“The so-called patent agents are actually little more than makers of junk patents,” said Ms. Guo laughingly. Ms. Guo is a patent agent herself and was a bit tired as she had just returned from a business trip where she had met a handful of clients. She told China IP that in one company visit the day before, all technical staff there simply described products to her verbally, without any written materials, and she had to write down several patents on the spot.
Guo seemed helpless over how these patents are produced more “efficiently.” In actual practice, she told our reporter, agents might even go so far as “creating” some innovative features for those soon-to-be-doomed patent applications. “We agents are practically becoming inventors,” she said with self mockery. “However, when we try to tell companies what’s in our mind, they refuse to understand and think we are just looking for money.”
In recent years, China has been moving very fast in the number and speed of patent applications. As Thomson Reuters pointed out in a research report, “China will surpass Japan and the United States in the annual number of patents by 2011.” However, coming at the same time is the corporate and academic opinion that “over 50% or even 80% of Chinese patents are junk.”
“As a patent agent, I’m even more anxious to create valuable patents than corporations are,” Guo said. Usually regarded as a high-income group, patent agents have their bitter complaints.
Supportive Policies Cause Many Junk Patents
To encourage innovation, in recent years local governments have issued incentive policies for patents; setting up funds and offering other preferential treatment. This was effective and China saw a fast increase in the number of patents applied for and granted. Many firms received financial support and tax cuts. However, it has been reported that for many firms the most common motive for the increased patent applications is government support instead of the patents themselves. A marketer with little IP knowledge reported to China IP : “Our company applied for many patents last year to qualify for preferential government policies.” People simply use patents as nothing more than a means to an end. Therefore the patent support policies were dubbed as policies that can be used to make a “quick buck.” In one IP fraud case, a Shanghai swindler helped an enterprise apply for patent for free; the enterprise received a patent certificate while the swindler received a handsome amount of money from the support fund.
You Minjian, lawyer in charge of IP affairs at Co-effort, a Shanghai-based law firm, stated, “The government support policy caused plenty of junk patents and a batch of agents who produce such junk. Service prices of the trade were also dragged down. Now in Shanghai it only costs 4,000 Yuan for an invention. The sum is simply too low for a good patent, which requires time and thought. People just get things done quickly. When you go to defend your rights you will find that too many applications are just junk. But enterprises don’t care, for all they are looking for is some financial interest.”
Presently, this group of patent agents can be described by one word——busy. Every agent has piles of cases at hand and sometimes they are too busy to accept new cases. According to Ma Lianyuan, former president of All-China Patent Agents Association, China has more than 10,000 certificated agents, but no more than 7,000 of them really practice. Statistics from the website of the SIPO showed that some 980,000 applications were fled in China in 2009. So each agent took 140 on average annually, and had to finish one every 2.5 days. The quality can be imagined.
However, due to the amazing number of applicants, patent agency became a trade so hot that more and more firms joined in. Consequently, price cuts became an important competitive means. “Some enterprises, setting eyes on the government fund rather than patent quality, would usually choose agencies of lower price and inferior service,” a Shanghai agent reported, “and enterprises and agencies would bargain fiercely, just like picking up a head of cabbage from the street.” Disorderly market competition also fueled junk patents. Tan Wenye, partner of Anova Law Group said, “In the US, people simply don’t bargain with lawyers, just like patients don’t bargain with doctors. For enterprises, IP is as precious as life to human beings.”
However, enterprises were not the only ones who set eyes on supportive policies. College incentives to patent applications fueled enthusiasm among faculty and students, and scandals of junk patents were staged. Middle school and university students sought extra marks in college entrance and postgraduate exams, and some professors took it as a tool to obtain money. Supported by research funds and workplace subsidies, plenty of patent applications and numerous result-assessment meetings appeared.
Tian Lipu, commissioner of SIPO, said the country’s preferential policies were attractive. The encouragement is a good thing, but it might easily go astray. He believes “junk patents” are a problem at a certain stage of development which can be solved by more refined and scientific administration and the incentives should focus on inventions and international patents.
You Minjian also said, “Government support should focus more on inventions which go global, because they are costly and competitive, and awards should be available for completed inventions.”
Flaws in Patent Examination
The epidemic of junk patents naturally led to finger-pointing at SIPO. The absence of substantive examination on design and utility model applications caused a large number of junk patents under these two categories. The Office has been placing emphasis on revising China’s patent system to curb the problem, and the threshold for designs was raised greatly in the third revision to the Patent Law in 2009.
Apart from an improved system, however, more doubts exist regarding patent examinations. A researcher from a pharmaceutical company told of his personal experience on an online forum. He said, “Following our agent’s suggestions, our lab applied for six patents at the same time. But each carried no substantial difference, all being variations of one technology and only having unnecessary changes on a certain step of the process.” The result was that the applications went to different departments of examination, one to biomedicine, another to biological assessment and still another to material assessment. Four of them were finally rejected with different reasons, one didn’t receive any reply and only one stood the chance of being approved. The researcher couldn’t help asking: why did the applications, almost the same in nature, go to different departments? And why did the examiners have widely different perspectives and gave different reasons of refusal? Ironically, it was only at that point that the researcher understood his agent’s cunning in suggesting six patents simultaneously.
China still lacks high-quality examiners as applications pile up, experts report. Moreover, inadequate assessment and supervision also contributed to the appearance of junk patents. Ruud Peters, CEO of Philips Intellectual Property and Standards, once stated in an interview, “All patent examination organizations hope to get done with all of the backed-up applications. And there is only one way: to go through the process quickly. It means to sacrifice quality and attention for speed, and a decrease in the average quality of patents.”