Patent Authority on Innovation Enterprise

September 16th, 2016

A recent editorial in the New York Times, published in the weeks just prior to the summit between United States President Barack Obama and Chinese President Hu Jintao, observed that China has taken measures toward developing an innovation-enterprise economic agenda. Currently the undisputed leader in low-cost, efficient assembly and manufacturing of products mostly designed elsewhere (high-tech goods in particular, such as iPads), China’s leaders have set their sights on developing a culture of invention, as evidenced by a recent government document outlining goals intended to incite a drastic increase in the nation’s production of patents in the coming decade, toward achieving a more innovative society and greater economic impact worldwide.

Published by the State Intellectual Property Office of China, the “National Patent Development Strategy (2011-2020)” outlines broad economic objectives and targets specific goals to be achieved by 2015. Translation of the document by officials at the United States Patent and Trademark Office indicate that China’s goal for annual patent filings by 2015 is two million, including “utility-model patents” which typically cover product features and are less ambitious than “invention patents.”

The American system does not have utility patents. In China, however, close to 300,000 applications for utility patents were filed in 2009, roughly equal to its total of invention patents. The national plan is calling for a leap to one million patents by 2015. According to the United States patent office, upwards of 480,000 patents were filed in the U.S. in 2010.

The Chinese plan also calls for a doubling of the number of patent examiners, to 9,000, by 2015. The United States currently has 6,300 examiners. Moreover, China’s plan includes doubling the number of patents that residents and companies file in other countries. Thomson Reuters recently issued a report forecasting China’s surpassing the U.S. in patent filings in 2011.

David J. Kappos, director of the United States Patent and Trademark Office, reported that recent Chinese filings in the U.S. are predominantly in fields that China has prioritized for industrial strategy, including solar and wind energy, information technology and telecommunications, as well as battery and manufacturing technologies for automobiles.

The Chinese government incentives include cash bonuses, better housing for individual filers and tax breaks for prolific patent producing companies. According to Mr. Kappos, the Chinese leadership sees innovation as the key to higher living standards and long-term opportunity for growth. “They are doing everything they can to drive innovation, and China’s patent strategy is part of that broader plan.” Mr. Kappos said.

That China’s strategy is steered and sponsored by the governing body could pose concerns for the United States government, analysts say, particularly regarding issues of trade. But in recent weeks, President Obama has repeatedly stressed the importance of free trade to create US jobs and keep America’s economy competitive. The President touted the $45 billion in deals struck with Chinese President Hu Jintao at the White House during the week of the summit, as well as the appointment of a new Council on Jobs and Competitiveness, to be led by General Electric chief executive Jeff Immelt.

“If we’re serious about fighting for American jobs and American businesses, one of the most important things we can do is open up more markets to American goods around the world” said the President. “Most important, these deals will support some 235,000 American jobs, and that includes a lot of manufacturing jobs,” he said. The President also celebrated a recent trade deal with South Korea, which he said will create more than 70,000 American jobs.

Recently speaking from a General Electric plant in Schenectady, New York, Mr. Obama upheld GE as a corporate model for the benefits of free trade. “This plant is manufacturing steam turbines and generators for a big project in India … a project that’s helping support more than 1200 manufacturing jobs and more than 400 engineering jobs in Schenectady,” he said.

In his State of the Union address, President Obama proffered some incentive metrics of his own, particularly in the areas of biomedical research, information technology, and green energy research. . . “one million electric vehicles on the road by 2015. By 2035, 80% of America’s electricity will come from clean sources, like wind turbines.”  Also, Mr. Obama called for doubling our country’s exports by 2014, and urged Americans to resist protectionist pressures and to “unlock the productivity” of US workers.

Mentioning that China is home to the world’s largest private solar research facility, and acknowledging the estimable economic development of China in the last decade, President Obama nonetheless made the claim that America still grants more patents to inventors and entrepreneurs. He called upon Americans to “out-innovate, out-educate, out-build the rest of the world“ and added: “Innovation doesn’t just change our lives; it is how we make our living.”

The New York Times editorial did suggest that China’s patent initiative could well turn out to mirror the outcomes of past efforts by other foreign governments to give their industry and economy a more competitive advantage globally. For example, In the 1980s, Japan’s government was considered a master of industrial policy, threatening to overrun many American industries, including computers. Because of actions taken by the American government and industries, however, the Japanese initiatives had an ultimately weakened impact.  Upon closer analysis, specifically on the computer front, it became apparent that Japan had never become a force in the writing of software, presumably not developing the skilled application of innovative tools still held in the domain of American expertise.

Noteworthy, however, is that Japan remains an impressive patent generator, still slightly ahead of the U.S., though their pace is reportedly slowing. And in certain industries, Japan has continued to dominate, as in automobiles, machine tools and consumer electronics. Just how strong an influence Japanese government policy has had in those successes is open to debate, the article claims.

China’s latest patent strategy is laid out on a document marked by metrics, calculations of goals for numbers of patents filed, and  patents owned per million people, etc. The effort as outlined would quantify innovative technologies and advancement according to a system perhaps better suited to other forms of industry. Such an approach to achieving large scale innovation as a societal agenda, as outlined in the document, seems to either presume or overlook a quality standard in its ambitious pursuit of quantity. Thus far, the plan calls for accumulation of assets without much direction regarding deployment of processes aimed at assessment, foresight, and the kinds of variable actions that some innovation experts have mapped as integral to an effective innovation enterprise.

John Kao, chairman of the Institute for Large Scale Innovation and  a leading  innovation consultant to governments and corporations worldwide warns that it would be a mistake to assume that China will follow a path similar to Japan’s. China, he notes, while much bigger than Japan, also has a more individualistic cultural ethos, despite its Communist goverment. China’s large scale innovation agenda will inevitably give rise to entrepreneurial strains, he predicts, which will play out over decades, with various extrapolations.

Mr. Kao defines innovation as the capability of continuously achieving a desired future. China, he predicts, will have its examples of iconic ingenuity, a Steve Jobs and a Mark Zuckerberg, eventually emerging from the tide of its systematic production initiatives; as Mr. Kao sees it, however, the U.S. holds a comparative advantage, in that “American culture, more than any other, forgives failure, tolerates risk and embraces uncertainty”, conditions essential to the open construct of innovation.  Many innovative products and technologies will be made elsewhere, he predicts. “But America’s future lies in being the orchestrator—the systems integrator—of the innovation process,”Mr. Kao said.
”Look at Silicon Valley. It is a place where smart people from all nations, all languages and all ethnic groups come together. It’s the capital of innovation assembly.”

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