[Ip-health] Wall Street Journal: China Issued Record Number of Patents in 2009

[Thiru Balasubramaniam]

<SNIP>

  Chinese authorities say their policies don't discriminate against
foreign companies, but foreign industry officials say certain aspects
of the policies still need to be clarified.

The new patent regulations could complicate research in China for
companies like Pfizer Inc. and Microsoft Corp., which have significant
research and development investments in China.

The new rules, for example, require that all patent applicants who
complete inventions in China apply for security clearance=97a process
that can take up to six months=97before applying for patents abroad.
They require patent applicants to declare any use of hereditary
material obtained from humans, animals, plants or microbes if
inventions are dependent on those genetic resources. They also force
patent holders to license their patents to other producers if patents
aren't "fully exploited" or if patent owners are deemed to be using
the patents in an anticompetitive manner.

<SNIP>

Other concerns include the compulsory licensing of patents. It is
unclear how the government will determine that a patent is being
misused, or how much patent owners will be paid if they are forced to
license their patent.

"Owning the patent could subject you to the government expropriating
it," said Mr. Cohen. "What's the compensation? What's the process?"

-----------

     * ASIA NEWS
     * FEBRUARY 4, 2010

China Issued Record Number of Patents in 2009



By LORETTA CHAO
[0203china] Reuters



BEIJING=97China said it issued a record number of patents in 2009, but
concerns are growing that new patent regulations and other initiatives
may damp that growth.

China's State Intellectual Property Office said Wednesday that it
issued more than 580,000 patents in 2009, up 41% from a year earlier.
The office also said it is working to increase public awareness of
intellectual-property-rights protection and to "further improve the
level and quality of patent applications" in China.

But multinational companies in sectors ranging from information
technology to pharmaceuticals say the government's efforts to boost
China's local high-technology sector have spawned protectionist
policies=97and that this could crimp foreign companies' willingness to
invest in cutting-edge technology development in China.

China revised its national patent law in October 2009 and then issued
implementation guidelines in January, which went into effect Monday.
The revisions were an attempt to decrease patent fraud and streamline
the filing process, but critics say many aspects of the new rules
remain unclear.

These critics also say the new patent guidelines and a number of other
policies=97known under the rubric of "indigenous innovation"=97include
government procurement regulations that favor local companies,
national homegrown technology standards for mobile networks, and
limits on royalties paid for foreign technology.

Chinese authorities say their policies don't discriminate against
foreign companies, but foreign industry officials say certain aspects
of the policies still need to be clarified.

The new patent regulations could complicate research in China for
companies like Pfizer Inc. and Microsoft Corp., which have significant
research and development investments in China.

The new rules, for example, require that all patent applicants who
complete inventions in China apply for security clearance=97a process
that can take up to six months=97before applying for patents abroad.
They require patent applicants to declare any use of hereditary
material obtained from humans, animals, plants or microbes if
inventions are dependent on those genetic resources. They also force
patent holders to license their patents to other producers if patents
aren't "fully exploited" or if patent owners are deemed to be using
the patents in an anticompetitive manner.

Mark Cohen, an attorney at law firm Jones Day in Beijing, said the
rules create uncertainties that could result in extra expense and
delay for companies. Because so much research is conducted cross-
border, it is unclear what constitutes an invention made in China that
would result in the security examination, he said. The delay could
increase the risk of trade-secret theft because it extends the period
during which people can access the information or copy it before the
invention is patented.

"There were some improvements made in the patent law, [but] there's a
lot to be concerned about," Mr. Cohen said. "If used in a
mercantilistic manner" to disadvantage foreigners, "then we have major
issues."

At Wednesday's news conference, officials defended the new law. The
rules would improve China's "level and capability of invention," said
Yin Xintian, spokesman for China's State Intellectual Property Office.
Mr. Yin said the four- to six-month waiting period is the maximum and
that in many cases the waiting period would only be a few days=97in line
with similar U.S. regulations.

Other concerns include the compulsory licensing of patents. It is
unclear how the government will determine that a patent is being
misused, or how much patent owners will be paid if they are forced to
license their patent.

"Owning the patent could subject you to the government expropriating
it," said Mr. Cohen. "What's the compensation? What's the process?"
=97 =97Sue Feng in Beijing and Ellen Zhu in Shanghai contributed to this
article.

Write to Loretta Chao at loretta.chao@wsj.com



------------------------------------------------------------


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
Mobile: +41 76 508 0997