News

What is the “China Effect,” and why is it important to understand the World IP Indicators?

By Jaime Nicolás

Data recently published by WIPO in its World Intellectual Property Indicators report confirms the increasingly growing influence of Asia in general – and China in particular – in the field of intellectual property. This is a long-standing trend, intensified in 2020 by the effect of Covid in the more Western economies.

The weight of these countries’ performance in global IP indicators is driving a change in the perception of the reliability and solvency they manage Intellectual Property. For many years now, it has become clear that China has been committed to this issue, which generates more confidence in trade relations.

Additional to this positive aspect, the inventive activity developed in the region also benefits -directly or indirectly and by extension of the figures- Europe and America countries. However, the United States is the leading country in the ranking of applications filed abroad, clearly indicating its desire to expand into new markets.

In any case, applications to protect various forms of IP in China now account for around 50% of registrations worldwide. Asia as a whole account for 70% of applications. This fact, which we call the “China effect,” must be considered when analyzing and assessing the annual evolution of world IP data. Because if we remove this effect from the equation, have we really improved?

Thanks to this positive impact from Asia – mainly China, followed by South Korea and India – almost all forms of IP grew in 2020, despite the adverse effects of the pandemic, more evident in the West.

Thus, after decreasing the previous year, worldwide patent applications increased by 1,6% in 2020, mainly thanks to pharmaceutical companies globally and less in other sectors, which have suffered much more in the West.

Trademark and design applications also increased their growth that year, almost reaching the growth recorded in 2018. Those indicate that new goods and services have been introduced in the market despite the crisis due to lifting restrictions and reopening trade.

While the United States and Europe (EPO, EUIPO) remain the top regions with strong influence and interest in filing intellectual property applications, China’s gap seems to be widening. Meanwhile, the remaining developed economies in the Asian region are making a big impact.

All this should lead us to reflect and remind us that business innovation is vital for long-term economic growth, as China clearly shows. For that reason, apparently more urgent needs affecting our nations should not make us lose focus on it. On the contrary, we should increase our investment efforts, update legislation, etc. Thus, favoring the development and protection of innovation at all levels will better prepare us to face and emerge from future crises.

We should also bear in mind that there are risks in this heavy dependence on the “China effect.” Beyond market control, the global effects of a sharp drop in applications in a giant, as it is today, would undoubtedly have consequences worldwide.

Despite everything, we can affirm that this “crisis” in which Covid has placed us in terms of IP would be more current than structural if we compare it with the economic crisis of 2008. And that companies globally continue to trust and bet on intellectual property as a critical asset of enormous value for immediate recovery and to continue growing in the future.

On the other hand, we should point out that the data on patent, trademark, and design applications in Latin America have been hardly hit by the crisis caused by this pandemic. However, we can highlight that in countries in which ClarkeModet acts directly, with few exceptions, they have managed to hold the positions achieved in the previous year, and even gained a slight improvement.

Finally, it is worth mentioning that Spain stands out, once again, among all the countries in the world for its number of women inventors, leading the ranking of patent applications, with a considerable difference compared to the second place, China.