Global intellectual property applications and active IP rights

Worldwide filings for patents, trademarks and industrial designs reached record heights in 2018 

Innovators around the world filed 3.3 million patent applications in 2018, up 5.2% for a ninth straight yearly increase. Trademark filing activity amounted to 14.3 million, up 15.5% and representing a fourth consecutive year of double-digit growth. Worldwide industrial design filing activity reached 1.3 million, while applications for utility models exceeded 2 million for the first time

Asia is the hub of global IP filing activity 2. Percentage shares of IP filing activity by region

Asia continues to outpace other regions in filing activity for patents, utility models, trademarks and industrial designs, and accounts for 66.8% of all global patent applications worldwide. Over the last decade, Asia has seen an increase in its share of all applications filed around the world for these four IP rights. Note that North American offices do not offer utility model registration and are therefore not included in the bar for that IP right in the chart opposite. There were approximately 14 million patents in force in 2018 3. IP rights in force

There were around 14 million patents in force worldwide in 2018. The largest numbers in force were recorded in the United States of America (U.S.) (3.1 million), China (2.4 million) and Japan (2.1 million). Of the 49.3 million trademark registrations active worldwide, the greatest number in force were in China (19.6 million), followed by the U.S. (2.4 million), India (1.9 million) and Japan (1.9 million). Likewise, the greatest number of industrial design registrations in force were in China, which accounted for 40.4% of the world total. In addition, China accounted for 93% of the total utility models in force

Patents and utility models

The top five offices accounted for 85.3% of the world total 4. Percentage shares of total patent applications by the top five offices 

Not only did the top five IP offices combined receive 85.3% of the 3.3 million patent applications filed worldwide in 2018, a considerable share (46.4%) was filed in China alone, primarily by Chinese residents. The next largest shares went to the offices of the U.S., Japan, the Republic of Korea and the European Patent Office (EPO).

China received approximately 1.5 million patent applications, which is similar in magnitude to the combined total of the next 10 offices 5. Patent applications for the top 10 offices 

In 2018, China’s IP office received 1.54 million patent applications, which is 46.4% of the global total and similar in magnitude to the combined total of the next 10 top-ranked offices added together. China was followed by the offices of the U.S. (597,141), Japan (313,567), the Republic of Korea (209,992) and the EPO (174,397). Among the top 10 offices, those of China (+11.6%), India (+7.5%) and the EPO (+4.7%) saw a strong growth in filings received in 2018.

Among the offices of selected low- and middle-income countries, Pakistan and the Philippines saw a rapid growth in patent applications in 2018 6. Patent applications for offices of selected low- and middle-income countries

Applications filed at the offices of Pakistan (+27.8%), the Philippines (+26.7%) and Uzbekistan (+17.5%) recorded particularly rapid growth in 2018. The three regional offices for low- and middle-income countries – the African Intellectual Property Organization (OAPI), the African Regional Intellectual Property Organization (ARIPO) and the Eurasian Patent Organization (EAPO) – likewise reported strong a growth in applications in 2018. For the numbers of patent applications received by all other IP offices (where available), see the statistical table starting on page 39.

Innovators in the Republic of Korea continue to file the highest number of patents per unit of GDP (USD 100 billion)

Differences in patent activity reflect both the size of each economy and its level of development. However, by weighing the number of applications per country relative to its GDP, it is possible to compare filing activity among countries with economies of very different sizes for an alternative measure. With 8,561 resident patent applications per unit of USD 100 billion GDP, the Republic of Korea continued to file the greatest number of patent applications according to this measure. China (6,183) had the second highest, followed by Japan (5,101), Germany (1,924) and Switzerland (1,831). In recent years, the gap between the Republic of Korea and China has narrowed considerably due to strong growth in resident applications in China.

U.S.-based inventors filed the greatest number of PCT patent applications in 2018

The Patent Cooperation Treaty (PCT) System simplifies the process of multiple national patent filings by reducing the requirement to file a separate application in each jurisdiction where protection is sought. WIPO’s PCT System passed the record-breaking quarter-million (253,000) filing mark in 2018, up 3.9% on 2017. U.S.-based inventors (56,142) filed the greatest number of PCT patent applications in 2018, followed by applicants from China (53,345) and Japan (49,702).

