ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Longer Patent Life Representing Higher Value? A Study on China Stock Market and China Patents

Hong-Wen Tsai, Hui-Chung Che and Bo Bai

Correspondence: Hui-Chung Che, drcharlie918@yeah.net

Shenzhen TekGlory Intellectual Property Data Technologies, Ltd

pdf (831.28 Kb) | doi: https://doi.org/10.47260/bae/918

Abstract

By setting the market capitalization as the frame of patent value reference, twenty-two quarter’s market capitalization from 2016Q1 to 2021Q2 of China listed companies (A-shares) were collected. All valid patent data of three patent species including the invention grant, the utility model grant and the design grant, were retrieved for calculating the average patent life of each A-share. The variances of the market capitalization via different patent life groups were analyzed via ANOVA. The A-shares having invention grant’s patent lives above the general level usually showed higher market capitalization means than the A-shares having invention grant’s patent lives below the general level. The invention grants with longer patent life might be regarded as the patents of higher value. The utility model grants with longer patent life might not be regarded as the patents of higher value because of poor significance. The design grant’s patent life was a significant indicator for discriminating China A-share’s market capitalization, however, the optimal patent life were close to but not longer than four years. The longer patent life of the design grants was not regarded as higher value.

Keywords:

  patent, market capitalization, China A-share, patent life, ANOVA.


References

Chen, T.M., Wei, C.C. and Che, H.C., (2018, Jul.) Contribution of Patent Indicators to China Stock Performance, Proceedings of IEEE 7th International Congress on Advanced Applied Informatics (ICAAI2018), 793-798, Yonago, Japan. https://doi.org/10.1109/IIAI-AAI.2018.00163

Chen, T.M., Wei, C.C. and Che, H.C., (2020) Exploring Contribution of Patents to Stock Price in China, International Journal of Economics and Research, 11(i4) (ja), 01-29.

Chen, Z. and Zhang, J., (2019) Types of patents and driving forces behind the patent growth in China, Economic Modelling, 80, 294-302. https://doi.org/10.1016/J.ECONMOD.2018.11.015

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020a) Does Patent Help to Build Investment Portfolio of China A-Shares under China-US Trade Conflict? Mathematical Problems in Engineering, 7317480. https://doi.org/10.1155/2020/7317480

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020b) Patent Implemented Time Series Algorithm for Building Stock Portfolios in China A-Shares, Asian Journal of Information and Communications, 12(1), 156-170.

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020c, Dec.) Patent As Predictive Indicator of Investment: An Empirical Study of China A-Shares, Proceedings of 2020 Chinese Society for Management of Technology Conference, Hsinchu, Taiwan.

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020d, Nov.) Patent Informatics in Predicting Stock Price and Increasing Investment Performance -- An Empirical Study of China Four Stock Boards. Proceedings of 2020 International Conference on Economics, Management and Technology (IEMT2020), Kaohsiung, Taiwan. https://doi.org/10.1145/3429395.3429414

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020e) Patent Informatics in Predicting Return-on-Assets (ROA) and Increasing Investment Performance in China, Proceedings of 2020 International Conference on Business Administration - Fall Session (ICBA 2020 Fall), New Taipei City, Taiwan.

Chiu, Y.J., Chen, K.C. and Che, H.C., (2020f) Using Patent to Predict Book-Value-Per-Share and Investment -- Evidence in China A-Shares, International Journal of Innovation in Management, 8(2), 47-64. https://siim.org.tw/IJIiM/DW/V8N2/IJIiM-20-001.pdf

Chiu, Y.J., Chen, K.C. and Che, H.C., (2021) Patent predictive price-to-book ratio (PB) on improving investment performance -- Evidence in China, World Patent Information, 102039. https://doi.org/10.1016/j.wpi.2021.102039

Dang, J. and Motohashi, K., (2015) Patent statistics: A good indicator for innovation in China? Patent subsidy program impacts on patent quality, China Economic Review, 35(Sep), 137-155. https://doi.org/10.1016/j.chieco.2015.03.012

He, Z.L., Tong, T.W., Zhang, Y. and He, W., (2016) Constructing a Chinese patent database of listed firms in China: Descriptions, lessons and insights, Journal of Economics and Management Strategy, 27(3), 579-606. https://doi.org/10.1111/jems.12186

Hu, A.G. and Jefferson, G.H., (2009) A great wall of patents:  What is behind China’s recent patent explosion? Journal of Development Economics, 90, 57-68. https://doi.org/10.1016/j.jdeveco.2008.11.004

Koo, B. and Wright, B.D., (2010) Dynamic Effects of Patent Policy on Sequential Innovation, Journal of Economics and Management Strategy, 19(2), 489-512.  https://doi.org/10.1111/j.1530-9134.2010.00259.x

Lai, Y.H. and Che, H.C., (2009a) Modeling patent legal value by extension neural network, Expert Systems with Applications, 36 (7), 10520-10528. https://doi.org/10.1016/j.eswa.2009.01.027

