Soaring patent approvals and more active protection of Chinese intellectual property abroad suggest China's attempts to pour money into research and development are paying off.

China is now the world number two in R&D spending, after the United States, according to the Battelle-R&D Magazine 2011 Global R&D forecast.

More companies are opening research and development centres in the country, as it attempts the leap from workshop to laboratory of the world.

But how do you measure how many ideas this money is buying? Counting patents - which are filed to legally protect an idea - is one option.

Unfortunately, there are no complete or up-to-date figures for Chinese patents available.

But this graph from the January report of the World Intellectual Property shows that the more expensive Patent Co-operation Treaty (PCT) filings, which help protect patents all over the world, rose dramatically in the last couple of years:

Chinese patent filings

Is there a new idea behind every patent?

However, questions remain about whether behind each patent there is, in fact, a unique invention.

Getting straight to the heart of the skepticism is a report produced by James McGregor at APCO Worldwide for the US Chamber of Commerce, titled "China's Drive for 'Indigenous Innovation: A Web of Industrial Policies":

China's patent regime has been tailored to help accomplish two major indigenous innovation goals. One is to incentivize Chinese companies to file patents that contain little substance so that they can learn the patent process for later filing of real invention patents. The other is for Chinese companies to be able to use domestic patents to retaliate against foreign companies which file intellectual property infringement lawsuits offshore that stymie the international expansion plans of Chinese companies.

The report says Chinese patents cannot be compared to their US counterparts:

The key tool for accomplishing this is China's use of the German "Gebrauchsmuster", or "utility model" patent. Such patents don't exist in the US. Filings of these patents are not reviewed, and require only vague information. They can be used to obtain patents that are merely descriptions of products owned by others with a few small changes added in.

If that all sounds a bit scornful, consider instead a report from The Economist that people are incentivised to file patents, whether or not it was their idea originally. According to the Economist piece, these incentives include government funding and reduced corporate income taxes for prolific filers. On an individual level, workers and students who file patents are more likely to earn residence permits for popular cities, the newspaper said.

A system in its infancy

Professor Peter Williamson from the University of Cambridge's Judge Business School and someone who follows Chinese patent law closely has argued that while the patent system is still suffering from teething problems, it is nowhere near as bad as is often made out. As he told FT Tilt:

People don't believe there's any innovation in China. They still have in their mind that it's all about imitation and copying and stealing technology, all of which, of course, goes on. But a lot of commentators say if that's happening there can't be any innovation but the two things can co-exist.

Williamson said that the rate at which patents are granted, at about 20-40 per cent of all patents filed, is similar to the UK rate of about 30 per cent.

He explains that incentives for filing patents should not be seen as an attempt to artificially buoy the numbers, but to encourage Chinese companies to file patents on ideas they would have normally kept secret:

Chinese business people often don't believe in filing patents. They think if they publish their ideas, people will steal them and they won't be able to enforce the patent. The whole legal system is struggling to keep up, it's not sufficiently developed so what they often do is just try to keep it [their invention] a secret.

Michael Lin, a patent lawyer at Marks & Clerks in Hong Kong, backs Williamson, saying the Chinese system has come along way in the last ten years.

According to Lin, figures which show China is fast approaching the US to become the issuer of the most patents in the world do include the more malleable "design" patents which the US Chamber of Commerce commented on.

But while foreign companies can face more hurdles than their Chinese counterparts, Lin told FT Tilt that many multinationals are very good at working the system:

Certain companies are very, very sophisticated. They know Chinese patent law better than anyone else. Then I think there are the companies who haven't really had that much experience, or who have had one bad experience and then ran away and stopped filing patents in China.

Lin said consumer goods companies had been particularly good at mastering the patent, adding that some had even started using it like some of their Chinese competitors do - less as a protection mechanism and more as a marketing tool.

Printing "patented" on bottles of shampoo and tubes of toothpaste convinces some consumers that there is something special about the product - which is, of course, an idea in itself.

See also:
Full coverage of intellectual property rights in China
- FT Tilt
The value of branding becomes patent
- FT
Unleashing innovation in China - McKinsey Quarterly