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The patent gold rush? An empirical study of patent bubbles in Chinese universities (1990–2019)

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Abstract

Chinese universities in recent decades have experienced a wave of surging patenting activities. Was such an increase evidence that Chinese universities have been catching up with their counterparts outside of China, or were there low-quality “patent bubbles” (a de-coupling of patent quantity and quality) with the surge? Extant studies have documented a decline in the quality of Chinese universities’ patents. Our investigation helps reveal the strategic-behavioural mechanism underlying such a decline. A drop in quality coupled with a decrease in quantity would be indicative of a decline of overall innovative activities. On the other hand, a drop in quality alongside growth in quantity would reveal Chinese university-scientists’ allocation of invention-related resources towards the pursuit of more patents than more valuable patents. Towards this goal, we analysed the quality (forward citations) and commercial value (licensing and collateralization) of 769,133 invention patents granted to 538 Chinese universities by China National Intellectual Property Administration in 1990–2019. Our analysis confirms the existence of patent bubbles: a 10% growth in the number of patents granted to a university in the past year is associated with a 1.1% decrease in the forward citations, 0.6% decrease in licensed patents, and 1% decrease in collateralized patents in the subsequent year. The bubbles were more severe in non-elite universities, but the severity of the bubbles grew faster after 2010 among elite universities. Our evidence suggests the existence of resource mis-allocation—Chinese university scientists appeared to be pursuing more patents at the cost of better patents during the period we analysed.

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Notes

  1. https://most.gov.cn/xxgk/xinxifenlei/fdzdgknr/kjtjbg/kjtj2021/202106/t20210622_175307.html.

  2. http://pss-system.cnipa.gov.cn/sipopublicsearch/portal/uilogin-forwardLogin.shtml, last visit 2022/03/13.

  3. Because patent collateralization and licensing are relatively infrequent, we dichotomized measures of the rate of change of licensed patents and of collateralized patents. We estimated logit models on these two indicator variables. Therefore, our models estimated whether growth in patent application quantity is associated with positive or negative change in the rate of licensed and collateralized patents.

  4. We didn’t estimate the OLS FE model for RQ2 because the main variable of interest, a university’s elite tier status, remained mostly constant over time. As such, there is not sufficient variation when using university FE in the models to obtain reliable estimates.

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Acknowledgements

This study is supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CityU 11611021), an internal research grant by the City University of Hong Kong (Project No. 7005485), and a grant from Southwestern University of Finance and Economics, 2022 New Finance and Economics Core Curriculum Construction Project: Introduction to Big Data in Law.

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Authors and Affiliations

  1. Department of Media and Communication, City University of Hong Kong, Kowloon, Hong Kong, SAR

    Fen Lin

  2. R.H. Smith School of Business, University of Maryland, College Park, USA

    Waverl W. Ding

  3. College of Law, Southwest University of Finance and Economics, Chengdu, Sichuan, People’s Republic of China

    Shi Chen

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  1. Fen Lin
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  2. Waverl W. Ding
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Correspondence to Waverl W. Ding or Shi Chen.

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Lin, F., Ding, W.W. & Chen, S. The patent gold rush? An empirical study of patent bubbles in Chinese universities (1990–2019). J Technol Transf (2024). https://doi.org/10.1007/s10961-024-10071-z

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