China Continues Market Distorting Patent Subsidies

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Despite China planning to cancel all patent subsidies by 2025, some jurisdictions are still issuing substantive patent subsidies and rewards for domestic and foreign patent grants. Specifically, Haining, near Shanghai, recently released their Implementation Rules for the Management of Special Funds for Intellectual Property Rights in Haining City (海宁市知识产权专项资金管理实施细则公示). Per a 2021 USPTO report on Chinese non-market factors influencing IP trends, China had reportedly adopted more than 70 subnational trademark subsidy measures, including measures for domestic and foreign applications and registrations. Further, all 31 Chinese provinces/municipalities had patent subsidy measures at the time of the report.

Per the Implementation Rules, patentees will receive an award of 100,000 RMB (About $14,000 USD) for every 10 granted Chinese invention patents. For each foreign patent granted through the Patent Cooperation Treaty (PCT) route, patentees will receive 30,000 RMB in subsidies for up to 2 family members. No corresponding subsidies are available for Paris convention filings, which may be one of the reasons China is the top user of the PCT system. Haining will also subsidize interest payments on loans using patents as collateral up to 150,000 RMB. Haining will also subsidize foreign patent litigation up to 200,000 RMB. 

Even after these subsidies are finally ended in 2025, China will retain other distorting incentives such as lower corporate income tax rates through the High and New Tech Enterprise (HTNE) program and patent requirements for listing on the Shanghai Stock Exchange Science and Technology Innovation Board.

The full text is available here (Chinese only).

Author: Aaron Wininger

Aaron Wininger is a Principal and Director of the China Intellectual Property at Schwegman Lundberg & Woessner.

Author: Aaron Wininger

Aaron Wininger is a Principal and Director of the China Intellectual Property at Schwegman Lundberg & Woessner.