Patents are almost never created or used to protect innovation. Companies that actually innovate and make things do so because they have a culture of innovation and execution, and they hold patents only to ante into the game of Mexican Standoff against other holders of patents.

The only people harmed by this proposal are patent trolls, and by companies who think that spending effort lobbying their patents into various national and international standards (especially doing so surreptitiously), and then riding the gravy train, instead of actually spending money on actual research, development, innovation, and execution.

Somehow, I don’t feel that patent trolls and patent surprisers deserve any protection or sympathy, and I hope that proposals like this one actually smash their business “model” as the parasite it is.

2. This raises the question: What explains the retreat?
• Opposition of leading Chinese companies (especially operators) is probably of greatest importance.
• What has been the role of inter-agency opposition?
• SIPO does not seem to play an important role in this debate
• How important was the unified opposition from global players? Was the degree of unity in the opposition to the SAC Draft Rules stronger than before?
My own hunch: Article 9 of SAC’s 2009 Draft Rules was too much a reflection of the initial motivation (reduce cost of technology licensing). That motivation continues to be important, but other motivations are now gaining in importance, among them the interests of Chinese companies (like Huawei) that have growing IPR portfolios and that have developed their own global corporate networks of production and innovation.

3. What next?
• In response to the comments it received, SAC is expected to issue guidelines to clarify what precisely is covered by the 2009 draft rules. But this will be a long and messy process, and ‘planned ambiguity’ will continue to blur the picture, right?
• Q: How important will be the role of the SPC in issuing guidelines?

4. Fundamental question – Will China’s reluctance to comply with the existing rules on IPR and standards diminish over time?
Proposition: Yes, because global companies (including Chinese new global players) need similar rules everywhere.

Q: What do you think about the following counter-arguments that I heard from Chinese stakeholders?
o As a latecomer, China will request substantial adjustments in the existing rules. China will continue to resist attempts by global players to push through full compliance with existing international rules and regulations.
o Large global industry players can cope with some diversity of rules and regulations through strategies of “intellectual property rights arbitrage” (Samuelson, 2004). “Copy exact” rules are unnecessary. What global players need is predictability. (That is different for smaller players, right?)
o China agrees that some kind of harmonization of standards would be advantageous for everybody. However, China does not want to repeat the negative experience of TRIPS. At least some stakeholders in China continue to consider the TRIPS agreement as “unfair”. In this view, TRIPS has been shaped by the interests of the incumbents and it fails to take into account the different interests of latecomers.