The Greater China IP Updates ¡V December 2024

By Lyndon 

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Patent Agencies Continue to Innovate in China

In 2023, patent agencies represented 90.6% of all domestic patent applications (indicating a 90.6% patent application representation rate), marking an increase of 9.1% percentage points from the previous year.  The representation rate for invention patent applications reached 94.4%.  The trademark registration application representation rate stood at 87.7%.  Additionally, 320 trademark agencies represented collective and certification trademark registrations for use as geographical indications, filing 968 applications at a 95.8% representation rate.  Also, geographic coverage improved significantly, with IP service institutions now covering 89.6% of prefecture-level administrative areas, an increase of 1.5 percentage points from the previous year and 6.2 percentage points from 2 years ago.  Service providers became more comprehensive, with 64.9% offering at least two types of IP services and 13.4% providing more than three types of services.  The range of service models diversified as well; large organizations constructed integrated, full-service models, while smaller ones focused on specialized services, enhancing competitiveness through niche and refined offerings.

US Curbs on China Likely to Stimulate Further Investment in Self-sufficiency

In early December, during the last weeks of Joe Biden’s administration, the US Department of Commerce slapped additional restrictions on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities.  It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf although it did not name them in an initial statement.  The Entity List has been expanded to include semiconductor fabs, tool companies, and investment companies that are acting at the behest of Beijing.  The controls unveiled in this latest action impose restrictions on the sale to China of two dozen types of manufacturing equipment and three software tools, with exemptions for countries that have the capability of imposing such controls themselves.  The idea is to create a pathway for those countries, such as Japan and the Netherlands, to enact comparable curbs.  The rules oblige the foreign facilities of US companies, using a provision known as the foreign direct product rule (FDPR).  That authority allows Washington to control goods made overseas that use even the tiniest amount of US technology.  The use of FDPR, even with exemptions, is an effort to prevent US toolmakers from avoiding trade restrictions by locating their manufacturing in other countries.  A recent report found that US gear suppliers have increasingly exported products to China from non-US countries in recent years.  The US Secretary of Commerce Gina Raimondo stated that the aim is to impair China’s ability to indigenize the production of advanced technologies that pose a risk to US national security.  The new controls restrict the sale of HBM chips that are essential AI components that handle data. HBM2 and more advanced chips will also be restricted.  This is a new development after previous campaigns to limit China’s access to advanced logic chips.