Recommendation of global IP firms of China-related business

By Tommy Zhang, Emily Tan, Stella Yang, Jane Jiang, Jenny Jiang, China IP,[Comprehensive Reports]

I. Background

With the rapid growth of knowledge-based economies and the accelerated development of the world’s economic integration, the amount of transnational IP applications and disputes have both soared, which has led to a dramatically increasing demand for corresponding IP services. Based on the 2013 World Intellectual Property Indicators published by the World Intellectual Property Organization (WIPO) in December 2013, with a growth of 9.2% comparing with 2011, the estimated 2.35 million patent filings worldwide in 2012 represents the fastest growth in the past 18 years. Similarly, the number of industrial designs contained in applications grew by 17% - the highest growth on record. The number of classes specified in trademark applications saw a healthy growth of 6% in 2012. In 2012, for the first time, residents of China accounted for the largest number of applications filed throughout the world for the four types of IP (patents, utility models, trademarks and industrial designs). Continued rapid filing progression in China is the principal force driving global IP-filing growth. Among the top 20 IP offices, China’s State Intellectual Property Office (SIPO, +24%) saw the largest growth in filings in 2012, followed by the offices of New Zealand (+14.3%), Mexico (+9%), the United States Patent and Trademark Office (USPTO, +7.8%) and the IP office of the Russian Federation (+6.8%). As can be seen from Chart 1 below, China resident applications are the main source of the IP-filing growth, non-resident applications only take 18%, which is the lowest in the 20 offices. Therefore, China can be considered as the most promising country for non-resident application growth.


Meanwhile, as the process of opening-up the Chinese market continues to deepen, Chinese enterprises are also accelerating their pace of internationalization. In recent years, both PCT applications and trademark applications filed by Chinese enterprises have increased sharply, the Chinese copyright system has been brought further in line with international standards, and Chinese enterprises have begun to be involved in IP wars around the world.


Against such a backdrop, a growing number of international IP firms are turning their eyes to China. By virtue of their expertise and experiences in the industry, these firms constantly seek to expand their business space and scopes in the Chinese market.


In order to get a better understanding of the business status of the aforesaid firms, China IP and China Daily co-launched “Survey on Global IP Firms of China-related Business” in 2012 for the first time. Taking IP firms as the subject, the survey tried to learn about their China-related business competitiveness. The survey was mainly in the form of questionnaire. Besides, a special research team was set up to get in touch with IP firms around the world, follow the questionnaire and collect relevant data for further research. After analyzing the information provided in the questionnaire, a recommendation list of Global IP Firms of China-related Business had been compiled. The list has become a reliable bridge to connect Chinese enterprises with global IP firms, through which many Chinese enterprises seek cooperation with IP firms in their target market, and have made a profound IP foundation before exploring the market.


With the approval and supports of readers, China IP conducted the “Survey on Global IP Firms of China-related Business” with China Daily for the second time to stay up to date with the IP firms. The survey lasted for 5 months starting on August 1st 2013, with over 2200 copies of questionnaires being sent out and covering a large number of IP firms in 36 countries. More than 552 agencies replied with valid statistics. Meanwhile, the research also received 121 recommendation forms filled by industry insiders from in-house IP departments, scientific institutes, the Chinese judicial system, and various IP related organizations, which have added to the authority and objectiveness of the analysis. Based on the statistics and opinions collected from the survey, a report and firm recommendation list were compiled to assist readers. Existing statistics and the results from last year had also been taken into consideration.


It is worth mentioning that as a comprehensive international media platform and with the aim to better connect enterprises with IP firms around the world, this year China IP invited global IP firms to recommend Chinese IP firms based on their business situation. The research also would like to provide a practical reference for global IP firms as a guide when they need to choose Chinese IP firms if they intend to explore the Chinese market.


The report and the recommendation list had been initially released at the 4th China IP Annual Forum in January 2014. It has also been published on other media platforms including China IP’s official website, China Daily IPR Channel, Weibo, WeChat, etc.


However, limited by time, territory, trade secrets, and other factors, there are still many unsatisfactory points in the report. China IP sincerely hope to be understood by relevant units, and will do our best to apply our experiences gained from this survey to future projects.


