Why breaking into the Chinese market is big business

Okay, you’ve got a fantastic product, patents in Australia and the US.

Should you push into China?

Getting back to business.

China’s economy is rebounding after three years of widespread COVID-19 curbs.

First quarter GDP grew 4.5%, beating analysts’ expectations.

The jump was driven by a surge in consumer spending.

But how different is the Chinese patent system, and how much IP protection will you get in reality?

Hello, I’m Lisa Leong, and welcome to season two of From Idea to Intellectual Property.

It’s a podcast about today’s big ideas and the IP considerations behind them.

This episode, tips and tricks for cracking into the Chinese market.

Siqi Wang is the head of patents for China at Spruson & Ferguson, Asia.

Hello, Siqi.

Could you please share a little bit about yourself and your job?

Of course, I’d happy to.

I’m Siqi Wang from China.

I’m now the head of Patent China of Spruson & Ferguson.

I’ve been with Spruson & Ferguson for over five years already.

And my journey as a patent attorney has been more than 13 years after I got my PhD degree in cell biology.

I thought we might deal with some of the perceived hurdles first, Siqi, namely, will Chinese courts potentially favour Chinese companies over foreign businesses when it comes to litigating IP?

Just recently, one of our colleagues from another office checked with me one day, and she was wondering whether there would be any bias against foreigners when it comes to IP enforcement.

I assume it’s likely something that might concern our overseas clients, so I did some digging from my own practice experience.

I didn’t believe there were such any bias.

However, the findings turned out to be very interesting than I previously anticipated.

According to the statistics on patent infringement verdicts between 2000 and 2017, the winning rate of cases with foreign plaintiffs was actually higher than the winning rate for local plaintiff cases.

So though nationality of the plaintiffs was definitely not the only determinant in such cases, it’s still an important indicator for foreign investors to rise assured when seeking IP protection in China.

So I guess that answers your question.

That does, thank you.

And how similar is the Chinese patent system to a patent system that we might be familiar with, like the Australian or the US patent system?

Chinese patent legal system got some unique sides when it comes to examination of patent applications.

So sometimes our European clients or US clients might find it weird why we got totally different examination opinions.

So it’s, you know, we play the role to explain all the different things, different rules under Chinese patent examination compared to the other jurisdictions.

The biggest difference, I think difference is actually in different aspects.

For example, like for me, I’m a biology patent attorney.

What I most familiar with is, for example, the examination of the biology cases and the chemical cases.

So when it comes to the experimental data, Chinese used to adopt a very strict rules when examination of the experimental data.

But there’s some development recently.

We know the signing of the agreement of trade and economy between Chinese government and the US government.

And in that agreement, it actually mentioned something about the experimental data, especially about the post-filing experimental data.

So nowadays, we have got successful cases utilising the post-filing data to help our clients to get the patent applications granted.

So the regulation, for example, on the post-filing data would be more similar to the current regulations in European or in US in the major other jurisdictions.

Siqi, what is the biggest trap for foreign players when it comes to getting their patents protected in China?

I actually don’t think it’s anything uniquely different.

You know, I assume the difficulty you were trying to ask about is actually usually come from just the policy, the gaps between the policies of different jurisdictions.

So that seems like just the common challenges.

Everyone would be prepared when you want to seek IP protection in a different jurisdiction, in a new jurisdiction.

So nothing uniquely difficult here in China.

And as what we always say to our clients and the potential ones, actually the market size of China economics, and again, something about the population scale, would definitely work the exploration along with the challenges.

What you mentioned about the difficulties when you seek IP protection in China.

There are different jurisdictions.

There must be some difference in the policies and the regulations and everything, but nothing that challenging if you can find the correct China agency to help you and assist you to understand the examination rules.

Some might be a little bit different from the US practice or European practice.

We understand the Chinese system, the examination rules, and then we seek our IP protection in China.

Let’s go now to the benefits then, the upside.

Number one, so you mentioned China is an economic powerhouse, a population of over 1.4 billion.

What does this offer companies who are wanting to register their patents in China?

I think there’s no need to stress how China, being an important economy with a population over 1.4 billion, should be your number one reason to consider this market.

The China economic miracle was not even interrupted by the global COVID pandemic, which is after 30 plus years, China still beats most of the economic powerhouses around the world.

Being the world’s largest manufacturing economy, the biggest exporter, and the second biggest importer of goods, China also retains the world’s fastest consumer growth rate and consumes great quantities of numerous commodities worldwide.

The most obvious reason behind all these amazing numbers is, of course, the huge population.

And for the very same reason, I strongly believe in the future and all the untapped potentials of our regional market.

I actually just recently had a very funny conversation with a colleague from another region.

When she questioned about why a very famous and popular mobile phone brand has been fighting so many patent applications in China, especially comparing to where she said.

I simply told her it’s because Chinese people really like this brand a lot, she’s not convinced.

And I said, so do we.

So I just gave her that one easy magic word, and the conversation is over, population.

And does that mean that if you had maybe a niche or a narrow product or a service that actually trying to break into the Chinese market might be of benefit, because even though it’s a niche product, you’ll have more potential customers?

Yes, even the percentage might be similar, but considering the population, it will attract a huge number of customers.

And I hear that China is quite fast to not only innovate, but also to adopt new technologies as well.

Is that what you found in your experience?

Yes.

Actually, I think China is amazing.

The extremely fast piece of continuous development in China automatically brought about amazing creations, innovations and implementations of new technologies in each and every industry in the market.

Sometimes China even skipped a few steps or phases in technological development, simply because there’s literally no time for this middle phases before the latest advances kicked in.

And new technologies had been introduced very quickly with minimal regulatory interference.

And even with some recent policy changes, China remains open to immediate utilization of new innovations.

So I’d love to hear, what are some of the most interesting matters that have come across your desk or that you’ve noticed?

Recently, I actually noticed something.

It’s not about patent protection.

It’s about technology secrets.

So it’s actually, so I recently did some case study about a series of civil litigations.

And in one judgment from the Supreme Court, the Supreme Court actually overruled the decision made by the lower courts because it involves some infringers, whether they should dismantle the manufacturing equipment that’s involved in the infringement of technology secrets.

So the lower courts decided, because the defendant claimed this would be a waste of public resources.

It’s very smart, right?

And the lower courts were convinced by the defendant’s claims and said something like, you need to reach an agreement to avoid the waste of public resources.

But this is so unfair to the patent holder, to the right holder, right?

And when it comes to the Supreme Court, the Supreme Court actually overruled the decision made by the lower court and said something like, this may be the lower court made this decision by goodwill, not the waste of public resources, but it would increase the difficulties to actually protect the right holder’s interests.

So the Supreme Court made the decision to order the infringer to dismantle the equipment in 90 days.

So this really struck me when I studied the judgment from the Supreme Court.

So this is a very expensive pipeline.

So we always talk about the Chinese government made new regulations, established new IP courts, and everything try to enforce the IP protection.

But that’s only truth.

Look at this verdict.

This real measures.

So it’s very amazing.

Siqi, thank you so much for having a chat to us about patent laws in China.

Thank you.

And that was Siqi Wang, the Head of Patents for China at Spruson & Ferguson Asia.

Big thanks to our producer, Kara Jensen McKinnon.

This podcast is brought to you by IPH, helping you turn your big ideas into big business.

I’m your host, Lisa Leong.

Bye for now.