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China and the U.S. are competing to be the world's technological master 10 years from now. After analyzing patent application data in 10 categories, including artificial intelligence and quantum computing, Nikkei has concluded that China will reign supreme in nine categories. Chinese tech giants Baidu and Alibaba Group will be the major innovators. Meanwhile, 64 of the global top 100 companies in terms of patent quality will be American. U.S. President Donald Trump is becoming more cautious regarding increasingly competent Chinese companies as the world's two biggest economies battle it out over the future of technology.

Rankings for 10 categories by country

Here are the changes in the number of patent applications since 2000, when Japan held the top spot in five categories. By 2010, Japan led in three categories but eventually gave up those spots to the U.S. and China.

Topic 1

China was No. 1 in nine categories

China scored an overwhelming victory in 2017, holding the top spot in nine categories. It accounted for 49% of all applications in all 10 categories that year.

Next came the U.S., which finished No. 1 in one category and No. 2 in seven. The world’s two largest economies are now the main combatants in the patent war.

Japan finished at No. 4 in seven categories. It was No. 2 in two categories and No. 3 in another. Its number of applications accounted for 11% of the total.

Topic 2

Will China achieve technological hegemony 10 years from now?

The 10 categories surveyed

Quantum computing
Regenerative medicine
Autonomous driving
Virtual reality
Lithium-ion batteries
Conductive polymers

The 10 categories are key sectors that will play important roles in the race for technological hegemony in the next decade. Technological dominance determines each county’s competitiveness on the global stage.

Charts and rankings of the 10 categories

Use the pulldown menu to select a category and see how the quantity of each country's patent filings have changed since 2000.

AI is likely to become an everyday technology in an array of fields, from manufacturing to medicine to services. The number of applications for AI-related patents has been rising since 2011. The U.S. was the leader for years, but applications from China surged in 2017, and the huge Asian nation overtook the U.S.

IBM overwhelmed competitors in quality and quantity. Japanese companies disappeared from the rankings after 2014. Baidu has led China’s rapid ascent up the rankings. The company is a world leader in autonomous driving and speech recognition technology.

The only category in which China lags the U.S. is quantum computing. Google in November 2019 announced it had achieved "quantum supremacy" -- it had exceeded the performance of supercomputers. It is now implementing its latest technology. Japan held the top position in number of applications until 2010 but fell from the perch in 2011. In 2017, the number of applications filed by the U.S. was 15 times more than a decade earlier, as the nation showed off unbeatable strength.

D-Wave Systems, a Canadian company that sells quantum computing sytems, was filing the most patents through 2014. It was also No. 1 in the quality rankings. But the development of general-purpose types, different than the D-wave type, is progressing, and Google, IBM, Microsoft and other companies are advancing in terms of quantity and quality.

Regenerative medicine promises to use technology to cure diseases and conditions that cannot be treated with conventional medicine or surgery. The U.S., the longtime leader in the field, was overtaken by China in 2015. Japan has risen steadily up the application ranking but at No. 4 still lags No. 3 South Korea.

The Chinese Academy of Sciences, a national research institute, for many years has been a strong presence in the application ranking. However, Chinese companies have disappeared in the quality ranking, and U.S. companies like Janssen, acquired by the Johnson & Johnson conglomerate, is ranked high. Mega pharma companies' acquisition battle is intensifying.

The main battlefield in the automobile development arena has shifted from tweaking hardware for fuel efficiency and other gains to optimizing software with AI. The number of patent applications in 2017 increased 2.3 times from two years earlier. A three-way battle is taking shape among Japan, the U.S. and China. Japan led the way through 2008, when China began to soar.

On the other hand, Google topped the quality ranking, besting Toyota Motor, which was No. 1 in terms of quantity. Waymo, Google's autonomous driving subsidiary, was No. 8. Alphabet companies overwhelmed the competition in terms of AI-powered self-driving technologies and accomplishments in demonstration tests.

This is a generic term for plastic that conducts electricity, a dream-come-true general-purpose technology applied to solar panels and most notably to OLED panels. Hopes are high for an "artificial muscle" material that can be used for humanoid robots and artificial organs. Hideki Shirakawa, who received the Nobel Prize in Chemistry for the development of conductive polymers in 2000, pioneered this technology. For a long time Japan was the top runner, but in 2012 China took over as the top applicant.

