Academic journal article Seoul Journal of Economics

Quality and Value of Chinese Patenting: An International Perspective

Academic journal article Seoul Journal of Economics

Quality and Value of Chinese Patenting: An International Perspective

Article excerpt

This paper presents a novel analysis of the international dimension of the rapid growth of Chinese patenting and advances an econometric model to scrutinize the determinants of patent granting, prior-art searches, opposition to patents granted, and patent renewal decisions. Our results provide support for the "strategic patenting" hypothesis on the lower value and quality of Chinese patents compared to other patents on average, though a few caveats are in order. On the one hand, I find that the probability of grant for foreign multinational firms is negative although their patents are relative strong regarding the prior art. The low value effect on opposition and renewal decision is moderate. On the other hand, for Chinese Indigenous patenting. I do not find ample evidence that there is lower probability of grant, but I do find support that these patents lack adequate prior art research, receive more oppositions, and have shorter renewal life cycle compared to other Chinese patents and other patents on average. The size and experience of the patent owner positively mediate these effects. Hence, the findings are consistent with the assumption that large and younger patenters concentrated in a few industries are responsible for the bulk of strategic patenting.

Keywords: Patent value, Quality, China, International patent filings, Firm level analysis

JEL Classification: O31, O34

I. Introduction

In the last decade, Chinese patenting has grown impressively, and in 2011 the State Intellectual Property Offlee (SIPO) of China outperformed all other such entitles in terms of patent applications published (The Economist October 14th, 2010). However, little is known about trends in Chinese patenting outside national borders, with the exception of die study by Eberhardt et cd. (201 1). Our work attempts to fill this gap with focus on international patenting according to regulations of the European Patent Office and the World Patent Cooperation Treaty.

The growth of international patenting has paralleled Internal reforms by the Chinese government. It is noteworthy that adoption of a modern patent system is a relatively new legislative change in China. Indeed, until the beginning of ttie 1980s, die development of intellectual property In China was limited, and ttie first patent law dates to 1985. Subsequenüy, die Chinese government promoted Üiree reforms to harmonize Chinese patent law with international treaties, increase statutory protection for the private sector, and extend patentability in novel subject areas. The first revision of 1992 introduced some administraüve changes in the regulation of the legal services sector. In 2001, China entered the WTO and its patent law was fully harmonized with the Patent Cooperaüon Treaty of the International Patent Cooperation Union (PCT) and the World Trade Organization agreement on trade-related aspects of intellectual property rights (TRIPS). In 2008, die Chinese government launched the "Naüonal Intellectual Property Strategy" to reduce bureaucratic costs, increase transparency in the patent system and enhance incentives for inventors who intend to carry out R&D in China.

According to the Joint Experts Group for Patent Examination of the trilateral cooperaüon commission among SIPO, Japan Patent Office (JPO), and Korean Intellectual Property Office (KIPO), there cire no significant differences between China's patent authority and other major patent offices regarding die examination process and die criteria for the patentability of an invention (JEGPE 2010). In the Chinese patent law, article 22 paragraph 3 defines the criteria as novelty, inventiveness, and practical applicability. For die Chinese patent office, as for the JPO and European Patent Office (EPO), the patent application is published 18 months from filing and novelty is established according to a "first-tofile" principle. Instead, die Chinese regulations differ from the Japanese ones regarding when die validity of a patent can be challenged: in China, it can be opposed up to nine months from the date the patent was granted (OECD 2009). …

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