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with Kathleen and Pim Fox on Bloomberg Radio. China. The International World International Intellectual Property Organization says that patent offices in China received the most patent applications of any country. Based on information gleaned from two thousand fourteen filings, they filed nearly one million applications. Compare that to the nearly six hundred thousand applications in the United States, and there's something else happening in China. Patent law is exerting itself
against US companies. Here to tell us more, Matt Lawson, litigation analyst Bloomberg Intelligence joining us from our Bloomberg studios in Washington, d C. Matt Larson. I understand it's fairly commonplace to hear about American companies suing Chinese companies over patent and trademark theft. But the other way around that seems rare. What's happening. Yeah, it is rare, And I think if if this story had come up, you know, ten years ago, or people looked at the trends, it
would be to be somewhat unbelievable. A lot of people viewed China as um as somewhere where I P rights weren't necessarily well protected. It was a little bit of a of a no man's land. I think was the was the perception, and that's really turned around over the last uh six seven years, and you're seeing a um kind of an outgrowth. China has made some efforts to
revamp its patent litigation system. They have developed some specialized IP courts and as a result, you've seen some pretty sophisticated litigation tactics where both Chinese companies are asserting their patents, and some US companies, Qualcom being the main example, is starting to really test out the Chinese court system and see, um, see how they can assert their rights and see kind
of how good the courts are. What are some of the differences to the Chinese patent litigation process compared to the United States. Yeah, well, China offers a couple advantages. One is that the disputes are much quicker. UM. It's about a little under a year from the time you file a lawsuit to when the final decision comes out. UM. Even the fastest courts here in the US are a little over a year, and the average patent case takes two and a half to three years UM from filing
through a final decision. So you get a decision very fast in China. UM. And the other advantage is um you get a vision on infringement, but the other side can't raise typical defenses like claiming the patent is invalid or not enforceable as part of the court proceeding. They have to raise those defenses in separate administrative proceedings before China's State Intellectual Property Office, and those can take eighteen months.
So if you're a patent owner you can assert your patent to get a decision within a year or so, and then in order for uh, for the other side to knock out that judgment, it's going to be another half year minimum. So you get you get a strategic advantage. And in that respect, patents that cover aesthetic or structural features, how did they differ from patents that involve inventions. Yeah,
that's a good question you mentioned. There's there's significantly more patent filings people seeking patents in China, and a lot of those are due to different types of protection that they offer. China's patent system is focused on design patents, which are kind of just the aesthetic value. Then they have these things called utility model patents that look at the way things appear, but a little bit more of a of a technical structure, so um, maybe the way
that the case that goes around your smartphone, um is formed. Um, And so it's a little bit more of an aesthetic or a design as opposed to an invention patent, which is what you think of when you come up with a new manufacturing process or new chemical compounds, something that's really kind of high tech versus versus just structural in nature. One of the most recent examples I believe of a
Chinese company suing a US company for patent infringement. Is the razor the kind of hoverboard I understand that the lawsuit alleges that razors hovered tracks infringes on a patent from a Chinese company hang Ju Cheek intelligent. Is that? Is that something we're going to see more of? Yeah, I think that, you know, that's a good example. There's
there's that example. There's the case of Apple recently got hit by by a similar UM type of lit gation in China where there was an injunction issued on old models of the of the iPhone. UM. I think you're going to see an increase in these types of of lawsuits, and they're going to be increasingly complicated. As you know, if you file a patent in the United States, he might file a similar patent in China, UM in Europe.
UM seeking protection multiple jurisdictions, and so I think you're gonna see companies, especially global tech companies, taking advantage of multiple jurisdictions and filing lawsuits in the courts that are that are best suited to hear the case, like here in the US, the Eastern district of Texas is notorious as a place where people will go to file patent suits because uh they're high wind rates and big damages amounts.
And China is starting to develop as a place where you can get a fast judgment and they're very plaintive friendly or people are are frequently able to succeed um in those courts. So I think you'll you'll start to see uh more patent suits because it's just a favorable jurisdiction to bring a lawsuit. And just quickly you say that the Chinese courts offer lower damage awards despite higher win rates. Yeah, and it's it's interesting. I'm curious to
see how those statistics develop. It may be because of the nature of patents. We mentioned that the Chinese system has a lot more focus on design and aesthetic features and those may not garner as many as many dollars, But we'll see as it continues. Thank you very much. Thank you for bringing this to our attention and giving us more details. Matt Lawson, litigation analyst of Bloomberg Intelligence, joining us from our Bloomberg studio in Washington, d C.
All about Chinese patent law. You're listening to taking stock I'm pim Fox, and this is Bloomberg. Bloomberg Taking Stock has brought you by Celebrity Motor Car Company, the luxury of BMW, the performance of Maserati, the innovation of Lexus. Walk the red carpet and get the status you deserve at the Celebrity Motor Car Company visits Celebrity Motorcar dot Com