Digital expert Vincent Lorphelin and economist Christian Saint-Etienne explain, in an article for "Le Monde", that China is calling the battle for technological supremacy on the patent front.
The battle for global supremacy between China and the United States is heating up. China has just declared war on cryptocurrency patents: "The right to issue and control digital currency will become a battleground between states." It makes no secret of its aim. It's all about "breaking the dollar's monopoly, which will be the key element in the internationalization of the yuan". To be taken seriously, it also unveils its weapons, a portfolio of "one hundred and thirty patents covering the entire chain of production, issuance and circulation of cryptocurrencies".
Aggressive in form, it is also tough on substance: accused of stealing $600 billion (around €515 billion) worth of industrial property from the United States every year, China wants to provide proof of its inventiveness. Accused of manipulating its currency, it wants to weaken the dollar by preventing its digital version. Sanctioned through its technology companies ZTE and Huaweï, it wants to symmetrically punish Western companies through its patents.
China is threatening the heart of the global economy: the Internet of money. As with the preparation of the Internet in the 1990s, the underground effervescence of financial technologies is on the rise. States have become aware of this with the first eruptions of bitcoin, Facebook's libra and the neobank Revolut, which is already worth half of Société Générale. Barack Obama declared that the USA "owned" the Internet. Today, China is retaliating, essentially declaring that it owns the Internet of money.
It's a patent troll strategy. This controversial practice consists of amassing patents, opposing them against operators and threatening them with prohibition in order to obtain advantageous compensation. It's the ultimate economic weapon, more dangerous for technology giants than threats of dismantling, taxes or penalties for abuse of a dominant position.
Change of tone
After multiplying its international patents two hundredfold in twenty years, China became the top filer in 2019. President Xi Jinping has declared his desire to acquire "the power to regulate blockchain in the world". Today, the balance of power is in his favor, with one thousand one hundred patents in the Chinese camp, state and champions combined, against six hundred in the American camp.
As patent wars are not trench battles but counter-offensives, multiplying the number of fronts, there is little doubt that this terrain will be extended to artificial intelligence, in which China aims to become the world leader by 2030, and to all strategic technologies.
What was unexpected was the suddenness of the change in tone. Sovereign patent funds have been around for ten years. But, accused of disguised protectionism and "state patent trolling" by the US Senate, they have remained discreet until now. China's thunderous announcement will make the aggressive side of their business less complex.
It's worth remembering the devastating power of the patent war between Apple and the Samsung-Google duo: hundreds of international companies swept up in the turmoil, the Galaxy phone banned from sale in certain territories, valuations like that of Nortel flirting with the million-dollar mark per patent, groups like Motorola changing hands for their patents alone, Homeric lawsuits running into billions. This power will be further amplified by that of governments.
Against this backdrop, France has a contrasting position. On the negative side, we suffer from a serious deficit in patent filings. Researchers prefer to publish their work rather than protect it. SMEs file half as many patents as their German counterparts. Start-ups neglect patents because they seem expensive, complicated and untenable. The Institut national de la propriété intellectuelle (INPI), which puts its own interests ahead of those of inventors, forgets to inform them that software and practical innovations are better protected in the United States.
France's inventiveness
On the positive side, France's inventiveness is recognized as unique in the world. It was at the origin of the early vision of the "knowledge economy", based on intellectual property, although its implementation at European level ended in the failure of the Lisbon strategy, decided in March 2000. It is the only Western country to have created a sovereign patent fund, although its mission statement is illegible.
So what should we do? In the long term, develop a patent policy with the same ambition as an innovation policy. Turn the anti-patent culture on its head, as Google and China have done. Google was built on open source software. In China, Confucianism values the copying of the master by his disciples. Both were philosophically hostile to intellectual property. Today, however, Google has joined Apple in the Top 10 of American inventors, and China has become the world leader in patents.
In the short term, we need to buy up as many international Internet of Money patents as possible, before the bidding gets too hot. Fund 100% of patent costs. Give priority to protecting innovations in use, which have more strategic value in the face of the GAFAs (Google, Apple, Facebook, Amazon). Pay a 5,000-euro bonus to inventors. Guarantee the purchase of all future patents in strategic sectors at 200,000 euros, including those filed abroad. Create a European patent fund to support our policy of technological, economic and monetary sovereignty. Invent a global GAFA royalty rather than a local GAFA tax.
China's new position is an ultimate threat to technological supremacy. It is also an opportunity, through the rising price of patents, to revalue the fruits of research, innovation, knowledge and one of France's great assets: its inventiveness.