The IP Dragon blog has a link to another blog that provides statistics on the outcomes of reported IP litigations in some of China’s most important courts. Having provided the information, a follow-up blog then seeks to interpret it. The conclusions reached – with some caveats – are as follows:
• Plaintiffs prevailed 75% of the time.
• You have as much chance of winning, whether you are a foreign or a domestic rights owner.
• Trade secrets are the most difficult type of IP right to protect
• A higher percentage of cases involving a foreign party ended up in court than those involving just domestic parties.
It’s important to remember that these statistics relate just to reported cases, so they may not tell the whole picture. In fact, if anything, they may underplay the extent to which foreign parties are successful, at least in patent litigation. However, the issue in China is not so much that it is difficult to get a fair hearing in court, but that it is hard to get the decisions enforced, or that the decisions themselves do not act as a deterrent. That is if you get a case to court in the first place – the vast majority of infringements do not get acted upon even when reported, which, of course, is another huge bone of contention.
That said, there does seem to be a conflicting picture of IP rights in China. Although everyone agrees that it is a difficult thing to be an IP owner in the country, many of those on the ground seem to find ways to do business and to turn a profit; even while foreign governments complain that their nationals are cruelly exposed to rampant counterfeiting and piracy.
Now, I have no issue with politicians and diplomats making their objections to the flaws in China's fledgling IP system known, but I worry that constant negativity has two major downsides: (1) companies getting into China do not bother with IP protection because they do not think it is worth it, so leaving themselves more exposed than otherwise would be the case; and (2) companies just ignore the Chinese market altogether, meaning that they miss out on the huge potential benefits it can bring.
In China right now, patenting is growing by an astonishing 30 percent or more each year. In fact, China now has more patent applications than even the United States. Their international patent applications are growing by a staggering 500% per year! And along with this surge in IP activity, China's total R&D spending is now growing at a phenomenal 25 percent per year -- the highest rate of growth in R&D investment of any nation on earth.
What this means is that piracy, counterfeiting and patent infringement in China is no longer just an enforcement issue to be addressed by external pressure from outside governments and multinational firms. For the first time, there are now strong INTERNAL forces encouraging the protection and strengthening of intellectual property rights.
Or, as one recent European study noted: "There is intensified demand by Chinese companies for stronger IP rights domestically and for [building] collaborative IP [relationships] abroad."
Ten years from now, the biggest IP nations in the world will no longer be the U.S. or Japan or Europe, but rather China and India and some other developing nations. That's because they are seeing with their own eyes the growth in their local economies that comes from encouraging and protecting innovation through the establishment of strong intellectual property systems.David Kline, on 19 Dec 2007