Shaping China’s Innovation Future
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Shaping China’s Innovation Future

University Technology Transfer in Transition

John L. Orcutt and Hong Shen

Shaping China’s Innovation Future employs a thorough analysis of a combination of factors including: the role of law and China’s legal system; economic theory and the development of China’s economy; China’s educational, intellectual property, and financial systems; China’s innovation capacity; and Chinese culture. Though the recommendations on how to improve China’s technology commercialization system are unique to China, the scope of the research makes the conclusions found here applicable to other countries facing similar challenges.
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Chapter 5: China’s Intellectual Property Regime has Come of Age

John L. Orcutt and Hong Shen


One thing necessary to stress is the need to concretely strengthen IP protection. In the new era, global science and technology competition, as well as economic competition, is primarily a competition of IP rights. Promoting IP protection therefore promotes and inspires innovation. – Premier Wen Jiabao1 IP protection provides the foundation for a university technology commercialization system. At the most general level, IP protection provides an economic incentive for individuals and firms, including universities, to invest in R&D.2 Economic actors will not invest in the creation of technology unless they believe they will receive a profitable return on their investment. R&D can be a very expensive and time-consuming effort. To make matters more challenging, the result of R&D is not a tangible, easily protectable good. Instead, the result of successful R&D is new knowledge. By its very nature, knowledge is a partially-excludable good (i.e., it is difficult to exclude unintended parties from benefiting from knowledge),3 which makes it difficult for inventors to collect the full value of R&D efforts. Economic historian Douglass North explains: Throughout man’s past he has continually developed new techniques, but the pace has been slow and intermittent. The primary reason has been that the incentives for developing new techniques have occurred only sporadically. Typically, innovations could be copied at no cost by others and without any reward to the inventor or the innovator. The failure to develop systematic property rights in innovation up until fairly modern times was a major source...

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