Patent Thicket: Impetus or Barrier in Technological Innovation?
ZHANG Meiyang, LONG Xiaoning
School of Law and Economics, Zhongnan University of Economics and Law; Intellectual Property Research Center, Zhongnan University of Economics and Law; Intellectual Property Research Institute, Xiamen University; The Belt and Road Research Institute, Xiamen University
Summary:
Innovation is a core element in the development of new quality productivity. As a key institutional arrangement, the patent system encourages and protects innovation by granting patentees monopoly rights over specific technical solutions for a limited time period. In the context of China, most studies have reached the consensus that stronger patent protection significantly boosts innovation. However, it is important to note that patent protection may also bring about various drawbacks of monopoly, including lower consumer welfare and discourage subsequent innovation. Theoretical studies suggest that patent protection either facilitates or hinders subsequent innovation, depending on industrial structure and technological characteristics. Empirical studies indicate that patent protection can impede subsequent innovation in the form of patent thickets, particularly in highly cumulative and patent-fragmented industries such as information and communications technology (ICT). This highlights the profound impact of patent thickets on the relationship between patent protection and innovation. In the context of the continuous transformation and upgrading of China's economy and the rapid increase of intellectual property protection, is technological innovation being affected by the patent thicket？ Accordingly, should patent protection levels vary based on industrial characteristics and innovation contexts？ And how should we mitigate the monopolistic barriers arising from enhanced patent protection？ There are still many problems worthy of attention. To this end, this paper focuses on the case of patent thickets to explore the monopoly costs associated with patent protection and their effects on subsequent innovation and industry development. First, based on Chinese patent data, this study draws on the framework established by Graevenitz et al. (2011) to quantify the density of patent thicket across various technological domains in China from 1985 to 2014. The analysis reveals several typical stylized facts: First, from the time dimension, patent thickets in China have witnessed a significant surge around the year 2000. Second, from the perspective of technical field level, the phenomenon of patent thickets has emerged prominently in fields involving complex technologies. Third, from the perspective of enterprise level, the formation process of patent thickets is dominated by a small number of enterprises, while most companies have encountered patent thickets as external uncertainties. Moreover, this study employs a causal identification strategy based on shift-share instrumental variables to empirically study the effects of monopoly loss costs stemming from patent protection on subsequent innovation and industry development. And our findings include the following: First, the density of patent thickets significantly amplifies the proliferation of utility patents while diminishing the number of invention patents with higher levels of innovative content; Second, patent thickets significantly decrease the quality of innovation; Third, patent thickets lead to a significant increase in the volume of patent transactions, but it will weaken the “quality premium” of patents that are licensed and transferred; Fourth, these effects are particularly pronounced among firms confronted with more important triples, positioned downstream in citation chains, belonging to high technology industries, and located in regions with higher level of intellectual property protection; Fifth, the strategic patent behavior induced by patent thickets has a significant negative impact on both firms' future market value and industry competition. This study makes possible contributions to the following aspects: First of all, most existing research on monopoly problem caused by patent protection focuses on developed countries. The studies on China is mainly based on theoretical discussion, lacking empirical analysis supported by data. This paper fills that gap by providing macro-evidence from China, examining the monopoly costs of patent protection and its impact on subsequent innovation and economic development, thereby providing empirical evidence from developing countries for existing theoretical research and broadening the understanding of the relationship between patent protection and innovation in economic theories. Besides, by measuring patent thickets across various technological fields in China, summarizing developing law of patent thicket, and empirically exploring the effects of patent thickets on innovation and competition, this paper provides empirical support from China for the global understanding of patent thickets and refines the theoretical framework by providing a dual perspective of both innovation and competition. Our study also has several important policy implications. First, raising the criteria for granting utility patents is essential to minimize monopolistic gains from strategic innovations. Meanwhile, the patent examination process should be strictly enforced, with higher standards to prevent the abuse of patents that lack sufficient novelty and creativity. Second, build technology trading platforms, patent pools, and promote patent open licenses to reduce the increased transaction costs due to patent hijacking and license fee superposition caused by patent thickets dilemma, thus encouraging enterprises to prioritize genuine R&D. Third, adjusting intellectual property protection levels based on industry development and technological characteristics to balance between fostering innovation incentives and mitigating monopoly costs, promoting industry growth and scientific and technological innovation.