Huawei Technologies, with a record number of published PCT applications, was the top filer in 2018

China-based telecoms giant Huawei Technologies, with a record 5,405 published PCT applications, was the top corporate filer in 2018. It was followed by Mitsubishi Electric Corp. of Japan (2,812), Intel Corp. of the U.S. (2,499), Qualcomm Inc. of the U.S. (2,404) and ZTE Corp. of China (2,080). ZTE Corp., which was the top applicant in 2016, saw a 29.8% drop in published PCT filings in 2018, a second straight year of decline. The top 10 applicant list comprises six companies from Asia, two from Europe and two from the U.S.

The IP office of China received almost 2.1 million utility model applications

A utility model is a special form of patent right which has less stringent requirements than a patent, but gives a shorter term of protection. Utility models are not available in all jurisdictions. Of the almost 2.15 million applications filed globally in 2018, the IP office of China received around 2.07 million – 96.6% of the world total – followed by the IP offices of Germany (12,307), the Russian Federation (9,747), Ukraine (9,120) and the Republic of Korea (6,232).

Utility model filings grew markedly in the middle-income countries of Uzbekistan and Viet Nam.

Trademarks Just five offices accounted for almost 65% of all trademark filing activity worldwide

In 2018, almost 65% of all trademark filing activity – as measured in class counts – occurred at the top five offices. Increasing its share of the worldwide total, the office of China (51.4%) now accounts for more than half of all global trademark filing activity, primarily from Chinese residents. The other four offices among the top five each accounted for between about 3% and 5% of the tota

The office of China’s class count of almost 7.4 million ranked first followed by a count of 640,181 at the office of the U.S. These have been the top two offices since the early 2000s, but from 2007 onwards China’s class count has grown from almost twice that of the U.S. to over 11 times as many. These two offices were followed by those of Japan (512,156), the European Union Intellectual Property Office (EUIPO) (392,925) and the Islamic Republic of Iran (384,338). Among the top 10 offices, China (+28.3%), India (+20.9%) and the Republic of Korea (+14.5%) recorded very high growth compared to 2017. In contrast, the offices of Japan, the Russian Federation and Turkey each saw a decline in filing activity.

Counterfeiting has reached an alarming level, causing huge revenue losses to governments across Southeast Asia including Malaysia, said Piotr Stryszowski, senior economist of public governance and territorial development directorate at the Organisation for Economic Co-operation and Development (OECD).

Stryszowski, who has been following this issue at the grouping of rich developed nations for some 10 years, observed that the scale of this problem has been growing in this region.

And it’s not just the scale of counterfeiting that is alarming, it’s also the scope, he added. 

According to him, high-end brands used to attract counterfeiters, but now any product with a logo is a target.

“These days counterfeit goods can range from branded consumer products, spare parts, batteries and business-to-business goods to common consumer goods such as toothpaste, cosmetics and food.”

“If there is a product where people are willing to pay more for its brand name or for any other reasons such as safety and quality, this product can become a target for counterfeiters,” he told The Edge Financial Daily on the sidelines of the Global Illicit Trade Summit hosted by The Economist Events recently.

According to a 2013 report, the OECD estimated that counterfeit goods accounted for 2.5% or US$461 billion of global trade.

“That’s equivalent to more than twice the annual revenue of Apple Inc — and the number is growing. What’s worrying is that the scope [of counterfeiting] is also expanding. More products are being attacked or copied,” said Stryszowski. In 2017, Apple’s revenue stood at US$229.2 billion.

The report also warned that the business of counterfeit goods is “a significant economic threat that undermines innovation and hampers economic growth”.

“Counterfeiting is an illicit activity, which means there is tax revenue lost. This money is instead channelled into the pockets of organised crime groups,” said Stryszowski.

Trade in counterfeit goods not only negatively affects economic growth, but it poses a serious threat to the health of consumers as the goods are produced and distributed without any standards or norms.

Stryszowski noted that Asia is often singled out as the top place where counterfeit goods are made and sold.

“This is simply because of its high level of manufacturing activity. In addition, there are so many big ports in Asia. Some of them are misused as hubs for counterfeit trade,” he said.

However, counterfeiting is an issue for Chinese companies too.

“When we look at our statistics, we see that a growing number of Chinese companies are also victims of counterfeiting. Take Huawei mobile phones for example. They are often targets of counterfeiters,” he said.

“While it is easy to give a broad-brush remark that China is the world’s manufacturing hub for counterfeit goods, there is a nuance to that. So, caution should be paid before making one-line statement.

“To counterfeiters, what matters most is money. They don’t care whether it is Asia, Africa or America. Counterfeiters know no borders,” he added.

