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

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.