China is making some moves
The fees, the agreements, the restrictions… You can understand when Chinese officials say that the country is retooling to become a country of technological innovation and less of a manufacturer. This positions China to move away from paying to use technology developed in other countries.
What many may not understand is how China is promoting innovation.
China's Investment Into Innovation
One of the largest markets available to multi-national corporations is that of gov’t procurement or products purchased by the gov’t of a country.
In the US, around $500billion is spent by the gov’t in procuring goods and services from foreign and domestic suppliers. Estimates say China spends in the neighborhood of $200billion and that number is growing rapidly.
It is not hard to figure out why many companies are interested in participating in such a large expenditure. They want to get in on a piece of that $200billion.
In order to spur domestic innovation, China has implemented several policies that give a distinct advantage to domestic Chinese companies. Some may say that the “distinct advantage” afforded by the local Chinese policies actually translates more accurately into an exclusive opportunity to be considered for Chinese gov’t procurement funds (part of the $200billion).
One of the more controversial of these policies “favors” products that are tied to technology created or held by Chinese entities. This has caused quite a bit of turbulence in the global marketplace.
The result of these policies is that little to none of the ~$200billion is headed for your company… unless you get accredited by the Chinese gov’t.
In order to achieve the accredited status, one must apply to the Chinese gov’t. The catch? Only an entity having Chinese legal status may apply.
If your product is the subject of a patent or trademark, that patent or trademark must be owned by a legal Chinese entity. So… if you want to get a piece of the Chinese procurement market, be ready to serve up your intellectual property as well.
There are definite up-sides to being able to participate in the Chinese market but the costs to transfer your patents to a Chinese entity and rely on them in order to get a bite at the $200billion apple might be a bit steep.
What To Do Next?
We recommend discussing the matter with an experienced patent attorney.
You can schedule a free strategy session with one of the attorneys at Miller IP Law to discuss you options.