Transcript Albert HU

A Great Wall of Patents: What is
behind China’s recent patent explosion?
Albert Guangzhou HU
National University of Singapore
and
Gary H. Jefferson
Brandeis University
Prepared for
Nanjing Workshop on Globalization of R&D
May 27 – 29, 2005, Nanjing, China,
A quote from a Chinese IP lawyer
“Once upon a time, the counterfeiters in China ran away
when you came after them. Today, they don't run away.
Indeed, they stay put and they sue us. More and more
Chinese companies are taking a so-called legal approach,
taking advantage of serious weakness in the Chinese
legal system."
--- New York Times, March 5, 2005
Figure 1. Domestic and foreign patent applications
300000
70000
Domestic Total
250000
60000
Foreign Total
50000
Foreign Invention
40000
150000
30000
100000
20000
50000
10000
Year
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
19
87
0
86
0
Invention Patent Applications
200000
19
Total Patent Applications
Domestic Invention
Figure 3. Patents-R&D and R&D-GDP ratios
16000
1.40%
Patent applications - R&D
14000
1.20%
Patent grants - R&D
R&D GDP ratio
1.00%
0.80%
8000
0.60%
6000
0.40%
4000
0.20%
2000
Year
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
0.00%
19
88
0
R&D - GDP ratio
10000
19
87
Patents per billion yuan of R&D
12000
The patent explosion

Growth of patent applications
1985 – 1999
2000 – 2004


All
patents
15%
18%
Domestic
invention
12%
29%
Foreign
invention
12%
22%
Similar patterns for patent grants
U.S. patent explosion

Patent grants and applications: 5-6% from 1983/4

(Kortum and Lerner, 1999; Hall and Ziedonis, 2001; Jaffe and
Lerner, 2004; Hall, 2005)
What’s behind the patent explosion?





The pro-patent amendments to the Patent Law in
1992 and 2000
The intensification of R&D
Surge of foreign direct investment
Strategic patenting
Economic reform and private property in China’s
enterprise sector
Table 3. Patents production function: ZIP estimates
All
Domestic
Foreign
0.012**
0.016**
-0.001
[0.004]
[0.005]
[0.006]
0.611**
0.654**
0.370**
[0.052]
[0.056]
[0.059]
1.582**
1.727**
1.250**
[0.214]
[0.233]
[0.355]
Observations
130296
110895
19401
Log likelihood
-77462.18
-66591.43
-9546.6
Log(R&D/labor)
Log(labor)
Industry FDI
Robust standard errors in brackets. Industry, year and ownership dummies
included are all regressions.
* significant at 5%; ** significant at 1%
Figure 8. Ownership and propensity to patent
6
Ownership (marginal) effect
5
Poisson
ZIP
4
3
2
1
0
State-owned
Collective
Private
Individual
Jointly-owned Public-listed
Ownership category
Foreign
HMT
Figure 9. Propensity to patent over time
3.5
3
Poisson
ZIP
Poisson - FE
Year (marginal) effect
2.5
2
1.5
1
0.5
0
1995
1996
1997
1998
Year
1999
2000
2001
Concluding remarks and caveats






Weak patents – R&D link: 0.02 vs. 0.6~0.99
FDI prompts more patenting by domestic firms: 15%.
Legislation strengthening patent rights leads to greater
propensity to patent.
Clarification of enterprise property rights results in
more aggressive assertion of patent rights.
Inter-industry differences: discrete vs. complex
Caveats:


Invention vs. utility model and design patents
Small firms