The patent system of the People’s Republic of China has only a history of about 30 years, yet it has
undergone three major policy changes to keep up with the tremendous pace of economic and technological
progress in China. Once a country in which technological advance relies primarily on copying
and imitating foreign innovations, China is gradually shifting towards a regime that emphasizes on
strong intellectual property and indigenous innovation. It is fascinating, therefore, to witness this transition.
It is important to enhance my understanding of the patent regime as a mechanism to promote
innovation and the dissemination of knowledge, as is the purpose of the thesis.
Both of the chapters in this dissertation focus on patent applicants’ preference for how quickly they
want their patent applications to be processed. This is nontrivial primarily due to heterogeneity in firm
characteristics, nature of invention, market structure, technology backgrounds and many unobservable
factors. I propose two factors that partially determine an inventor’s preference for speed of patenting:
the inter-temporal value patents of their invention and the speed of technological progress.
The first chapter investigates the heterogeneous inter-temporal patterns of inventions’ value flow
and the associated applicants’ patenting strategies for a small set of United States patents. To measure
the characteristics of different inventions’ inter-temporal value flow, we exploit a policy lever provided
by the Chinese government that allows patent applicants to freely choose between one patent
protection of short examination delay, short protection period and another patent protection of long
examination delay, long protection period. We find that the majority of applicants that favor the former
protection (short&shot) have Electronics and Mechanics inventions, whereas applicants that favor
the latter (long&long) are mostly within Pharmaceuticals and Drugs. We then exploit this variation
in patent choices under the Chinese regime with applicants’ patenting strategies in the U.S., for identical
inventions. The empirical results suggest the short&short Chinese patent holders have a strong
tendency of pursuing early U.S. patent issuance whereas the long&long patent holders have a strong
tendency of maintaining their U.S. patents for long periods. The results are robust with or without
technology field fixed effects.
The second chapter analyze the effect of faster technology development on firms patenting strategy.
Using a dataset with information about patent applications in both China and the US, I find that
firms are willing to secure early patent grants when technology moves ahead faster. The conventional
wisdom that a patent secures a flow of monopoly profits that depreciates at a constant speed over time
is not consistent with my empirical findings. Faster technology progress shifts the profits towards the
early periods, making early grants more important. The empirical results suggest that a more flexible
patent regime which offers options for speed is more efficient.