WIPO: China Soon To Overtake US In Patent Filings; Cybersquatting Climbs To New Record

It’s a question of when, not if, that China will overtake the United Sates as the largest user of international patent systems, says the World Intellectual Property Organization, which has also announced a record number of “cybersquatting” cases.

Chinese patent applications surged almost 45 percent in 2016, under WIPO’s Patent Cooperation Treaty (PCT), the UN body regulating intellectual property announced on 15 March.

“The performance of China is quite extraordinary,” WIPO Director General Francis Gurry told journalists. “The number of patent applications for China rose by 44.7 percent in one year. We are used to double digit growth from China.”

“It takes China in terms of volume to a position very close to the first two,” Gurry said. He mentioned that the United States filed 56,000 applications, Japan 45,000, while China filed 43,168 under the WIPO-managed PCT in 2016. That was up from 29,839 two years ago.

“If double digit growth continues from China, we would expect China to move into second position next year and within two or three years to catch the United States of America,” he said.

Gurry was asked if there was any way of looking at the quality of patents. He had noted that patents are a “measure of technological capacity.”

“We also publish a global innovation index, which is a much broader look at some 68, or so, different elements that we think are important inputs to an innovation ecosystem,” and he said that would be better ways of looking at the overall innovation index of country than just patents. He said, however, that matter of quality regarding filing of patents “is a difficult one.”

Gurry said, “The reality is we do not have a metric for quality.” One might ask why, he said, adding, “If we did, you would not need a venture capital industry.” If one could tell what the commercial capacity and potential of an invention at the very first stage, then such a process might not be needed.

“We are vitally interested in this question,” said the WIPO director general, and he noted that the investment of China in R&D is greater than that in the European Union at present.

Asia: 47 Percent of Applications

Asia now accounts for almost 47.4 percent of all international patent applications and looking back merely 10 years it was 27 percent with China as the biggest driver. That compares with Europe which have 25.6 percent of applications and North America 25.3 percent in 2016.

“In a world in which we are getting messages from the principle economic bodies that the world economy is rather sluggish and disappointing, what we see here is in marked contrast to that,” said Gurry.

He cited a growth rate in international patent applications of some 7.3 percent, growth in trademark applications of 7.2 percent (under the Madrid Protocol), and designs (under the Hague System) soared by 35 percent.

“What it says is that the nature of economic activity contains a knowledge component and that these sectors are tending to outperform other sectors of the economy,” said Gurry, conceding that the statement was a generalisation.

He noted, “In an interlinked, knowledge-based global economy, creators and innovators are increasingly relying on intellectual property to promote and protect their competitive edge around the world.”

Gurry said, “China-based filers are behind much of the growth in international patent and trademark filings, making great strides in internationalizing their businesses as the country continues its journey from ‘Made in China’ to ‘Created in China’.”

The WIPO director general explained that Japan and South Korea have had good performances and it is for long-term gains that applications are filed. India had 1,509 applications last year with 8 percent growth.

India Expected to Continue its Rise

“I would expect India’s performance to continue to rise,” Gurry said in answer to a question, noting filings are a measure of technological capacity, but not the only one.

Two Chinese companies topped the ranking for corporate patenting with ZTE leapfrogging Huawei as two of China’s largest telecoms and electronics companies battled for the top spot.

Shenzhen-based telecom companies – ZTE Corporation (4,123 published PCT applications) and Huawei Technologies (3,692) battled it out for top spot on the list of top PCT applicants.

They were followed by Qualcomm Incorporated of the United States (2,466), Mitsubishi Electric Corporation of Japan (2,053) and LG Electronics of Korea (1,888).

WIPO said that the top 10 applicant list comprised seven companies from Asia and three from the US.

Among educational institutions, the University of California – with 434 published PCT applications – was the largest user of the system and has maintained that position since 1993. Massachusetts Institute of Technology (236) was ranked second followed by Harvard University (162), Johns Hopkins University (158) and the University of Texas System (152).

While the top 10 is dominated by US-based institutions, the top 20 list consists of 10 US and 10 Asian universities.

Digital communication (8.5 percent) accounted for the largest share of published PCT applications, followed by computer technology (8.2 percent), electrical machinery (6.9 percent) and medical technology (6.8 percent). Among the top 10 technologies, medical technology (+12.8 percent) optics (+12.7 percent) and digital communication (+10.7 percent) saw the fastest growth in 2016.

Cybersquatting Continues Rise

Separately, on 16 March, WIPO announced that cybersquatting is at an all-time high with trademark owners filing a record 3,036 cases under the Uniform Domain Name Dispute Resolution Policy (UDRP) with WIPO in 2016.

This is an increase of 10 percent over the previous year, with over 1,200 new generic top-level domains (gTLDs) now operational, said WIPO.

Cybersquatting disputes “are cases where a trademark owner is alleging that someone has registered a domain name that is either the same as or confusingly similar to the trade mark,” Gurry said in his statement.

Cybersquatting refers to trademark users who register internet domain names of existing companies in an effort to re-direct online traffic to their own site or to entice the company to purchase the domain name for a large sum of money.

“The principle motivation may be to divert traffic to your website, diverting eyeballs,” Gurry elucidated. “The continuing growth in cybersquatting cases worldwide shows the need for continued vigilance by trademark owners and consumers alike.”

“This is even more important as a considerable number of these disputes involve incidents of online counterfeiting. In such cases, WIPO assists in restoring these domain names to trademark owners, thereby curbing consumer deception.”

Cybersquatting disputes relating to new gTLDs rose to 16 percent of WIPO’s 2016 caseload, which covered a total of 5,374 domain names and climbed by 10 percent last year from the year before.

WIPO UDRP cases in 2016 involved parties from 109 countries. Among the countries where filings originated, the US remained first with 895 cases filed, followed by France (466), Germany (273), the U.K. (237) and Switzerland (180). Among the top five filing countries, France (+38 percent) saw the highest growth in cases filed.

The top sectors of complainant activity were banking and finance (12 percent of all cases), fashion (9 percent), heavy industry and machinery (9 percent), internet and IT (8 percent), biotechnology and pharmaceuticals (7 percent) and retail (7 percent).

Philip Morris leads the list of filers with 67 cases, followed by AB Electrolux (51) and Hugo Boss, Lego, and Michelin (42 each).

In 2016 WIPO appointed 305 panellists from 47 countries, and administered proceedings in 15 different languages.

Since the WIPO Arbitration and Mediation Centre administered the first UDRP case in 1999, total WIPO case filings passed the 36,000 mark, said WIPO.