China is taking over the patent world — This is what you need to know

Patents — the currency for a nation’s development. Historically, innovation has been concentrated in the USA, the UK, Japan, Germany, and France. These countries accounted for approximately three-quarters of the global innovations between 1995 and 2014 and were responsible for the main part of R&D spending. However, in 2019, China overtook the USA for the first time in the number of patent applications and ranked among the top three countries with the most patents in technology. According to the World Intellectual Property Organization (WIPO), China filed almost 59,000 patents — around 1,000 more than the USA, which has been on top of the list of patents ever since 1978. Now that China takes over patent applications, it seems to be soon overrunning the rest of the world.

China filed almost 59,000 patents — around 1,000 more than the USA, which has been on top of the list of patents ever since 1978.

Intellectual Property Organization (WIPO)

China and the USA are in an innovation race… and the USA is losing

As investments, innovations, and patents are a central basis for the progress and international competitiveness of companies and economies, especially for new future developments in technologies such as 3D printing, 5G, artificial intelligence or energy conversion and management, China is now conquering the industry and increasing the disadvantage of the USA and Europe. According to a study by the Bertelsmann Foundation on the development, size and strength of national patents in Asia, America and Europe, “the international balance of power regarding intellectual property and innovation potential of economies and companies is shifting”.

China and the USA are in an innovation race… and the USA is losing

In most important technologies, China has not only caught up but has actually overtaken the USA. For instance, China is already the leader in areas like nutrition and environment according to WIPO. In recycling, the country holds almost a quarter of the world-class patents, while the USA holds approximately 21%. In water treatment, China has gained a patent share of 36%, leaving the USA behind with 22%. This is a big contrast compared to 2010 when China was not represented in a single technology in the top three, in 2000 not even in the top five.

“China’s rapid rise to the leading applicant underscores the shift in the focus of innovation to the east”
WIPO General Director Francis Gurry, Geneva

European high-tech innovation is far behind

While cities in the USA present a consistent annual innovation growth of an average of 20%, Beijing, for example, shows approximately 30% innovation growth annually, while German cities like Munich or Stuttgart only have 16%, according to the European Patent Office (EPO). Although Germany, as the European frontrunner, receives more patent applications in the high-tech sector than France and Great Britain combined, the country and the region need to step up a gear in these future-oriented technologies.

European high-tech innovation is far behind

The hard truth is that China and South Korea are increasingly taking control. Innovators are putting their stamp on the data-driven economy of tomorrow, and the trend with more registrations from Asia will continue. Even now, taking the Corona pandemic circumstances into account, China and South Korea have come through these hard times comparatively well so far, affirms the President of the German Patent and Trade Mark Office (DPMA), Cornelia Rudloff-Schäffer.

There is a lot that suggests that these countries could further strengthen their position, especially looking at future digital technologies. At the beginning of March, German Chancellor Angela Merkel (CDU) and the Prime Ministers of Denmark, Estonia and Finland called to strengthen the digital sovereignty in Europe in order to continue to be relevant in the IP economy. This should be a wake-up call for important European actors like Siemens against the potential threat of China’s rise in innovation and IP development.

About the autor:

Sebastian Hugl

COO & GoodIP Co-Founder

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