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China’s global dominance in the area of patent filings has raised questions about how to distinguish the quantity of those patents from their quality. Intellectual property experts in technology have an answer: The two best ways to measure patents’ quality are by looking at patent citations, and counting how many triadic patents a nation’s citizens and corporations file. These barometers may tell us how globally competitive China really is.
To gauge a patent’s novelty and influence, you can start by examining how often other patents cite it. Frequently cited patents generally have wide-reaching influence, and represent an innovative step or level of development in their respective fields. At present, the People’s Republic of China’s patents are rarely cited, lagging far behind the patents of the USA, South Korea, Japan, and Europe. That suggests other inventors aren’t using them to create new products or processes. But as the patents become more valuable or improve in quality, they’ll likely be cited more.
For another way to gauge the value of patents, look at triadic patents. These families of patents are filed jointly in the world’s three largest technology markets: Japan, the USA, and the European Union. They represent the gold standard of patents, because they are put through rigorous, thorough, intense examinations in three major markets. Also, triadic patents give patent holders broader protection for inventions, and better opportunities to make money from those inventions globally. To further cement their prestige, they are expensive to obtain, and take five to six years to get.
In 2016, China lagged far behind in triadic patents. While 96% of its patents were filed domestically, only 4% were filed overseas. For the same year, Japan and the USA had 43% of their patents filed overseas. China represented 8.73% of global triadic patents that year, while the USA and Japan represented 33.7% and 26.73%, respectively.
In 2015, the numbers were similar for China, with 5.2% triadic patents, while Japan and the USA had 31.2% and 26.7%, respectively.
Triadic Patent Applications Filed in 2000, 2013, and 2015
|Country||2000||% of Total||2013||% of Total||2015||% of Total|
Still, China may be catching up quickly. From 2000 to 2013, China increased its triadic patent grants by more than 18%, and its triadic patent applications by more than 26%. Even more impressively, in 2015, China had more triadic patent applications than South Korea, France, and the U.K. Not bad for a country that didn’t have any intellectual property laws before 1985.
Another sign of progress: In 2000, China only held 0.2% of the world’s triadic patents. By 2016, it had increased its global share of triadic patents by over 4,300% to 8.73 %. In 2013, China had more triadic patents than the UK, and China achieved the largest growth in triadic patents from 2000 to 2013, too.
Triadic Patents Granted by Country in 2000 and 2013
Why triadic patents might not be as prestigious as they look
Many Chinese companies and citizens may not have the money to file triadic patents. They also may not think that such patents aren’t necessary. If the patent holders foresee the bulk of their money being made in China, why bother with overseas patent application filings?
Also, triadic patents are expensive to defend and enforce. It may be asking too much to expect the people of a country with a nascent intellectual property (IP) history to spend large amounts of money on overseas patents on the mere hope of making money, instead of just concentrating on the home market.
How investors should think about triadic patents
Investors looking to get a jump on companies that will introduce cutting-edge technology to the world should look at Chinese companies filing triadic patents. Those companies are internationally competitive and looking to not only dominate their industry, but also to set the standards and rules for its operation. China has a growing number of companies filling ever-increasing numbers of triadic patents. While its numbers have not eclipsed those of the USA, Japan, Germany, and South Korea, if it keeps growing at its present rate, in a few years its triadic patents may surpass those nations’ filings.
As an investor, consider adding the companies filing those triadic patents and setting global tech standards to your portfolio. There’s a good chance that they might be the tech blue chips of the future.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.