US is LOSING to China on patents – it’s the key consideration innovators use to determine strength of the IP system

The patent system in the United States has been impacted by changes introduced in the last dozen or so years, which are seen by some as having weakened the standing of the U.S. system compared with patent systems in other major economies.

The difficulty with comparison is: what do you compare? Absolute patent application or grant numbers? Growth in patent filings? Strength in litigated patents? Commercially meaningful outcomes? What is the meaningful data? These can differ from sector to sector, and certainly from jurisdiction to jurisdiction. Always it is important to understand what the data drawn upon actually reflects. Nevertheless, in this article we have a go.

Filing

When considering whether innovators see strength in the patent system, perhaps the best data to review concerns the number of application filings.

Worldwide, patent application numbers have been rising steadily since the turn of the millennium; between 2002 and 2016, world application numbers more than doubled, to over 3 million.1

European patent applications have increased fairly steadily in the decade to 2018, from 145,557 in 2008 to 165,235 in 2017 (a 12.0 percent increase).2 Of those filings, 27.8 percent are classified as “electrical engineering”; 26.0 percent as “chemistry” (including pharmaceuticals and biotechnology (7.8 percent)); and 22.0 percent as “mechanical engineering” (including transport (5.0 percent)). Within those fairly steady headline percentages, in electrical engineering there was steady real and percentage growth in digital communication filings between 2008 (4.4 percent) and 2017 (7.1 percent), along with reduction in telecommunications filings (4.1 percent in 2008 to 2.3 percent in 2017). Relatively static numbers of filings in the pharmaceutical and biotechnology classifications reduced the percentage contributed by those sectors from 8.2 percent to 7.2 percent of all filings.

Chinese patent applications have increased exponentially in recent years, from 153,060 in 2007 to 1,381,594 in 2017 for invention patents, and from 179,999 in 2007 to 1,687,593 in 2017 for utility model patents. This amounts to approximately a ninefold increase for both. Of those filings, in 2017, 30.5 percent are classified as electrical and electronics (including telecommunications and computer engineering); 28.9 percent are classified as manufacturing and transportation; 19 percent are classified as mechanical engineering (machines, structures, etc.); and 8.8 percent are classified as chemistry and metallurgy (including pharmaceutical and biotechnology). There was a dramatic increase in the manufacturing and transportation sector from 16.9 percent in 2007 to 28.9 percent in 2017.3