IP Protection, Innovation Incentives, and Patenting Strategies

52 Pages Posted: 2 Aug 2021 Last revised: 11 Jul 2022

See all articles by Jun Chen

Jun Chen

Renmin University of China - School of Business

Zhao Jin

Cheung Kong Graduate School of Business

Date Written: July 28, 2021

Abstract

We study how intellectual property (IP) protection impacts local firms' innovation incentives and patenting strategies. Exploiting the staggered establishment of specialized IP courts across Chinese regions, we show that strengthening IP protection leads to higher R&D investments but lower patenting activities. Higher litigation risk from disclosing inventions seems to dominate the benefit of stronger protections gained from patenting. Consistent with this explanation, we find that firms reduce patenting mainly in technology fields where their industry rivals have previously patented. Overall, our findings suggest that enhancing IP protection encourages more innovation efforts, possibly in uncharted technology areas.

Keywords: IP rights, IP protection, IP courts, innovation, patents, R&D investments

JEL Classification: G38, O30, O31, O32, O34, O38

Suggested Citation

Chen, Jun and Jin, Zhao, IP Protection, Innovation Incentives, and Patenting Strategies (July 28, 2021). Available at SSRN: https://ssrn.com/abstract=3895023 or http://dx.doi.org/10.2139/ssrn.3895023

Jun Chen (Contact Author)

Renmin University of China - School of Business ( email )

59 Zhongguancun Street, Haidian District
Beijing, 100872
China

Zhao Jin

Cheung Kong Graduate School of Business ( email )

1 East Chang'an Ave.
Beijing, Beijing 100005
China

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