Discrimination in the patent system: evidence from standard-essential patents

This paper tests for traces of discrimination against foreigners in the patent prosecution process. It focuses on the case of China and looks specifically at patent applications declared as essential to a technological standard, so called standard-essential patents. The identification strategy exploits the timing of disclosure to the standard-setting organization in a difference-in-differences framework. Specifically, we track whether the patent application was disclosed as standard essential before or after it enters substantive examination at the Chinese patent office, and whether it is filed by a local or a foreign firm. We find that patent applications by foreign firms are treated unfavorably when examiners know that they are declared standard essential. Such patent applications are less likely to be granted, take longer to examine, and are more extensively amended. We interpret this result as evidence of violation of the national treatment principle.