Maryland Smith Research / March 28, 2024

Chinese University Patent Bubbles Evident and Problematic, Including to National Innovation Strategy, Study Shows

Study Reveals 'Patent Bubble' Phenomenon in Chinese Universities
China’s ambitious drive to become an 'innovation nation' has been propelled by its universities facilitating the country to the forefront of global patent applications. However, a study led by Waverly Ding reveals a concerning trend of 'patent bubbles,' raising questions about the true quality of such innovation.

The Chinese government in recent decades has focused on its universities as intellectual property rights facilitators in a strategy to transform China into an “innovation nation (by 2020).”

China subsequently has become a global leader in patent applications. But despite the apparent fruition, a new study shows a university-level, low-quality basis for the recent patent surge, indicative of a “patent bubble” phenomena.

“A high volume of patents doesn't automatically translate to a high level of technology or viable commercial products,” says Associate Professor of Strategy and Entrepreneurship Waverly Ding at the University of Maryland’s Robert H. Smith School of Business.

“Our evidence suggests the existence of resource misallocation – Chinese university scientists appeared to be pursuing more patents at the cost of better patents during the period we analysed,” she writes, with co-authors Fen Lin of City University of Hong Kong and Shi Chen of Southwestern University of Finance and Economics (China) in “The Patent Gold Rush? An Empirical Study of Patent Bubbles in Chinese Universities (1990-2019).”

To improve the quality of patents, the policy decision-makers in China should consider more comprehensive methods of evaluating innovation outcomes in universities, say the authors.

Significantly, the findings show non-elite institutions experienced patent bubbles across the three decades of analysis while their elite counterparts were mostly patent-bubble free – up until 2010 and have since experienced the phenomena more severely. It’s an “alarming trend,” Ding and her co-authors say, as “universities have always been a crucial part of national innovation systems.”

The team analyzed 769,133 invention patents granted by the National Intellectual Property Administration of China to 538 Chinese universities and colleges between 1990 to 2019. The findings, overall, confirm the patent bubbles. The key figures: "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 latter two metrics – for licensed and collateralized patents – have been underused in previous studies and indicate patent quality in terms of commercial viability, the authors write in setting up this summary: “On one hand, leveraging sustained investment over the past few decades from the government, Chinese universities have experienced exponential growth in research publications and academic ranking, and in particular, the number of patent applications. On the other hand, such evidence paints a less optimistic picture of the real level of progress in the innovation capacity of Chinese universities.”

Historically and policy-wise, the Chinese government at all levels has encouraged university researchers to file patent applications, the authors summarize. Correspondingly, as the study shows, many Chinese universities have linked patent quantity with the performance evaluation of university faculty and researchers.

“This works to deter a university's genuine innovative capabilities and should be an alert to various levels of government in terms of setting innovation goals,” Ding says.

She and her co-authors further summarize: “To the extent that government administrators are quantifying innovation goals in the form of patent growth rate, the innovation effort in universities may be misdirected to fulfill these quantitative goals. Instead, policies more oriented toward promoting the high-quality patents that industrial firms can commercialize will need to be considered more.”

Read the research forthcoming in The Journal of Transfer Technology.

Media Contact

Greg Muraski
Media Relations Manager
301-892-0973 Mobile 

Get Smith Brain Trust Delivered To Your Inbox Every Week

Business moves fast in the 21st century. Stay one step ahead with bite-sized business insights from the Smith School's world-class faculty.

Subscribe Now

Read More Research

Back to Top