Most Chinese Patents Are Being Discarded By Their Owners Because They Are Not Worth The Maintenance Fees To Keep Them

from the more-patents-do-not-mean-more-innovation dept

Techdirt has been writing about China and patents for years. One recurrent theme is that the West is foolish to encourage China to embrace patents more enthusiastically, since the inevitable result will be more Chinese companies suing Western ones for alleged infringement. The second theme -- related to the first -- is that the Chinese government is unwise to use patents as proxies for innovation by offering incentives to its researchers and companies to file for patents. That leads people to file as much as possible, regardless of whether the ideas are original enough to warrant patent protection. One of the surest guides to the value of a patent is whether those who filed for them are willing to pay maintenance fees. Clearly, if patents were really as valuable as many claim they are, there would be no question about paying. An article in Bloomberg reveals how that is working out in China:

Despite huge numbers of filings, most patents are discarded by their fifth year as licensees balk at paying escalating fees. When it comes to design, more than nine out of every ten lapses -- almost the mirror opposite of the U.S.

The high attrition rate is a symptom of the way China has pushed universities, companies and backyard inventors to transform the country into a self-sufficient powerhouse. Subsidies and other incentives are geared toward making patent filings, rather than making sure those claims are useful. So the volume doesn't translate into quality, with the country still dependent on others for innovative ideas, such as modern smartphones.

The discard rate varies according to the patent type. China issues patents for three different categories: invention, utility model and design. Invention patents are "classical" patents, and require a notable breakthrough of some kind, at least in theory. A design patent could be just the shape of a product, while a utility model would include something as minor as sliding to unlock a smartphone. According to the Bloomberg article, 91% of design patents granted in 2013 had been discarded because people stopped paying to maintain them, while 61% of utility patents lapsed within five years. Even the relatively rigorous invention patents saw 37% dumped, compared to around 15% of US patents that were not maintained after five years.

This latest news usefully confirms that the simplistic equation "more patents = more innovation" is false, as Techdirt has been warning for years. It also suggests that China still has some way to go before it can match the West in real inventiveness, rather than the sham kind based purely on meaningless patent statistics.

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  • icon
    Federico (profile), 5 Oct 2018 @ 3:26am

    Fees increasing over time

    I think it makes sense for fees to grow over time for a patent. The fact that patents get discarded is a feature.

    «It costs 900 yuan ($131) a year to own an invention patent, a price that rises to as much as 8,000 yuan later in its life. For the other categories, tolls rise from 600 yuan to 2,000 yuan annually in the last two years.»

    The costs in USA seem much lower, no wonder there's no incentive in discarding patents once you've got them in:
    https://www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Oct 2018 @ 4:02am

    Obviously the Chinese have not discovered patent trolling yet, as unwarranted license fees would easily pay the maintenance bill..

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Oct 2018 @ 6:23am

    Most patents are not worth anything ,unless they are used as a defence against other companys who wish to sue you.Software patents should not exist .
    If someone writes program thats useful they already have copyright on the unique code.
    A few programmers could just make up software patents everyday
    without selling anything to a customer or providing
    a service or improving society in any way.
    The reason apple ,google or ibm don,t sue each
    is that all the large tech companys have 1000,s of patents th so it,s a standoff .
    Most patents are never used by anyone ,
    as they are vague or don,t actually do anything useful or new .
    iF Patents were really a measure of value then
    ibm would be worth more than apple .

    reply to this | link to this | view in chronology ]

  • icon
    Hugo S Cunningham (profile), 5 Oct 2018 @ 10:43am

    "we will overtake and surpass America..."

    The cargo-cult reverence for patent filings today (and adopted by some self-identified free-market conservatives who ought to know better) reminds me of Soviet planners' obsession with steel production. "We will overtake and surpass American." By the time they did in the early 1970s, nobody cared.

    reply to this | link to this | view in chronology ]

  • identicon
    Châu, 5 Oct 2018 @ 12:03pm

    Copyright Reform

    Next step, use this system for copyright.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Oct 2018 @ 8:35pm

    How the hell have we as a society allowed all these parasites to control so much ?
    Patents , copyrights , music royalties , .
    All this shit does little to enrich those who all these rights groups are supposed to take care of .
    The WWW was supposed to free us and all its done is enslave us and erode more of our freedoms .

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 5 Oct 2018 @ 9:16pm

      Re:

      One "argument" was, "you know... jobs." Big corporations need to have billions of dollars because, "you know... jobs.". and they need a lock on copyright/patents/etc. because they might go out of business and people will lose "you know... jobs." So, taxes, wages, and benefits should be low because "you know... jobs."

      reply to this | link to this | view in chronology ]

  • identicon
    Shoko Bo, 6 Oct 2018 @ 10:19am

    It doesn't mean anything

    Abandoned patents doesn't mean unqualified patents. It usually means lack of commercial success.

    What really important is that foreigners and locals get equal treatment.

    reply to this | link to this | view in chronology ]


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