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30.01.2010 Business & Finance

The People's Republic will surpass the U.S. as the world's leading intellectual property marketplace.

30.01.2010 LISTEN
By Gary Zhang

The People's Republic will surpass the U.S. as the world's leading intellectual property marketplace.

When most people hear "intellectual property" and "China" mentioned together, they conjure up images of counterfeiting and piracy. China has in the past had a terrible record, yet today this perception lags behind reality--intellectu al property protection is quietly undergoing a huge improvement.

The data speak alone: In 2008, more than 800,000 patent applications were filed with China's State Intellectual Property Office, by far the largest number received by any patent office in the world. In the same year, the U.S. Patent and Trademark Office and the Japanese Patent Office, ranked second and third in terms of application numbers, receiving about 500,000 and 450,000 patent applications, respectively. The Europe Patent Office received only about 150,000 applications.

The numbers for trademarks applications, an important indicator of business activity, are also striking. The Chinese Trademark Office has been the largest in the world in terms of number of applications. In 2008, for example, the office received about 700,000 new trademark applications. The comparable figure for the U.S., the second largest, was around 400,000.

And, perhaps most surprising, intellectual property-related litigation is on the rise. In 2008, Chinese courts issued judgments in about 28,000 patent, trademark and other IP-related cases, an annual record. The vast majority of the cases are among Chinese litigants, who less than 30 years ago had no such way to resolve disputes. Even though the process and cost involved in Chinese IP cases are usually substantially simpler and lower than in the U.S., the numbers demonstrate not only that the Chinese are becoming more litigious, but that the legal and court systems are maturing and being more widely used to resolve disputes.

The National Intellectual Property Strategy, released by China's State Council last year, shows that China--which invented gunpowder, movable print and the compass--doesn' t want to remain a mere manufacturing power. The paper sets out a course for China to concentrate more on innovation and move up the ladder in the global economy.

If China's quickening progress in intellectual property recently is an indicator, the next 10 years should see more historic changes. As patent and trademark applications and cases continue to grow amid healthy economic growth, China, in areas where it doesn't already, will surpass the U.S. as the world's leading market for intellectual property. That implies that Chinese companies and individuals will become a major innovation force, shedding their images as low-cost manufacturers and imitators.

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