A Renaissance of Innovation and IP Myths Ironies

A Renaissance of Innovation and IP? Myths, Ironies, Threats, & Opportunity from China Jeff Lindsay Head of IP Asia Pulp & Paper Shanghai, China

IP in China: Downplayed by the West • Western stereotype: China a great copier (or thief), but not an innovator. • Western stereotype: Chinese IP can’t be taken seriously. • E. g. , the 2011 Thompson Reuters Top 100 Global Innovators (based on international patent activity, 2008 -2010) http: //top 100 innovators. com/ – Naturally, Apple was on the list. – Tiny Liechtenstein made the list. – But ZERO top innovators came from China, Taiwan and Hong Kong.

Even though…. . • Foxconn/Honhai Precision (Taiwan): – is the “silent” innovation partner for Apple and other companies on the list – Has 3 x as many US patents as Apple – has 50 times as many US patents as some companies on the TR 100 list • Lenovo and Huawei are also major international filers with huge estates • Invisible innovation? Invisible IP? • In fairness, I contacted the publisher…. Details: http: //tinyurl. com/jefflindsay 9

The Renaissance of IP in China • China had no IP system or IP laws until 1984, but has rapidly evolved since then • Now China leads the world in patent filings • Two Chinese companies are in the world’s top 5 international patent filers for 2011 • Many in the West are unprepared for the opportunities China’s IP boom will create. See WIPO stats on China at http: //tinyurl. com/jefflindsay 18 Also see http: //tinyurl. com/jefflindsay 13, tinyurl. com/jefflindsay 14, tinyurl. com/jefflindsay 16, tinyurl. com/jefflindsay 19

The Emergence of IP in China Dr. Gao Lulin, Founder of China’s IP System

EPO. org at http: //tinyurl. com/jefflindsay 17

EPO. org at http: //tinyurl. com/jefflindsay 17

PCT Apps: #4 in the World almost #3 http: //www. globalpost. com/dispatch/ne ws/afp/130319/global-patent-filings-rose -66 -2012 -wipo #4 #5 #10 #22 #16

Scientific Publications • World Bank reports that Chinese technical publications soared from 20, 000 in 1998 to 112, 000 in 2008 -- 8. 5 percent of global output. Source: http: //tinyurl. com/jeffiri 6 • China is now #2 in the world for scientific publications. • Be patient. That will change.

Chinese IP Myths • No real innovation • IP just low quality junk • International patents reveal China isn’t serious about IP • Enforcement is a joke • There are no secrets in China, and certainly no useful trade secret protection • China is all about IP theft, not creation and protection

My Observations • Innovation: – looks different than in the West, but occurs in many forms – Chinese employees can be as creative and innovative as Western employees – cultural differences often need to be addressed

My Observations • IP quality: – yes, often lacking, but rapidly improving – China is strengthening its law, its courts, and its training of examiners – Chinese companies are strengthening their systems and their patent drafting – But many companies still fear patenting key technologies and rely too much on trade secrets

My Observations • International patents: – 2 of the top 5 filers are Chinese companies – China will soon lead the world

My Observations • Enforcement : – Difficult, but can work. Western companies can prevail over local infringers. – IP litigation is exploding in China. Up 46% in 2012, with 87, 419 civil IP cases accepted. tinyurl. com/jefflindsay 12 – Penalties are still arguably too weak. – Lack of discovery is a barrier. Guanxi, etc. can be barriers. – The proposed 4 th Amendment may greatly strengthen enforcement by adding discovery, tougher penalties, etc. • Chinese details: http: //tinyurl. com/jefflindsay 10 • English chart: http: //tinyurl. com/jefflindsay 11 • Commentary: http: //tinyurl. com/jefflindsay 20

Trade Secrets • Chinese trade secret law is very similar to US law, and is a strength of China’s IP system • Enforcement is happening with serious penalties • Burdens of proof can still be difficult • Companies must take proactive steps to identify and protect trade secrets

Other Concerns • Enforcement requires patience, experience, and guanxi. Challenging. • Corruption is being fought but remains serious, including at the academic level where students learn the wrong lessons. • It is nearly impossible to buy legitimate movie DVDs in China. Social acceptance of copyright theft is pervasive. This may hinder general respect for IP.

Bottom Line • IP theft is still a serious problem. • But China is rapidly and deliberately transforming from “cheaply copied in China” to “improved, designed, or invented in China. ” • While the West downplays China IP and innovation, China is returning to its historic role as a global leader. See also the World Bank Report, China 2030: http: //tinyurl. com/jefflindsay 21

谢谢! (Thanks!) Jeff_Lindsay@app. com. cn Linked. In. com/in/jefflindsay