Asian Innovation Surge

Patents have an incorrect notion of secrecy attached to them. Patents do not provide secrecy, for the same reason Coca Cola recipe till date has not been patented. As the lore goes, the original formula was patented in 1893 however the modified one has not been patented simply because patents provide protection for a limited time period.

Having said that lets have a look at the brief overview of benefits of patents and what motivates or demotivates innovators towards a patent protection. Patents provide the applicant or the inventor certain rights over their invention, these rights are legal and financial in nature. Legal enforcement of these rights prohibits others from copying, manufacturing, selling or importing the invention whereas financial enforcement lets the applicant or the innovator derive some sort of Licensing deal or financial gain in terms of royalty being paid to them for use of their patented innovation. Patents however additionally embolden the innovators in terms of strengthening the innovators market position, negotiation power and also a positive image to their organisation/company as patented innovations project an image of expertise, strong technological capacity within the company.

In addition to the registration/application/filing of a patent being a financial cost for the innovator, one of the disadvantages which might not even be considered as one by some is that in return for these rights, protection offered is limited to 20 years. An innovator might also need to be ready to defend their patent and remember to timely process the additional cost of patent annuity fee, also the cost incurred while enforcing rights on the infringer is again a slight disadvantage for some smaller businesses.

If we look at the number of filings from year 2007 to 2017, we can calculate the average growth rate, which shows the trends of patent filing in terms of the different regions. As per the “World Intellectual Property Indicators 2018” report, Patent applications filed worldwide reached 3.17 million in 2017.

As per the report the patent filing in numbers has increased every year since 2003, with the exception of 2009 when there was a decrease of about 3.8% as a result of the financial crisis. The office of India granted 50% more patents in 2017 than in 2016.

It is also noteworthy that China has changed the system followed for counting the total number of patent applications filed, hence their data after 2017 is not comparable to the data from prior years. Since 2017, China has started to count only those applications for which the office has received the necessary application fees. This type of change though causes some minute discrepancy, however the long term growth from 2007 to 2017 is not affected by this as much as the impact is very limited. Chinese telecommunication giant Huawei filed a behemoth number of patents in one year, patents filed by Huawei were 5,405 in 2018.

As per the recent trend in filings, Asia has shown the highest increase in the average growth from 2007 to 2017. Broadly speaking one can say that there is  a new shift of innovation from the west to the east. Higher number of patent applications filed by an organisation like Huawei showcases Huaweis’ higher R&D investment. More focus on R&D for organizations promotes innovation and growth. Patents also help bring investments, economic growth and sharing of knowledge, these factors ultimately lead to economic benefits along with the promotion of innovation.

In the words of Mark Blaxill and Ralph Eckardt -Innovation without protection is Philanthropy. The quote above is an apt description of the necessity of patents and the reason why much more competitive Asian countries have shown such higher growth rates over the course of the past decade. Such a paradigm shift promises better economic benefits for the Asian region as a whole. Countries like India, Republic of Korea have shown tremendous growth in terms of patent applications and grants. Few of the fields with the most number of patents filed are Medical Technology, Digital/Computer Technology, Electrical machinery/apparatus, Energy and Transport, Biotechnology and Pharmaceuticals. These fields help understand the direction of innovation as a long term phenomenon for mankind and what we can expect in the near future to come. This increase in competition from the east to west if nothing acts like a healthy competition fueling both sides for further innovation and its vast benefits.

Author:  Dhruv Verma, Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at dhruv@iiprd.com.

References:

[1] https://www.epo.org/news-issues/news/2019/20190312.html

[2] https://www.wipo.int/sme/en/ip_business/importance/reasons.htm

[3] https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2018.pdf

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