Why Is China's University Patent Commercialization Rate Stuck at Just 3%?

The rate of patent industrialization in Chinese universities is relatively low.

According to the “2021 China Patent Survey Report” (hereinafter referred to as the “Patent Survey Report”), in 2021, the industrialization rate of invention patents in China was 35.4%, whileThe Commercialization Rate of Invention Patents at Universities Is Only 3%。

However, according to the latest data from the Ministry of Education, patent applications filed by Chinese universities increased from 106,000 in 2012 to 367,000 in 2021, representing a growth of 246.2%.

On one hand, there is a high growth rate in the number of patents; on the other, the commercialization rate of these patents continues to decline. Why do universities exhibit such a “data contradiction” in the transformation of their scientific and technological achievements? What are the underlying causes? And how can this issue be addressed? To answer these questions, VCBeat’s Orange Fruit Bureau has conducted an in-depth analysis.

Before patent commercialization, we must first clarify one thing: What is the actual purpose of a patent?

In fact, Article 1 of the Patent Law states—The purpose is to safeguard the legitimate rights and interests of patent holders, encourage inventions and innovations, promote the application of such inventions and innovations, and thereby advance scientific and technological progress as well as economic and social development.

Therefore,Patent applications must be oriented toward the industrialization of inventions and innovations., but is this really the case?

This is not the case most of the time. A relevant official from a certain university told Chengguo Bureau that, currently, university professors mostly apply for patents due to reasons such as performance evaluations, professional title reviews, project completions, and patent subsidies. Some professors even split one patent into more than ten just to receive more subsidies. The purpose of applying for patents has been misguided from the very beginning.

These “off-track” patents fundamentally lack the necessary conditions for industrialization and are therefore difficult to commercialize. As data from the Patent Survey Report shows, among the surveyed universities, more than half of the patent holders believe that“The fact that patent applications themselves are not aimed at transfer and commercialization” is a significant factor constraining the transfer and commercialization of patents。

However, even with the goal of commercializing patents, numerous hurdles must be overcome during the translation process. These include whether the patent can be effectively protected, whether the invention aligns with market demands, and whether the outcomes can be linked to appropriate resources for industrialization. All of these are critical factors in patent commercialization.

Yet the core competencies related to these factors are precisely areas where many university professors lack expertise, compounded by insufficient external support.Many valuable patents fail to reach the market, falling by the wayside during the commercialization process.

In fact, whether the initial approach was misguided or the effort faltered midway, these are merely the observable manifestations. To “prescribe the right remedy,” it is essential to look beyond these surface-level signs and uncover the underlying root causes.

So, what exactly is the underlying logic?

Based on research and interviews, VBInsight’s Orange Fruit Bureau will examine the issue from three core dimensions: university evaluation systems, university professors, and technology transfer offices.

Let us first examine the performance evaluation system in higher education institutions, where the primary issues lie in the “patent-quantity-only” mindset and the “superficiality” of patent assessments.

In the evaluation mechanisms of most universities in China, professional title assessments, tenure reviews, and research grant applications are all tied to the number of patents. While this approach can, to some extent, stimulate professors’ engagement in scientific research and enhance the innovation capacity of universities, the purpose of filing patents has gradually shifted toward gaining more academic achievements and material rewards. As a result, patent commercialization has become merely an optional task that offers no additional credit.

Furthermore, in patent evaluation, excessive emphasis is placed on quantity rather than quality; pre-filing review and prior art searches are inadequate, and there is no follow-up tracking or assessment of patents after grant.

Over time, the number of patents held by universities and colleges has surged, yet only a handful are available for commercialization; this artificially inflated denominator naturally drives down the patent industrialization rate.

Having Analyzed the Assessment System, Let Us Now Discuss University Professors.

Universities are often regarded as “ivory towers,” seemingly sacred havens dedicated to academic pursuits and talent development. However, for professors seeking to commercialize their patents, being situated in such an “ivory tower” may not be advantageous.

Patents must address societal needs and realize market value, which requires university professors to possess the ability to “go out” and engage with the industry; however, practical implementation is far from being as simple as it may seem.

First, as educators responsible for imparting knowledge, university professors possess ample theoretical expertise but lack practical experience. They often conduct research in isolation, resulting in scientific outputs that struggle to meet market demands.This has, to some extent, created a “silo effect” in R&D innovation, which is the first pain point.。

Secondly, the initial patent application fees are largely covered by professors’ research grants, whereas subsequent maintenance costs must be borne out-of-pocket by the patent holders. As patents age, their financial demands intensify, making it increasingly difficult for university professors to sustain these expenses alone.Therefore, lack of funding is Pain Point 2.。

Finally, even patented technologies that meet market demand may not be effectively commercialized or successfully launched into the market.Insufficient capability in patent transfer and commercialization, coupled with difficulties in advancing the industrialization of technologies, constitutes Pain Point 3.。

Therefore, this necessitates the involvement of specialized technology transfer departments dedicated to patent commercialization; however, can they shoulder this responsibility at the current stage?

Zhang Xiaoyu, who has been engaged in university technology transfer work for decades both domestically and internationally, told Chengguo Bureau that a common phenomenon still prevalent in universities today is: professors sit at the negotiation table, holding full decision-making power over all aspects of patent layout, from application to commercialization.The Technology Transfer Office lacks the authority to conduct due diligence and evaluation, reducing it to a mere “approval-process facilitator” and preventing it from delivering its professional value.。

In addition to the lack of authority, the Technology Transfer Department itself has many problems.

