LIUXIANG-cr.JPGChina has overtaken Europe to take fourth place in the world ranking of countries by number of patents applications, a key measure of innovation.

That might come as surprise to many readers, not least to those who read the Financial Times, which erroneously put China behind Europe in fifth place.

To be fair to the FT, the World Intellectual Property Organisation, in an earlier version of its Patent Report,
included a bar chart that showed China in fifth place. But a bit of number-crunching with a calculator using the data WIPO supplies shows the chart is wrong and China has leapt ahead of Europe.

To put the record straight, China’s patent office handled 130,384 patent applications in 2004 while the European Patent Office handled 123,701. WIPO has since corrected the bar-chart.

Irrespective of whether China is fourth or fifth, its rapid rise is truly impressive. In only 20 years, China has grown to have a similar level of patenting activity to South Korea or Europe , although still someway behind the US and Japan. For several decades Japan has been the largest patent office in the world with more than 400,000 patent applications filed in 2004.

The number of patent filings by Chinese residents grew more than 557% between 1995 and 2004, the greatest percentage increase of all countries and a long way ahead of India, where the increase was 337%. India languishes in 12th place in the number of patents filed in 2004.

Patent applications by inventors or businesses in their country of residence are often used as a rough
indicator of a country’s propensity to innovate. Depending on commercial considerations, applicants later decide whether or not to file non-resident patent applications for the same invention in foreign countries.

In terms of non-resident filings, China has also seen
an enormous increase in patent activity, with the number growing 644%
since 1995.

In China, half the patent filings in 2004 were by foreign companies. Most in Japan and South Korea are still by local inventors.

Interestingly, when the WIPO compares patent applications with R&D expenditure — a measure of the efficiency of a country’s R&D spending — China comes a long way behind Japan and South Korea but slightly ahead of the US and the UK.

Patent applications are just one of several indicators used to measure the “innovation output” of countries and
regions. Many academics argue that raw patent numbers are not a particularly reliable indicator, due to differences in national patent systems. In addition, in litigation-happy countries like the US, businesses file patent applications with an enthusiasm bordering on the obsessive

Nevertheless, the fact that China now handles more patent applications than Europe provides ammunition for those who argue that there is more to China’s economic strength than an ability to churn out cheap copies of western products and technologies.

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