Joint patents with China pose pitfalls in U.S.-led decoupling, Nikkei Asia, Mar. 15, 2023.
TAMAKI KYOZUKA, Nikkei staff writer
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The increasingly global nature of intellectual property development could provide Beijing some protection from the U.S.-led push to cut China out of supply chains, as companies worry about losing access to key technology in such areas as electric vehicles.
American entities jointly applied for 125 patents in China with Chinese universities or companies over the three years through 2022. Japanese-Chinese joint applications were close behind, at 115.
Though U.S. and Japanese applicants account for fewer than 1% of all patent filings in China, many cover advanced technologies in areas such as batteries, telecommunications or key industrial metals, for use in electric vehicles or smartphones. Around 40% have dual-use potential, meaning they could have military applications.
Chinese law treats any joint filings involving Chinese nationals or organizations, even those with foreign partners, as Chinese technology. If Beijing retaliates against Washington's export restrictions on advanced technology with similar measures of its own, companies with such patents could find themselves unable to develop or produce technology using them outside China.
Many of the Japanese filings involve automobiles. Toyota Motor leads the pack with around 30, centering on core technologies for next-generation vehicles such as autonomous-driving control systems and fast-charging batteries. Hitachi has about 10, including self-driving technology and EV charging systems. Both submitted a number of applications with partners like Tsinghua University.
"We apply for joint patents around the world. The number in China isn't especially large," a Toyota representative said. "We consider a variety of possibilities in each region."
Hitachi said it files patents and manages technology appropriately "in accordance with local laws and based on our intellectual property usage strategy."
Electronic parts maker Alps Alpine has submitted five Chinese joint patent filings. Four of these, covering camera components likely for use in smartphones, are in partnership with Huawei Technologies, a Chinese telecom equipment maker on which the U.S. government is considering a total export ban.
A proposal would bar not only direct dealings with Huawei, but also exports to companies that supply it with goods or technology, according to U.S. media. There is concern that if joint patents are considered to be technology transactions, they could fall under American export bans, a consulting firm said.
"While it is true that we have joint filings with Huawei, we follow U.S. guidelines, and we don't plan to change our policy," Alps Alpine said.
Competition between the U.S. and China for cutting-edge technology -- a central part of their greater rivalry -- is growing, as both sides tap legislation and export curbs to gain an advantage.
China has become a major intellectual property player in recent years, producing more patent applications than any other country since 2011. It is also weaponizing IP, with the number of patent infringement suits against overseas companies growing 150% from 2019 to 2021.
A Chinese business sued Apple in 2012, claiming that the U.S. company's virtual assistant Siri infringed on its artificial intelligence-related patent, and the two have been locked in a legal battle ever since.
Chinese courts have upheld the patent's validity in a blow to Apple, which could be forced to stop producing and selling products loaded with Siri in China depending on how the case plays out.
"The Chinese company could be hoping for a settlement, thinking that Apple would be reluctant to drag the fight out and risk losing," said Haseru Roku, a lawyer and an expert on Chinese legal affairs.
Further tensions between China and the U.S. could put a target on more American companies, disrupting the flow of IP across the globe.
IP also emerged as a key concern when French automaker Renault in November announced a joint venture with Chinese peer Geely on gasoline-powered vehicles.
Renault and alliance partner Nissan Motor jointly hold numerous patents. Nissan executives worried that if the joint venture eventually becomes a Geely subsidiary, some of the patents could transfer to Geely and fall under Chinese export curbs, disrupting Nissan's own supply chains.
A global decoupling, including on IP, would prove costly. Dividing the global economy in two would cost the world 5%, or nearly $5 trillion, in gross domestic product, calculations by the World Trade Organization show.
Joint research conducted across borders was around 20% more likely to be cited by other papers than joint research conducted within Japan, a study by Niigata University and other institutions found. The number of citations are an indicator for quality.
The study also found that joint research produced greater synergies in the 2000s, when global research gained momentum, than in the immediate aftermath of the Cold War.