Publications

Working papers

     

The paper explores the impact of patent remedies on firms' innovation strategies, focusing on the damage awards doctrine—the compensation rule for patent owners whose patents are infringed- an important yet under-explored aspect of patent remedy policy. I propose that increasing damage awards raise the perceived value of patents, but the effects vary depending on the \textit{ex-ante} value of the patents when damage awards are set uniformly. Specifically, low-value patents benefit more from increased damage awards than high-value patents, leading firms to file more low-value patents and pursue incremental innovations. Using China’s 2009 patent reform, which explicitly raised damage awards across all types of patents, I developed a structural model to predict changes in patent value. I then conduct a series of difference-in-differences analyses on a sample of 52,706 Chinese patenting firms. The results show that firms more exposed to changes in patent remedy policy are more likely to file more low-value patents than high-value ones. More notably, low-quality, high-value patents tend to be substituted with low-value patents. These effects are especially pronounced among firms with greater resource constraints or lower absorptive capacities. The findings suggest that misalignments between damage awards and patent value may lead to the overvaluation of low-value patents, highlighting the potential caveats of strengthening patent protection in weak IP regimes.


This paper explores key features of China’s patent system, embedding them in a growth model that allows us to explore their consequences for longrun innovation, economic growth, and welfare. We first show that China’s system is characterized by narrow patent protection, reflecting three key features: a strong bias towards incremental innovation, weak patent enforcement, and a decline in the quality of patent examination. Based on these stylized facts, we build a growth-theoretic model to show how narrow patent protection distorts innovation incentives. By skewing R&D efforts toward “incremental” innovation, China’s patent system slows technological progress and lowers national economic growth. These results suggest that strengthening patent infringement damage awards and raising patent application fees could significantly accelerate China’s economic and technological progress. 


This paper investigates characteristics of patents involved in infringement lawsuits in weak intellectual property rights (IPR) regimes. Weak IPR regimes usually feature weak patent enforcement, such as relatively low level of compensation to infringement loss or damage awards being capped by an upper bound. I build a dynamic model to show how these low-enforcement features lead to patterns of litigated patents that are not documented in the Western countries. I compile a new dataset comprising 17,331 Chinese litigated patents and their counterparts- 306,898 non-litigated patents. I find that valuable patents are less likely to be litigated than patents with lower values among invention patents while this pattern does not hold among utility models- the type of patents inferior to invention patents. I also document that China’s patent infringement litigation rate is extremely low by international standards, and it has been decreasing sharply over time. Litigated patents tend to concentrate in technological areas and industries in which litigation rates are relatively low in Western countries. These empirical patterns suggest that weak IPR regimes might create a “lemon market” for patent protection in which truly valuable patents are “crowded out” by their counterparts with lower value. Enhancing patent enforcement by eliminating the cap to damage awards might be a feasible solution.