Thomson Reuters' 2009 Patent FOCUS report -- CHINA!

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CHINA
In 2008, for the first time ever, a Chinese company topped the list of Patent Co-operation Treaty (PCT) applicants. According to a report issued by the World Intellectual Property Organization, Huawei Technologies Co Ltd, a telecoms company based in Shenzhen, filed 1,737 PCT applications during 2008, to finish in top spot above Panasonic (1,729) and Philips (1,551).
Overall, Chinese companies accounted for 6,089 applications via the PCT, a rise of over 11 per cent on the previous year. Meanwhile, in China itself, the State Intellectual Property Office (SIPO) received 716,377 patent applications between January and the end of November 2008, 613,922 of which came from Chinese entities.

It is a similar story when it comes to patent grants. Between January and November 2008, Chinese applicants received 40,639 patents, compared to 31,945 for the whole of 2008. Although foreign companies look likely to get more grants during 2008 (to the end of November they had 41,569), the likelihood is that Chinese entities will overtake those from abroad for the first time in 2009.[/B]
All of this bears testament to the remarkable advances China has made since the country’s first patent law came into force in 1985. Indeed, research published by Thomson Reuters in December 2008 indicates that by 2012 the country will be the world’s leader in terms of the number of patent applications it generates, accounting for 34 per cent of the global total.

The most important legislative development of 2008 in China were amendments to the patent law, which were approved by the standing committee of the National People's Congress on December 27. This was after an extensive and—by most accounts—transparent consultation process in which views from all interested parties were canvassed, including foreign entities.

The amendments will come into force on 1 October 2009 and will bring about a number of changes. Among the most significant of these are provisions that the absolute novelty standard will be applied to all patent applications, as opposed to the relative novelty principle that is applied now. In addition Chinese entities will no longer have to apply for a Chinese patent before seeking protection overseas—although they will have to get a license from the government to patent outside of China first.

With regard to patent litigation, another foreign company found itself on the wrong end of a large (by Chinese standards) damages award as the losing defendant in a patent case during 2008. Although nowhere near the size of the USD40 million awarded against French company Schneider in 2007 (a decision that is still under appeal) Samsung was ordered to pay the equivalent of nearly USD7.5 million to a company in the eastern province of Zhejiang after being found to have infringed its dual-mode cell phone patent. There are now thought to be more patent disputes in China each year than in the United States, and although most patent litigation in China is between local businesses, foreign companies are increasingly involved in disputes. In 2005, for example, 268 non-Chinese companies were involved in Chinese patent litigation, a jump of over 75 per cent on the 2004 figure.

In short, China is emerging as a sophisticated patent jurisdiction. Businesses with any kind of patent-based output, wherever in the world they are based, should now be factoring the country into their strategic considerations – even if they are not yet operating there.

China needs more companies like Huawei, Haier etc sort of private enterprises where their main objectives are profitabilty, innovability and hence competibility in global market. But again they also need to be closely watched by the public for good governance to aviod things like those unethical American firms caused the crisis!