INNOVATION, PATENTS AND ECONOMIC GROWTH - Innovation in the Biopharmaceutical Industry - page 74

further updating laws so that, today, China's IP laws are acknowledged to be among
the best in the world. IP “rights” for foreigners are generally of high quality and
reasonable cost. Patents issued to foreigners by the Chinese Patent Office have
been well assessed by their best patent examiners and the 20-year lifetime cost of
a Chinese patent is 10% of the total cost of patents for the G8 countries. However,
patents issued to Chinese inventors are not always as critically examined.
Although problems remain, the third area, enforcement, has improved enor-
mously and continues to improve. The manufacture of counterfeit drugs is a partic-
ular problem, and enforcing IP rights can still be challenging. However, it is possible
now to get a patent enforced through the Chinese court system, and this is not costly
compared to Europe and the US. In 2004, there was more patent litigation cases
filed in China (2550) than in any other country, including the USA. Over 95% of
these litigation cases involved only Chinese parties. Chinese companies today are
acting as though their IP is important and worth defending. Several of the major
pharmaceutical companies have successfully litigated against products that have
infringed their patents. But, the quality of the first level courts remains variable,
and the relatively independent provincial governments do not always recognise that
their courts need to be impartial between foreign and Chinese litigants. The Chinese
government appears to be aware of the unresolved problems and willing to address
them, for example, by actively encouraging foreign firms to use the recently-created
“IP Tribunal of the Supreme Court”, whose decisions have been of good quality.
Broader understanding of IP in China has passed a tipping point over the past two
years. Chinese companies and universities have begun to understand the interna-
tional system, its rules and benefits. Acquisition by SAIC of Rover Group's IP — and
only the IP — is an indicator of some Chinese companies' sophistication. Chinese
companies and universities have begun to realise that if they can invent the next
generation of high definition television or mobile phone, they can set the de facto
global standard. Having also patented these technologies globally, they can then
decide to whom to license them. Domestic patent applications are growing at 25-
40% a year. Chinese universities now file about as many patents in China (about
6,000 a year) as US universities do in the US. This is six times the number filed in
the UK by British universities. The effect of these patents will become visible as
technologies mature — ranging perhaps from 5 years in the case of high technology
to 15 for pharmaceuticals.
The European Union
Unlike Japan and the US, Europe has not been able to create a strong and user
friendly patent infrastructure at reasonable cost for its businesses. It has also failed
to create an environment which adequately rewards IP, allowing adequate return on
investment.