On the other hand, in the quality ranking, four of the top 10 companies are from South Korea, with only two coming from Japan, Kyocera and Shin-Etsu. There is concern in Japan that the country's presence will decline as Chinese companies also rank high.

Topic 3

The BATH quartet leads China’s astonishing rise, and its acquisitions of technologies are accelerating

Number of applications by BATH and their rankings (since 2015)

Source: astamuse

The BATH companies Baidu, Alibaba Group, Tencent and Huawei are the driving force behind China’s patent war blitz. They are top application filers. Thanks to of Chinese economic reforms that have picked up since the 1990s, they are helping to raise the global profile of Chinese businesses.

Topic 4

U.S. triumphs in terms of quality

No. of top 10 companies in each category by country

U.S. companies dominate in terms of quality(Note 3)The quality rankings were compiled by analyzing patents filed with the patent offices of Japan, the U.S., the EU and the World Intellectual Property Organization. Quality was evaluated based on original astamuse indexes gauging the number of applications around the world, examiner citations of existing technology concerning novelty and inventiveness, time remaining until a patent expires and how promising the technology is.. Among the 100 companies that made it into the top 10 of all categories, 64 are American. 18 are Japanese, and eight are South Korean. China had only one company show up in the ranking, in the drone category.

Topic 5

China spends three times more on science and technology than Japan

Key measures for China’s “intellectual property powerhouse” policy

Cash incentives

The central government provides up to 500,000 yuan ($74,000) per application for international patent

Nurture experts

China is promoting the education of intellectual property professionals, and not only in China. Patent attorneys and lawyers are furthering their education in the U.S., gaining international knowledge and returning home to improve the quality of China’s legal and patent systems.

Bigger damage awards

Under a proposal, patent holders would be allowed to claim damages of five times the amount approved by a court. (In Japan, plaintiffs accept the amount of court-approved damages.)

Improve court functions

The Supreme Court handles intellectual property cases. (In Japan and the U.S., high courts handle such cases.)

Source: Japan Patent Office

One factor behind China’s swelling presence in patents is the government’s strategy to turn China into a technology-driven nation. The 13th five-year plan adopted in 2015 includes an “intellectual property powerhouse” initiative. In “Made in China 2025,” announced the same year, the government unveiled an ambition to domestically produce 23 items in high-tech fields such as information technology, aerospace and materials.

Trends in science and technology spending

China’s science and technology spending has been growing at a faster pace than that of other major countries. China overtook Japan in 2009 and now has the world’s second-largest science and technology budget. Expenditures continued to grow, to 50.8 trillion yen ($460 billion) in 2017. That’s three times as much as Japan’s spending and close to the U.S.’s 55.6 trillion yen.

Topic 6

Japan's presence
in cutting-edge research fades

Number of authors of outstanding academic papers

Japan’s presence on the frontlines of research is declining. It ranks 11th among nations with authors of outstanding academic papers. The U.S. and China occupie the two top stops. Although Japan calls itself a tech-driven nation, its technology centers on manufacturing geared toward the second industrial revolution. As the world moves into the fourth industrial revolution, which will be heavy with digital technology, Japan is unlikely to achieve technological hegemony five years from now. The country needs to draw up a strategy that reflects this reality.

Note 1: The survey is based on data collected by astamuse, which manages intellectual property databases. Nikkei is a shareholder.

Note 2: The numbers of patents cover applications made to patent offices of more than 80 countries. Applications for one patent filed in two or more countries are counted as one. The nationality of applicants is used for the by-country rankings.

Note 3: The quality rankings were compiled by analyzing patents filed with the patent offices of Japan, the U.S., the EU and the World Intellectual Property Organization. Quality was evaluated based on original astamuse indexes gauging the number of applications around the world, examiner citations of existing technology concerning novelty and inventiveness, time remaining until a patent expires and how promising the technology is.

Wataru Kodaka, Tamaki Kyozuka, Hidefumi Fujimoto, and Manami Ogawa
Kentaro Watanabe
Shohei Morikawa

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