China Poised to Become Global Innovation Leader

Thomson Reuters IP analysis projects China annual patent volume to surpass Japan and U.S. by 2011

LONDON and NEW YORK, October 5, 2010 - China is projected to lead in patent activity by 2011, according to a
detailed intellectual property analysis published today by the IP Solutions
business of Thomson Reuters. The projected growth in Chinese patent activity
is based on analysis of the total volume of first-patent filings in China,
Europe, Japan, Korea and the U.S. China experienced an annual growth rate of
26.1 percent in total patent volume from 2003-2009, as compared to its
closest rival, the U.S., with a 5.5 percent growth rate.

This second edition of the Thomson Reuters study suggests that patent
filings in China will outpace Japan and the U.S. in 2011, one year earlier
than was forecast when the first edition of the study was published in 2008.
The study, Patented in China II: The Present and Future State of Innovation
in China, tracks global patent activity as a barometer for innovation across
dozens of metrics to provide a view into China's innovation economy.

Beyond projected patent growth, the study also examines the composition
of patents from China relative to its peer group globally, domestic vs.
foreign patent applications, patent technology areas, government/policy
implications, and patent quality vs. quantity. Following are some of the key
observations in the analysis:

    - Expansion through Patents: While innovation by domestic entities
      is driving China's patent boom, China is also expanding its IP
      protection overseas. From 2007-2008, the growth rate of China's
      overseas patent fillings in Europe, Japan and the U.S. were 33.5
      percent, 15.9 percent and 14.1 percent, respectively.

    - Chinese Government Is Driving Innovation: Government innovation
      incentives, R&D tax deductions, Chinese premier Wen Jiabao's
      commitment to make China an innovation-centered economy, and unique
      patent types (such as utility models) contribute to China's
      acceleration to the top innovator spot.

    - Shift from Agriculture to High Tech: As the Chinese economic
      landscape changes, a major shift is occurring in patent filings:
      agri-centered innovation related to food production is growing much
      more slowly than high-technology innovation. There was a 4,861 percent
      increase in domestic Chinese patent applications in digital computers
      in the decade from 1998 to 2008, versus a much more modest increase of
      552 percent in natural products and polymers for that same period.

    - Alternative IP Rights in China - Utility Model Patents:
      Approximately half of all Chinese patents filed in 2009 were utility
      models, which are less-rigorous, more-affordable forms of patents that
      provide 10 years of protection (versus 20 years for invention patents).
      The use of utility model patents in China has grown at a rate of 18
      percent per annum since 2001. Utility models are also a potentially
      valuable strategy for foreign filings in China.

    - Patent Quality Improving: Despite the growing use of utility
      model patents, Chinese patent quality is slowly improving based on the
      Thomson Reuters analysis. By tracking the ratio of patent applications
      to granted patents among full invention patents in China, the analysis
      finds that patent quality is trending up.

The data in this report was compiled using the Thomson Reuters Derwent
World Patents Index(R) (DWPI(SM)) database, the most trusted source of global
patent information with expertly-indexed records, enhanced titles and
comprehensive abstracts, enabling deeper insight into patent research.

To view the full report, Patented in China II: The Present and Future
State of Innovation in China, go to:
ip.thomsonreuters.com/chinapatents2010/index.html.

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Laura Gaze, IP Solutions, +1-203-868-3340, or laura.gaze at thomsonreuters.com; or John Roderick, J. Roderick Inc., +1-631-656-9736, or john at jroderick.com