The Greater China IP Updates ¡V August 2024

By Lyndon 

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China’s Huawei Files Lawsuit against MediaTek

Although China has declared that patent subsidies will come to an end in 2025, many local jurisdictions are still issuing substantive patent subsidies and rewards for both domestic and foreign patent grants.  According to a 2021 USPTO report, China has reportedly adopted more than 70 trademark subsidy measures, including measures for domestic and foreign applications and registrations.  For example the Implementation Rules for the Management of Special Funds for Intellectual Property Rights in Haining City state that patentees will receive an award of 100,000 RMB for every 10 granted Chinese invention patents.  For each foreign patent granted through the Patent Cooperation Treaty, patentees will receive 30,000 RMB in subsidies.  Even if China ends these kinds of subsidies in 2025, China will still be able to use other incentives such as lower corporate income tax rates amongst other means.

China Struggles to Overcome Challenges in AI Field

China has filed for more generative AI patents domestically than any other country, but it faces issues such as US export controls and a low-level of innovation culture.  In the past decade China had filed more than 38,000 generative AI patents, compared to the US with 6,276, South Korea with 4,155, Japan with 3,409 and India with 1,350 according to the World Intellectual Property Organization (WIPO).  However, quantity doesn’t mean quality.  Despite the lower overall number of patents, US developers have the lead.  According to Stanford University’s 2024 AI Index, the most notable AI models to date stands at 61 from the US, compared to 21 from the European Union and 15 from China.  Competing with Silicon Valley’s deep pockets and resources has always been a challenge, but it has become more challenging since 2022 when the US began imposing export controls on key tech like the Nvidia A100 chip that has helped power the latest AI boom.  Although China filed the largest number of generative AI patents in the world, far more than the US, much of these patents were not able to be translated into forces to help bring about large language models or other fundamental AI models.  The reasons for this are that China did not have the required enormous computational power and neither the billions and trillions of high-quality data parameters for large model training.  Companies like Intel and Nvidia have pivoted to make chips that comply with US regulations for the Chinese market, and at the same time Chinese companies are turning to the locally-made Ascend chip series from Huawei to improve their level.  One result is that China’s AI industry is focusing more on the domestic market.  In fact, China has only filed 2,926 patents overseas in this field.  Companies that are filing patents abroad are those, such as Huawei, ZTE and Vivo, which already have a presence there.