'Take China seriously,' says IP veteran

By Kirsty Barnes

- Last updated on GMT

Related tags: China, Intellectual property, Copyright

IBM's vice president of Intellectual Property (IP) Strategy, Kevin
Rivette, gives his views on the IP state-of-play on the ground in
China.

"The positives are obvious and the pitfalls are many,"​ he said speaking at a recent conference held by the Intellectual Property Institute in London titled: "The Chinese Opportunity: Successful Business Development in China."

"Everybody's getting ripped off from floor-makers to television and drug-makers."

China is the world's number one source of counterfeit drugs, in a market estimated by the World Health Organization to be worth a staggering $35bn (€27.8bn) a year.

Other problems cited include patent backlog, inconsistent judicial systems, suspect quality control examination, an often-low regard for IP, as well as an industrial policy in some regions that make trade secrets public.

"But operating in China is not as bad as it may seem on the surface,"​ he said.

The Chinese Government is undertaking a lot of initiatives to rectify the situation, setting up infrastructure, introducing the new trade secrets law in 2004, developing patent protocols for industry groups and undertaking new legal training in IP for judges, explained Rivette.

In addition China has set up the Ministry of Science and Technology (MOST), which is training 103 innovation-driven Chinese companies on how to deal with IP.

"As a result, some Chinese companies are now starting to use patents as a business tool, having recognised the value of doing so, and this is a major step forward as it is something that Western companies have already been doing for years,"​ said Rivette.

"Right now IP lawsuits between Chinese firms are becoming fast and furious."

According to Rivette, China is on the precipice of beginning to take IP seriously, estimating it will take three to five years before IP is widely respected and 10-15 years before this respect is widespread throughout the whole country and it is seriously paying royalties.

"China is now where Japan was ten years ago. Korea is also evolving in this area too although China's progress will be a lot faster,"​ he said.

Interestingly though, although China has stepped up its R&D investment and its patent filing, the country has sought minimal IP rights in other parts of the world.

"They currently have a 30 times deficit at where they are with their patents, compared with the rest of the world, so they are having a lot of trouble with exports,"​ said Rivette.

"This will have to change."

Therefore, Rivette believes that China's need for IP rights to do business outside China will provide opportunities for Western firms, such as joint ventures, "that are new and unexpected."

"China needs access to foreign markets and foreign markets need access to China,"​ said Rivette.

Rivette said that in order to help things move forward more quickly and smoothly, Western firms can help Chinese firms along on their IP journey.

"This will take time but we should invest this time and work with them to set up deals that are mutually beneficial."

When asked to compare India to China, Rivette said that in regards to being perceived as a business opportunity or threat, China was in a different class to India altogether.

"India has not been embracing trade as China has - royalties collected by India have been $15m in the last ten years, compared to the $15m collected by China in the last five years,"​ he said.

"India is less well-intentioned than China - China is the place we need to take seriously."

Related topics: Markets & Regulations

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