…but he was a practicing audiologist at the time he invented his version the telephone. If it weren’t for his design we would be speaking and listening to each other through a speaker box attached to a classic phonograph horn.

Of course that’s when the patent system actually was working and not being exploited.

Wally (profile) says:

Re: Re: Re:

Not as bad as China or Brazil.

I may be mildly in the form of allowing patent trolling….but there are almost no restrictions in China involving that. The main part of the US system is Execution and how the invention handles. It is petty corporations like Google (bought up Motorola Mobility for the sole purpose of litigation against Microsoft), Apple (Apple vs Samsung…rounded corners), and Samsung (who has recently tried to assert a software patent against Apple over text to peach software patents).

Meanwhile in China…
The Arbiters and Judges and Debt Creditors are all the same people.

Corwin (profile) says:

Re: Re: Re: Re:

Meanwhile in China…
The Arbiters and Judges and Debt Creditors are all the same people.

What the fuck, how does that work? Wait, it can’t. Next question : what does happen? There must be stories in that, that make the idiocies we read about here seem the result of thoughtful consideration.

Or is it all like when that cunt from the DHS or other jackboots U.S. agency pocketed a yacht for a typo in a customs form? And when the TPB censorship orders were issued by a textbook-corrupt judge in the Netherlands?

Harald K (profile) says:

Absurd patents in Chinese

If you thought current patent filings were absurd, I guess we’ll soon see stuff like this:

A display unit of a video control signal, characterized in that the pixels having the light-emitting element for emitting light, and said pixel circuit, the amount of the display device having a power supply is applied to the light-receiving element the luminescent signal scanningline select and for selected pixels sent to the default scan cycle pixels and the video signal supplied data lines of pixels by the light are arranged in a matrix pattern, for example, a display device, comprising: The amount of luminescence detection unit is configured to be able to detect a video signal in the light emission amount

Biizsearch (user link) says:

Online Business Form

Biizsearch began as an online business directory with the primary goal of helping businesses connect with their potential customers via the Internet. However, after talking to many business owners we found out that most of them still don?t have a website. Start up companies and small and medium-sized enterprises (SMEs) are especially lagging behind in terms of having an online presence.
Need a website? Let’s get started here:>>

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