[1]代昀昊、童心楚、王砾和邢斐,2023,《法治强化能够促进企业绿色创新吗？》,《金融研究》第2期,第115～133页。 [2]冯灵和袁晓东,2021,《基于引证的专利丛林识别——以高铁制动技术为例》,《科研管理》第4期,第123～130页。 [3]赖烽辉和李善民,2023,《共同股东网络与国有企业创新知识溢出——基于国有企业考核制度变迁的实证研究》,《经济研究》第6期,第119～136页。 [4]黎文靖、彭远怀和谭有超,2021,《知识产权司法保护与企业创新——兼论中国企业创新结构的变迁》,《经济研究》第5期,第144～161页。 [5]林志帆、杜金岷和龙晓旋,2021,《股票流动性与中国企业创新策略:流水不腐还是洪水猛兽？》,《金融研究》第3期,第188～206页。 [6]林志帆和龙晓旋,2019,《卖空威胁能否激励中国企业创新》,《世界经济》第9期,第126～150页。 [7]龙小宁,2018,《科技创新与实体经济发展》,《中国经济问题》第6期,第21～30页。 [8]龙小宁、易巍和林志帆,2018,《知识产权保护的价值有多大？——来自中国上市公司专利数据的经验证据》,《金融研究》第8期,120～136页。 [9]龙小宁和张美扬,2023,《标准的力量——来自中国标准必要专利的经验证据》,《管理世界》第10期,第149～168+227页。 [10]罗恺和袁晓东,2022,《专利技术创新调节作用下的专利丛林与企业市场价值研究》,《管理学报》第11期,第1675～1682页。 [11]罗恺和左祥太,2023,《专利丛林对企业市场价值影响的非均衡研究》,《科研管理》第10期,第168～180页。 [12]史宇鹏和顾全林,2013,《知识产权保护、异质性企业与创新:来自中国制造业的证据》,《金融研究》第8期,136～149页。 [13]王永钦和董雯,2020,《机器人的兴起如何影响中国劳动力市场？——来自制造业上市公司的证据》,《经济研究》第10期,第159～175页。 [14]吴超鹏和唐菂,2016,《知识产权保护执法力度、技术创新与企业绩效——来自中国上市公司的证据》,《经济研究》第11期,125～139页。 [15]易巍和龙小宁,2021,《中国版Bayh-Dole Act促进高校创新吗？》,《经济学(季刊)》第2期,第671～692页。 [16]许年行、王崇骏和章纪超,2023,《破产审判改革、债权人司法保护与企业创新——基于清算与破产审判庭设立的准自然实验》,《金融研究》第 6 期, 第 150～168 页。 [17]赵奎、后青松和李巍,2021,《省会城市经济发展的溢出效应——基于工业企业数据的分析》,《经济研究》第3期,第150～166页。 [18]宗庆庆、黄娅娜和钟鸿钧,2015,《行业异质性、知识产权保护与企业研发投入》,《产业经济研究》第2期,47～57页。 [19]Autor, D. H., D. Dorn, and G. H. Hanson, 2013, “The China Syndrome: Local Labor Market Effects of Import Competition in the United States”, American Economic Review, 103(6), pp. 2121～2168. [20]Borusyak, K., P. Hull, and X. Jaravel, 2022, “Quasi-Experimental Shift-Share Research Designs”, The Review of Economic Studies, 89(1), pp. 181～213. [21]Cohen, W. M., R. Nelson, and J. P. Walsh, 2000, “Protecting Their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (or Not)”, NBER Working Paper, No.7552. [22]Fischer, T., and P. Ringler, 2015, “The Coincidence of Patent Thickets: A Comparative Analysis”, Technovation, 38, pp. 42～49. [23]Galasso, A., and M. Schankerman, 2015, “Patents and Cumulative Innovation: Causal Evidence from the Courts”, The Quarterly Journal of Economics, 130(1), pp. 317～369. [24]Goldsmith～Pinkham, P., I. Sorkin, and H. Swift, 2020, “Bartik Instruments: What, When, Why, and How”, American Economic Review, 110(8), pp. 2586～2624. [25]Hall, B. H., and R. H. Ziedonis, 2001, “The Patent Paradox Revisited: An Empirical Study of Patenting in the US Semiconductor Industry, 1979～1995”, RAND Journal of Economics, pp. 101～128. [26]Heller, M. A., and R. S. Eisenberg, 1998, “Can Patents Deter Innovation？ The Anticommons in Biomedical Research”, Science, 280(5364), pp. 698～701. [27]Hsu, P. H., H. H. Lee, and T. Zhou, 2022, “Patent Thickets, Stock Returns, and Conditional CAPM”, Management Science, 68(11), pp. 8343～8367. [28]Noel, M., and M. Schankerman, 2013, “Strategic Patenting and Software Innovation”, The Journal of Industrial Economics, 61(3), pp. 481～520. [29]Serrano, C. J., 2010, “The Dynamics of the Transfer and Renewal of Patents”, The RAND Journal of Economics, 41(4), pp. 686～708. [30]Shapiro, C., 2000, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting”, In Innovation Policy and the Economy, 1, pp. 119～150. [31]von Graevenitz, G., S. Wagner, and D. Harhoff, 2011, “How to Measure Patent Thickets—A Novel Approach”, Economics Letters, 111(1), pp. 6～9. [32]von Graevenitz, G., S. Wagner, and D. Harhoff, 2013, “Incidence and Growth of Patent Thickets: The Impact of Technological Opportunities and Complexity”, Journal of Industrial Economics, 61(3), pp. 521～563. [33]Ziedonis, R., 2004, “Don't Fence Me. Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms”, Management Science, 50(6), pp. 804～820.
