Discrimination in the Patent System: Evidence from Standard-Essential Patents

Abstract

This paper tests for traces of discrimination against foreigners in the patent system. It focuses on patent applications filed in China, and for which the owner has made a public disclosure that they are or may become essential to the implementation of a technical standard. Such potentially standard-essential patents are of particularly high importance to their owner. We use the timing of disclosure to a leading standard-setting organization as a source of econometric identification and carry out extensive tests to ensure the exogeneity of timing. We find that foreign patent applications are significantly less likely to be granted by the Chinese patent office if their owners disclose them to be potentially essential to a standard before the substantive examination starts. Furthermore, the patent office spends, on average, one more year on the examination of such patents, and the scope of the patents is also more extensively reduced. Our findings contribute to the emerging discussion on technology protectionism.

Keywords: discrimination, indigenous innovation, national treatment principle, standard essential patent, technology protectionism

JEL Classification: F53, F68, K39, L52, L63, O25, O34