Compensation schemes for rewarding inventors vary and what constitutes reasonable remuneration is sometimes controversial, although a common basis is 2 percent of a firm’s after-tax profits on an invention. It seems unlikely that uncertainty about employee compensation is a deterrent to inventiveness and innovation. Between 2000 and 2006, patent applications have increased more than 20 percent every year; filings by Chinese nationals are outpacing those of foreign-owned firms (Figure 10). The top international filers are Japanese, United States, South Korean, and German nationals in that order.
In discussion, the experts on the Chinese and Indian patent systems agreed that it is premature to judge whether the current patent regimes in both countries are providing an impetus to innovative activity. On the other hand, foreign direct investors are voting on the newly strengthened patent systems “with their feet,” investing heavily in both China and India.