Stryszowski also described counterfeiting as a “disaster” for developing countries that are trying to move away from manufacturing to become a development hub where more creation of products takes place.

“Counterfeiting is a process that steals technology. So, imagine that you put a lot of efforts thinking and creating and end up producing something. Counterfeiting means that all these efforts of your creative thinking have been stolen and taken away. This means that countries that are exposed to counterfeiting are not likely to move up to start designing their own goods. They will always be locked in this trap,” he said.

Unfortunately, counterfeiting is rife around the globe and fake products are slipping into countries at increasing rates, for reasons that Stryszowski says lie in their low penalties.

“Penalties for counterfeiting are low unlike narcotics. Sometimes it is not even a big offence because it is seemingly a harmless crime. The rapid proliferation of products with so many distribution channels also makes [selling counterfeit goods] relatively safe and risk-free,” he said.

Stryszowski also attributed the rapid growth in counterfeit trade to governments not being able to catch up with the evolving structure of global trade.

“Organised crime or counterfeiters also know where the money is and they are aware that governments have problems with coordination. So part of the reason why counterfeiting is lucrative and why it is easy money actually lies in the fact that response from governments is still not yet to perfection.

“Of course, regulations are important, but only if they are enforced. The best rule of law that is not in place is basically useless,” he said.

“You can have soup but without a spoon, you cannot eat it. What we see in many countries, there are regulations, they are enforced but not to the extent that [is enough to stamp out the counterfeiters],” he added.

Asian Trade Centre executive director Deborah Elms concurred. “In general, we know how to deal with illicit trade and it’s not that you have to make new rules, you just need to enforce existing ones. If governments have the political will to tackle the issue, a lot of the problems can be resolved.”

“I think one of the struggles Malaysia faces is its wide boundaries and coastline and to keep guard of all that for the authorities is tough. When you add all of that physical space plus the free trade zones, I think that is a challenge,” she told The Edge Financial Daily.

Elms is of the view that consumers can play a major role in the fight against counterfeiting by being educated on the risks of buying counterfeit goods.

She also warned about the growth of e-commerce that is likely to lead to the explosion of illicit goods, thanks to it being less regulated. This is particularly so for goods where smugglers can profit from evading customs duties and taxes such as cigarettes and alcohol.

Meanwhile, Elms said it’s still uncertain whether the upcoming Digital Free Trade Zone in KLIA Aeropolis, Sepang, will be subject to the same challenges as traditional free trade zones in terms of trafficking fake goods. “You might have fewer challenges with the Malaysian system because they can police activity in and out of the warehouse better,” she added.

However, she cautioned that allowing a large company like Alibaba to take control of the e-commerce ecosystem here may not be the best approach as it will be difficult when law enforcers are unwilling to enforce the rules against these “very powerful players”.

Elms also pointed to the difficulty in securing sufficient data on illicit trade activities in Malaysia.

“The one reason why we don’t tackle illicit trade enough is because the numbers are missing. It’s very hard to say this is the problem as it’s very hard to get the actual numbers and to be able to say clearly that it comes from a certain location. So, you don’t really appreciate why it matters,” she said.

Elms believes that companies must be willing to share basic information about their goods in free trade zones with the customs, law enforcement and related agencies.

“If you’re not going to open up every box, which is unrealistic, then you can at least share information about what is in every box, what’s going into the zone, where did they come from and what’s the final destination of the goods,” she added.

Holidaymakers caught buying goods from vendors on Italian beaches could face fines of up to €7,000.

Matteo Salvini, Italy’s interior minister, who also leads the country’s right-wing League party, is preparing a ruling called Safe Beaches, reports The Telegraph, which will severely impact vendors' freedom to sell products – and put tourists purchasing goods at risk of large fines.

The ruling, which is expected to be rolled out this summer, would mean vendors caught selling counterfeit products could face fines of between €2,500 and €15,500 and have their merchandise confiscated.

Tourists who pay for massages, tattoos and hair braids from unauthorised vendors would also run the risk of a fine.

The proposed levies originate from existing laws relating to the illegal trade in counterfeit goods which are already on the statute book.

Local police, Carabinieri police and the Guardian Finanza tax police would enforce the new decree against vendors and those who choose to buy from them.

Mr Salvini argues that the vendors sell fake brands and evade tax, which damages legitimate businesses.

The business association Confesercenti estimates that trade in counterfeit goods totals €22bn a year in Italy, with tax authorities arguably losing out on billions in revenue.