Lai, Y.H. and Che, H.C., (2009b) Evaluating patents using damage awards of infringement lawsuits: A case study, The Journal of Engineering and Technology Management, 26, 167-180. https://doi.org/10.1016/j.jengtecman.2009.06.005

Lai, Y.H. and Che, H.C., (2009c) Integrated evaluator extracted from infringement lawsuits using extension neural network accommodated to patent assessment, The International Journal of Computer Applications in Technology, 35(2/3/4), 84-96. https://doi.org/10.1504/IJCAT.2009.026585

Lee, Y.G., (2008) Patent licensability and life: A study of U.S. patents registered by South Korean public research institutes, Scientometrics, 75(3), 463–471. https://doi.org/10.1007/s11192-007-1879-5

Lei, X.P., Zhao, Z.Y., Zhang, X., Chen, D.Z., Huang, M.H. and Zhao, Y.H., (2011) The inventive activities and collaboration pattern of university---industry---government in China based on patent analysis, Scientometrics, 90(1), 231-251. https://doi.org/10.1007/S11192-011-0510-Y

Li, Z., Deng, G. and Che, H.C., (2020a, Dec.) Patent-Based Predictive Price-to-Earnings on Increasing Investment Performance of China Stock Market, Proceedings of 2020 International Symposium on Computational Intelligence and Design (ISCID2020), Hangzhou, China. https://doi.org/10.1109/ISCID51228.2020.00197

Li, Z., Deng, G. and Che, H.C., (2020b, Dec.) Patent-Based Predictive ROE on Increasing Investment Performance of China Stock Market, Proceedings of 2020 IEEE International Conference on Computer and Communications (ICCC2020), Chengdu, China. https://doi.org/10.1109/ICCC51575.2020.9345204

Li, Z., Deng, G. and Che, H.C., (2021, Jan.) Patent-Based Predictive EPS on Increasing Investment Performance of China Stock Market, Proceedings of 2021 IEEE International Conference on Power Electronics, Computer Applications (ICPECA2021), Shenyang, China. https://doi.org/10.1109/ICPECA51329.2021.9362701

Liu, L.J., Cao, C. and Song, M., (2014) China's agricultural patents: How has their value changed amid recent patent boom? Technological Forecasting and Social Change, 88(October), 106-121. https://doi.org/10.1016/j.techfore.2014.06.018

Liu, Q. and Qiu, L.D., (2016) Intermediate input imports and innovations: Evidence from Chinese firms' patent filings, Journal of International Economics, 103, 166-183. https://doi.org/10.1016/J.JINTECO.2016.09.009

Motohashi, K., (2009) Catching up or lagging behind? Assessment of technological capacity of China by patent database, China Economic Journal, 2(1), 1-24. https://doi.org/10.1080/17538960902860055

O'Donoghue, T., Scotchmer, S. and Thisse, J.-F., (2004) Patent Breadth, patent life and the Pace of Technological Progress, Journal of Economics and Management Strategy, 7(1), 1-32. https://doi.org/10.1111/j.1430-9134.1998.00001.x

Tsai, H.W., Che, H.C. and Bai, B., (2021a) Innovation Continuity as Indicator for Observing Stock Return Rate in China Stock Market, Advances in Management and Applied Economics, 11(5), 25-49. https://doi.org/10.47260/amae/1152

Tsai, H.W., Che, H.C. and Bai, B., (2021b) Exploring Patent Effects on Higher Stock Price and Stock Return Rate—A Study in China Stock Market, Chinese Business Review, 20(5), 168-180. https://doi.org/10.17265/1537-1506/2021.05.003

Tsai, H.W., Che, H.C. and Bai, B., (2021c, Sep.) Exploring Technology Variety Effect on Stock Return Rate in China Stock Market, Proceedings of the 2021 7th International Conference on Industrial and Business Engineering, 19-206, Macao, China. https://doi.org/10.1145/3494583.3494621

Tsai, H.W., Che, H.C. and Bai, B., (2021d) How Does Patent Examination Indicate Stock Performance? An Empirical Study of China Stock Market and Patents, Internal Journal of Economics and Research, 12(i5), 01-29 (so).

Tsai, H.W., Che, H.C. and Bai, B., (2021e) Using Patent Backward Citation for Classifying Stock Price of China Stock Market, Economics and Management, 18(2), 12-34. https://doi.org/10.37708/em.swu.v18i2.2

Tsai, H.W., Che, H.C. and Bai, B., (2021g) Patent Effects on Higher Stock Price - An Insight into China Stock Market and Four Stock Boards, International Journal of Innovation in Management, 9(2), 61-74. https://siim.org.tw/IJIiM/DW/V9N2/IJIiM-21-014.pdf

Tsai, H.W., Che, H.C. and Bai, B., (2022) Using Patent Forward Citation for Discriminating Stock Price in China Stock Market, Journal of Business and Management Sciences, 10(1), 1-12. https://doi.org/10.12691/jbms-10-1-1

Van Zeebroeck, N., (2011) Long Live Patents: the Increasing Life Expectancy of Patent Applications and Its Determinants, Review of Economics and Institutions, 2(3), Article 5. https://doi.org/10.5202/rei.v2i3.41