Patent statistics: a good indicator for innovation in China? Assessment of impacts of patent subsidy programs on patent quality

This paper investigates whether patent subsidy programs aimed at promoting regional innovations have aroused a large number of low-quality applications in China and created biased patent statistics as an indicator for innovations. We found that patent filing fee subsidies encouraged filing of low-quality patent, resulting in a decreased grant rate. Though reward conditioned on grants increased patent grant rate, it also brought patents with narrow claim breadth. Our empirical results confirmed a general concern that patent subsidies have side effects in encouraging patent applications of low quality or low value. However, the patent subsidy programs does not affect the trend of granted patents, particularly for those applied by firms. Therefore, while the surge of patent applications has upward biases as an innovation indicator, increases in granted patents can be explained by uprising of technological capability at enterprise sector in China.