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Written by: Lawrence A. Maxham

Why are so many patents filed in China? Simply put, the Chinese governments pay them to file in China and abroad, that’s why. China leads the world in patent and trademark filings, at least partially for this reason. Thus, their impact on filings in the US cannot be underestimated. In the US, patent applications are filed because someone creates an invention and they, or their company, hope to have that intellectual property investment lead to an economic advantage. Or to a new or improved product that is to be sold and a trademark helps to prevent confusion by competitors who might want to trade off the same or a similar name. Unfortunately, with the surge of filings coming from China, filers in the US may experience delays and disadvantages.

In January 2021 the United States Patent and Trademark Office (USPTO) published a paper, “Trademarks and Patents in China: The impact of non-market factors on filing trends and IP systems.” In China, massive numbers of trademark applications are driven by subsidies, government mandates, individuals and companies filing in bad faith (you can read further about bad faith filing in China in our article, “China Gets Serious About Its Trademark System”), and non-Chinese filers defensively employing good-faith countermeasures. Interestingly, some of the subsidies exceed the cost of registering a trademark. Given that, how could anyone resist making money by filing trademark applications? This subsidy was especially applicable to Chinese applications filed in the US where, in a recent four-year period, those applications increased by 1,264%. In a slightly more recent four-year period, the US trademark filings from China increased from 5,161 trademark applications to 58,066 trademark applications.

For context and evidence, in March 2020 China directed its state-owned enterprises to increase by 50% their trademark applications under an international trademark filing system, which includes (roughly 107) countries, including the US. This results in several repercussions, including the fact that trademark applications filed due to non-market factors result in undermining the reliability of trademark registries, the USPTO being a major one.

As for patents, there are 195 subsidy systems in China, from cities, provinces, as well as the national government. Some of these also are higher than the cost of obtaining a patent. There are also mandated targets for patent filings by state-owned enterprises, universities, and government officials. The March 2020 directive required China’s 128 centrally owned enterprises to double their holdings of US and other foreign patents by 2025. A single filing can cover 57 countries under an international treaty (the PCT), and the filer can be awarded more money than the application costs. Such subsidies encourage people to seek patents in order to receive the subsidy rather than to protect innovation.

Interestingly enough, on 27 January 2021 China National IP Administration (CNIPA) announced that patent filing subsidies will end in 2021, and that subsidies for patents granted will end by 2025.

So, that situation, which few of you have ever heard of, but which affects the USPTO patent and trademark operations and any applications you may file, will come to an end (we have been told), after it affects tens of thousands of patents and trademarks issued over the last five years and for many years to come. Point being that there are often external factors which can help determine whether or not you can get a patent issued or a trademark registered and what its value might be.

One way to increase your chances of overcoming such potential disadvantages and inconveniences in filing applications in the USPTO is to hire a highly experienced attorney. The Maxham Firm has over 50 years of knowledge gained in US and foreign patent and trademark filings. We also have a solid network of foreign associates, most of whom are known personally, that we have built over the years that will make sure your IP is up to par for its best chances for issuance abroad.

If you have questions about foreign filing, or IP in general, please call us at 760-975-3843 or e-mail us today and we’ll be happy to set up a consultation with you to discuss your next steps. We are available for virtual and in-person meetings.

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