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IP Strategy in China IP Strategy


									   IP Strategy in China:
from a Business Perspective

   IP & IT: Theory and Practice
    4-5 September 2009, HKU

             Yahong Li
          Faculty of Law
    The University of Hong Kong
I. Background: significances
IP assets today comprise >70% of corporate
asset value.
A country’s economic growth and a company’s
success in market competition depend
heavily on the capitalization of IP assets.
IP strategy can help capitalize IP assets and
maximize IP values.
Many countries have adopted some kind of
Background: China‛s response

Research started in 2005. 
 “Implementing IP strategy” was
announced at the CCP’s 17th congress
on 15 October 2007.
The “Outlines for the National IP
Strategy” was issued on 5 June 2008.
China IP Strategy: strategic focuses
 Improving IP system: law, enforcement and
 IP policies
 Strengthening the protection of IPRs
 Preventing abuses of IPRs
 Fostering IP culture
 Promoting creation and use of IP
 “Encouraging independent innovation to
 acquire IPRs and to be commercialized and
 industrialized, and guiding enterprises to
 realize the market value of their IPRs
 through transferring, licensing, pledging or
 other means.” (art 12)
China IP Strategy: strategic measures

  Increase the capacity of creating IP:
    “enterprises as the backbone”;
    “transform innovation into IP”
  Encourage the commercialization and
  use of IP:
    inventions from universities to
    improve IP management system, e.g.
    system of tech data, IP valuation, IP
    statistics and accounting, and info search.
II. China IP Strategy in Practice

 Patent strategy
   Patent filing
1. Commercialization:
 Relatively high innovation capacity,
 but low rate of commercialization
  0.5% transfer rate
  Broken chain of commercialization.
  Insufficient funding
  Lack of expertise and good models in tech.
  Weak patent protection
2. Patent filing
Some figures:
  By 2009, total filings at SIPO reached 5 million
  among which >3 million from Chinese applicants.
  In 2007, 4,141 filed with USPTO.
  By 2008, 6089 filed through PCT.
  Story of Huawei
Another side of the story: nation-wide
  Only about 20% of all patents are for inventions
  Many basic research results are not patented
  99% of enterprises do not own patents.
  Foreign and int’l filings are still very low
 3. Standardizing
Chinese standard groups
  Linux National Standard Working Group
  Intelligent Grouping and Resource Sharing Working
  Group (IGRS)
  Audio Video Coding Standard Working Group (AVS)
  Radio Frequency Standard Working Group (RFID)
  High-density DVD format, EVD/HVD/HDV
Cases against foreign standards and patent pool
  Wuxi Multimedia Ltd and Orient Power Tech. Ltd. v.
  3C group
  Zhang Ping v. 4C group
4. Licensing
General trend:
  More transfer of patent rights and joint venture
  than licensing
Some changes 
  “National patent tech transfer and trade
  platform plan” started in 2006
  In 2007, 1012 patent licensing agreements
    359 contracts for transfer of patent rights, and 41
    contracts for transfer of patent application rights
  Story of Netac Tech. Co. Ltd.
5. Litigation
Cases brought by Netac Tech. Co. Ltd.
  Netac v. Hua Qi Digital Tech. Co. Ltd.
  Netac v. Shenzhen Fu Guang Hui
  Netac v. Beijing Hongji
  Netac v. Sony (Wuxi)
  Netac v. PNY Technologies, Inc.
Why litigation?
  litigation à settlement à licensing
Where China stands now?

 5 stages of IP development:
   Driving growth through export
   Climbing the value ladder
   Paying the price
   Getting serious about IP
   Profiting from IP

 (Boston Consulting Group)
IP business strategies are important for a
nation’s economic growth and a company’s
success in market competition.
It is sensible for China to include them in
national IP strategy outlines.
A few Chinese companies have made a great
stride in implementing these strategies
But more progress has to be made for China
to transform itself from a labor-intensive
economy to a net IPR royalty receiving
    Thank You!
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