II. Survey results

1. Branch offices
 
According to the survey data, international IP firms from countries with a large number of patent applications in China, such as Japan, the U.S., Germany, South Korea, France, Switzerland, Holland, the U.K., Sweden, Italy etc., tend to have more China-related businesses. Most of them have 1-3 branch offices in China, far surpassing the average number of Chinese offices set by firms from countries with fewer patent applications in China. It also suggests that firms from these countries develop better and are more competitive in the Chinese market. Among all countries, IP firms from the U.S., the U.K., Japan, and Germany have the most Chinese offices.


2. Location selection

Most firms choose to set their By May Zhang report China Intellectual Property 36 China IP 3-4/2014 Chinese offices in Hong Kong, Beijing or Shanghai. Large firms with more Chinese businesses incline to open new offices in cities emphasizing on R&D and innovation such as Guangzhou, Shenzhen, Chongqing, etc., to further explore the Chinese market.


3. Personnel structure

Viewing the personnel structure, though some well-known IP firms do not have branch offices in China, most of them normally have at least 1-2 Chinese staff members or staff with Chinese language competence. IP firms who have branch offices in China often have over 2 Chinese staff members and some large firms have more than 200 Chinese employees. Meanwhile, over half of the firms have non-Chinese staff members that can communicate in fluent Chinese.


4. Case volumes

Case volumes of the firms under survey range from 0 to over 100 per year. There are three reasons for the divergence. Firstly, the size of the firms and their business development degree in China vary. Secondly, the trade status between the firms’ home country and China often exerts a great influence on their case volumes. Thirdly, the status of IP and the level of innovation in the firms’ home countries also contribute to the difference. For instance, large firms from the U.S., the U.K. and other developed countries where IP is treated as a valuable asset often enjoy high case volumes with hundreds of patent applications and litigations, as well as thousands of trademark applications. However, firms from Southeast Asian, African and some Latin American countries have significantly fewer cases.


5. Services

The Chinese businesses of most global IP firms still focus on traditional IP services like patent and trademark applications as well as litigations. Large firms have a wider range of service scope, their areas of practice include domain name, trade secret, unfair competition, etc. To build their own brand and to attract clients, a number of firms have developed featured services. Common featured services are patent translation, data analysis, consultation for in-house IP management, reverse engineering, due diligence, pre-investigation in patent cases, etc. With the trend of IP capitalization spread all over the world, new services such as patent portfolio analysis, licensing, and IP value assessment also spring up.


6. Advantages and expertise

In terms of competitiveness, the majority of agencies for the inquiry have expertise in particular areas, such as machinery, electronics, medicine, and chemical, and are capable of providing customers with full Chinese services.


7. Clients

An explicit trend is that the clients of these international agencies are shifting from foreign enterprises to Chinese enterprises. When agencies had just entered the Chinese market, their basic China-related businesses were helping foreign companies build IP systems in China, introducing their trademarks and patents to China, and combating counterfeits. In recent years, an increasing number of agencies have begun to represent Chinese enterprises to file PCT applications, international trademark applications and deal with overseas IP litigations.


8. Performances

To date, for the majority of international IP firms, profits gained in the Chinese market account for only a small part of their total profit volumes. Over 80% of the firms under survey admitted their Chinese businesses account for less than 10% of the total business volume. However, they do believe that as China’s IP industry develops, there will be a growing market.


9. Obstacles

Survey results show that while exploring the Chinese market, the major obstacles facing the firms are the differences of the legal environment and culture. Also, firms that have just entered the market also find problems in recruiting talents and raising funds.


II. IP service agencies recommendations

Based on the Survey, China IP concluded a Recommendation of Global IP Firms of China-Related Business 2013, which takes into consideration the following aspects of the firms: the number and size of their Chinese offices, number of Chinese employees, number of employees with Chinese language abilities, employees based in China, patent and trademark applications in mainland China, IP litigations in mainland China, average business volumes of the last 5 years, recommendations, and so on. With solid statistics, over 137 international IP firms from 29 countries are included in the list.


Since the survey data involves many business secrets, to fulfill the obligation of confidentiality, China IP will not reveal the score of any agency.


Disclaimer:

1. This recommendation list serves only for reference; China IP reserves the right of final explanation.
2. If any errors are found, please contact the research team of China IP (E-mail: chinaip.survey@hurrymedia.com)
3. Recommended agencies are categorized by country and listed in alphabetical order by pinyin of firms’ Chinese name if they have one, and in alphabetical order by firms’ English name.

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