China may hold the largest number of blockchain patent applications in the world — but according to at least one measure, the greatest number does not mean the greatest significance.

As of the end of October, nearly 7,800 companies from about 50 countries and regions around the world have filed a cumulative 55,000 blockchain-related patent applications, according to a report published Tuesday by Suzhou-headquartered analytics firm PatSnap, a data and intellectual property platform.

China’s 33,000 blockchain patent applications rank first in the world, accounting for 63.2% of global applications, the report said. That was followed by the United States and South Korea, accounting for 11.8% and 5.3%, respectively.

However, the Chinese patents were much less cited than those of the U.S. “China leads the world in the number of blockchain patent applications, but the proportion of high-quality patents still needs to be increased,” the PatSnap report said.

The report said 78.4% of Chinese blockchain-related patents were cited only one to five times, and 10.5% of the country’s patents were cited 11 times or more. Blockchain patents from China with more than 100 citations accounted for only 0.1% of China’s total.

Meanwhile, in the U.S., 65.7% of American patents were cited in the range of one to five times, and 21.5% of the patents were cited over 11 times. About 1.3% of the patents there were cited more than 100 times, according to the report.

China has seen a rise in blockchain-related patent applications over the past few years. In 2019, Chinese President Xi Jinping emphasized the development of blockchain technology, calling for more research, investment and regulation. More than 35,000 companies answered Xi’s call, expanding their business into blockchain by registering company names and major business using the term “blockchain.” Companies not only wanted to obtain blockchain bragging rights, but also to file more patents related to the technology. 

“Two key factors are behind the massive growth in Chinese blockchain patents, and neither one has anything to do with the quality of the technologies being registered,” John Eastwood, a Taipei-based patent lawyer who is a senior partner at Eiger Law’s Greater China practice, told Forkast.News in an email interview.

Eastwood said in China there had been massive government subsidies for patent filings in recent years, and these had often been sufficient for companies to cover most if not all their costs for doing so.

However, “the subsidies are being trimmed way back, but given that the Chinese patent system, like many patent systems, does not do a substantive examination of the technologies before granting, it means there are a lot of Chinese companies holding patents that may not hold up to further review or litigation,” Eastwood said.

Eastwood also noted that Chinese blockchain companies, like many companies in a new technology, need to demonstrate to investors that they have something “special.”

“Holding patents is one way to try to do that,” Eastwood said. “Investors often don’t easily have a fast way to check out whether the patent is any good or the prior art situation, but patent certificates at least create an excuse to try to value one investment opportunity over another one.”

On the contrary, U.S. patents often need to go through stricter reviews.

“The U.S. patent system is a lot more rigorous up-front, and so patent applicants have a higher burden to show that their patent claims represent something new and work as described,” Eastwood said. “It’s also a lot more expensive, so if you are going to get an invention patented in the U.S., it involves a real financial commitment by a company.”

China’s tech giants are also actively filing patent applications related to blockchain. According to an October report published by 01Finance, a Beijing-based fintech think tank, and PatSnap, Alibaba fintech affiliate Ant Group, Ping An Group and Tencent had filed some 7,000, 4,200 and 2,800 such patent applications, respectively.

Another recent report by intellectual property research media IPR Daily showed that Ant Group has obtained 631 blockchain-related patents during the period between the beginning of this year and Aug. 31. Ant Group appeared to have acquired the most blockchain patents during the period, followed by Tencent with 307 patents, and blockchain company with 86, according to the report.