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The assessment of patent value represents a perpetual topic of inquiry within the field of intellectual property. Among the indicators of patent value, the most commonly utilized is the number of forward citations. In empirical research on patent value, foreign scholars have demonstrated that forward citations of patents possess intrinsic value. The average value of a forward citation of a U.S. invention patent is estimated to be approximately 4,025,320 U.S. dollars. However, the regulations on patent citation in different countries are quite disparate, which renders cross-country comparisons of patent citation data challenging. Furthermore, there is no legal obligation for applicants to disclose patent citations in China’s patent law, raising questions about the reliability of forward citations of China’s patents as a basis for subsequent inventions and a measure of patent quality. In light of these considerations, it is pertinent to inquire whether the number of forward citations in China can serve as a reasonable indicator of patent value. Moreover, it is pertinent to inquire whether it is feasible to evaluate the value of each forward citation of a Chinese patent. These are not only significant theoretical matters, but also practical issues with practical implications. This paper represents the inaugural attempt to integrate the quality differential of patents into the theoretical analysis framework, with the objective of assigning corresponding weights to each patent in accordance with the number of forward citations. In accordance with the theoretical analysis framework, an empirical model was constructed and verified using the invention patent data of Chinese listed companies. The findings of this paper are as follows: (1) Patent forward citations have a significant positive impact on the Tobin’s Q value of listed companies. For every increase in the number of patent forward citations, there is an 18.5% increase in the Tobin’s Q value of listed companies, which corresponds to an increase in market value of listed companies of approximately 3.03 million yuan. (2) In contrast to the number of patents, the value of patents is more closely associated with their quality. In other words, the value of patents is concentrated among those of superior quality. (3) Furthermore, this paper examines the heterogeneity of the aforementioned results from two additional perspectives: the level of IPR protection in the region where the enterprises are located and the characteristics of technological development in the industries to which the enterprises belong. The study indicates that the value of patent forward citations is relatively higher in regions with higher levels of intellectual property rights (IPR) protection. This suggests that high-quality innovations in these regions can result in higher economic returns for enterprises. Furthermore, the value of forward citations is observed to be lower in technology areas with greater complexity, where the landscape of patents is denser. This suggests that the value of forward citations is less likely to enhance the future market value of firms. The findings of this paper offer both theoretical and empirical support for the use of forward citations as a means of measuring patent value.

Innovation is a core element in the development of new quality productivity. As a key institutional arrangement, the patent system encourages and protects innovation by granting patentees monopoly rights over specific technical solutions for a limited time period. In the context of China, most studies have reached the consensus that stronger patent protection significantly boosts innovation. However, it is important to note that patent protection may also bring about various drawbacks of monopoly, including lower consumer welfare and discouraging subsequent innovation. Theoretical studies suggest that patent protection either facilitates or hinders subsequent innovation, depending on industrial structure and technological characteristics. Empirical studies indicate that patent protection can impede subsequent innovation in the form of patent thickets, particularly in highly cumulative and patent-fragmented industries such as information and communications technology (ICT). This highlights the profound impact of patent thickets on the relationship between patent protection and innovation. In the context of the continuous transformation and upgrading of China’s economy and the rapid increase in intellectual property protection, is technological innovation being affected by the patent thicket? Accordingly, should patent protection levels vary based on industrial characteristics and innovation contexts? And how should we mitigate the monopolistic barriers arising from enhanced patent protection? There are still many problems worthy of attention. To this end, this paper focuses on the case of patent thickets to explore the monopoly costs associated with patent protection and their effects on subsequent innovation and industry development. First, based on Chinese patent data, this study draws on the framework established by Graevenitz et al. (2011) to quantify the density of patent thickets across various technological domains in China from 1985 to 2014. The analysis reveals several typical stylized facts: First, from the time dimension, patent thickets in China witnessed a significant surge around the year 2000. Second, at the technical-field level, patent thickets emerged prominently in fields involving complex technologies. Third, at the enterprise level, the formation of patent thickets was dominated by a small number of enterprises, while most companies encountered patent thickets as external uncertainties. Moreover, this study employs a causal identification strategy based on shift-share instrumental variables to empirically study the effects of monopoly loss costs stemming from patent protection on subsequent innovation and industry development. The findings are as follows: First, the density of patent thickets significantly amplifies the proliferation of utility patents while diminishing the number of invention patents with higher levels of innovative content. Second, patent thickets significantly decrease the quality of innovation. Third, patent thickets lead to a significant increase in the volume of patent transactions, but weaken the “quality premium” of patents that are licensed and transferred. Fourth, these effects are particularly pronounced among firms confronted with more important triples, positioned downstream in citation chains, belonging to high-technology industries, and located in regions with higher levels of intellectual property protection. Fifth, the strategic patent behavior induced by patent thickets has a significant negative impact on both firms’ future market value and industry competition. This study contributes in the following respects. Most existing research on monopoly problems caused by patent protection focuses on developed countries, while studies on China are mainly based on theoretical discussion and lack empirical analysis supported by data. This paper fills that gap by providing evidence from China, examining the monopoly costs of patent protection and their impact on subsequent innovation and economic development. By measuring patent thickets across technological fields in China, summarizing their development, and empirically exploring their effects on innovation and competition, this paper provides evidence from China for the global understanding of patent thickets and refines the theoretical framework through the dual perspectives of innovation and competition. The study also has several policy implications. First, raising the criteria for granting utility patents is essential to minimize monopolistic gains from strategic innovation, while stricter examination standards can prevent the abuse of patents that lack sufficient novelty and creativity. Second, technology-trading platforms, patent pools, and patent open licensing can reduce transaction costs arising from patent holdup and royalty stacking, encouraging enterprises to prioritize genuine R&D. Third, intellectual property protection levels should be adjusted to industry development and technological characteristics to balance innovation incentives against monopoly costs and promote industry growth and technological innovation.

Strengthening the internationalization of standard-essential patents (SEPs) and promoting the formation of international intellectual property rules are crucial for building a powerful country with intellectual property rights and a unified national market, thus realizing high-quality economic development. Despite extensive debates on the significance of technical standards, the study of their effects on innovation remains incomplete. Using datasets of Chinese patents, listed companies, and industrial enterprises, this paper empirically analyzes how technical standards impact patent value and innovation from the perspectives of market power and knowledge spillovers by employing the difference-in-differences approach. The findings are as follows: (1) After being declared as standard-essential, patents experience a significant increase in value, as evidenced by increased citations, licenses, and market value. (2) The patent value enhancement stems from the expanded influence following standard adoption, indicated by increased citations by patents from different technical fields, patents in complex subjects, and by non-SEPs. (3) The returns to the technology contributor are at least partly due to the market power of the standard, manifested in more benefits for small-scale innovators, increased market concentration, and fewer new enterprises. (4) Standards generate knowledge spillover effects among industry followers, resulting in improved innovation quantity, quality, and geographic distribution. Thus, this study not only expands our understanding of the effects of standards on innovation and industrial upgrading, but also provides empirical support for the government to simultaneously promote international standardization and strengthen rule-based processes to prevent potential monopolistic consequences.