First, there is a lack of specialized talent within the patent commercialization system in universities.Surveys indicate that nearly 90% of universities have only two or fewer full-time patent management staff, and those engaged in patent commercialization are predominantly administrative personnel who lack the requisite professional knowledge for technology transfer as well as practical experience.

Secondly, constrained by the traditional mindset of public institutions,The complex and cumbersome approval process in patent management adversely affects the pace of patent commercialization.

Finally, the operational mechanism of the technology transfer department is unsound., the overall operational model is relatively simple and fails to cover the pre-filing assessment of patent applications, subsequent commercialization evaluation, and the end-to-end process of linking with industry.

Constrained by various external and internal factors, a long-standing “divide” has existed between university professors and technology transfer offices: the former adopt a “high-and-mighty” stance, while the latter lack core competencies. This makes collaboration difficult and, to some extent, hinders the commercialization of patents.

"Plan before acting, know when to stop and you will gain."

Having identified the “root cause,” it becomes much easier to prescribe the right remedy. Through discussions with numerous university researchers and technology transfer managers, VCBeat Chengguo Bureau explores pathways to enhance the industrialization rate of patents from three perspectives.

First, the performance appraisal system should be differentiated and diversified.

Professors from multiple universities unanimously agree that the evaluation criteria for basic research and applied research should be differentiated.

Basic research is exploratory in nature, aiming to address fundamental technical issues and explore the unknowns of human knowledge; whereas applied research focuses on the market, solving practical problems within industries. Given their differing starting points, a more multidimensional approach is required for evaluating their outcomes.

For basic research, it is essential to provide adequate resources and an inclusive environment.As Academician Huang Zhen of the Chinese Academy of Engineering has stated, it is essential to establish long-term, stable support mechanisms for basic research, increase non-competitive funding for scientific research, extend evaluation cycles, and develop a classified science and technology evaluation system led by scientists that aligns with the inherent principles of basic research.

For applied research, emphasis should be placed on the practical utility of patents in industrialization, moving away from a “research-only” mindset.Professor Chen Tingtao of Nanchang University stated to VCBeat, “It is challenging for university faculty to balance scientific research with industrial innovation. Universities should adopt more diverse pathways for promotion and project selection, such as incorporating the commercialization of technology into performance evaluation metrics.”

Furthermore, patent evaluation should be more rigorous to establish stronger endogenous constraints. Professor Chen Tingtao pointed out that emphasis should be placed on the practical value of patents, as a strong focus on utility enhances patent quality. Zhang Xiaoyu believes that after patent grant is obtained, continuous monitoring and evaluation of subsequent patent operations should be conducted.

Second, university professors should proactively understand the market and seek multi-party collaborations.

University professors, as the “source of living water” for innovative technologies, it is particularly crucial to cultivate their business acumen during the patent commercialization process. So how can this be achieved? Consider focusing on these three key areas.

First, proactively engage with the market and facilitate research collaboration with enterprises.

Specific manifestations include: university professors engaging deeply with enterprises to collaborate with corporate R&D personnel in tackling key technical challenges; and corporate R&D personnel actively participating in professors’ industry-sponsored research projects to stay informed about current R&D progress.

Second, broaden the sources of research funding.

In addition to their own research funding, university professors can secure greater fiscal support for scientific research by applying for natural science foundations or scientific and technological R&D programs at various levels, or by attracting additional external research funds through collaborative R&D with enterprises.

Third, establish deep linkages with technology transfer departments.

University professors should position themselves appropriately when communicating with technology transfer offices. They should not adopt an overly arrogant attitude simply because they possess the original scientific and technological innovations. Instead, they should place full trust in the commercialization team and leave professional matters to the professionals.

Furthermore, as professors move toward leveraging market resources, universities should also provide incentive policies to accelerate the translation of research outcomes.

In the distribution of benefits from patent commercialization, safeguard the personal rights and interests of patent inventors by granting them substantial autonomy over financial resources; in relevant performance evaluations, increase the weighting assigned to university researchers’ participation in patent commercialization, thereby recognizing and supporting their efforts in technology transfer.

The third point is that the technology transfer department should “help get it on the horse and accompany it for a stretch.”

Zhang Xiaoyu stated in an interview with VCBeat that at universities in the United Kingdom and the United States, the Technology Transfer Office determines whether scientific research technologies have commercial value; outcomes deemed to lack commercial value are not filed for patents.

Therefore, he recommends that Chinese universities continue to delegate authority to their technology transfer offices, enhancing their decision-making power in project approval and patent management.

With greater power comes greater responsibility. How can the technology transfer department perform better after being entrusted with “significant authority”? Based on the interviewees’ responses, VCBeat has summarized the following three key points:

First, establish a professional technology transfer team.

In terms of the composition of technology transfer teams, it is essential to ensure complementary expertise among members. They should possess not only technical knowledge and an understanding of national laws but also strong marketing acumen, with additional proficiency in foreign languages, finance, and management.

Furthermore, it is essential to engage technology transfer managers with extensive experience in commercializing scientific achievements. Well-versed in the relevant laws, regulations, and operational procedures, and equipped with business acumen and practical expertise, they play a pivotal role in executing the key stages of the technology transfer process.

Second, streamline the approval process.

The technology transfer department must be distinct from the traditional operational model of public institutions, as its work efficiency directly impacts the pace and outcomes of patent commercialization. To this end, review steps with limited relevance to technology transfer should be waived, and approval hierarchies should be streamlined.

A researcher told Orange Bureau: “Invention patents must go through five stages—acceptance, preliminary examination, publication, substantive examination, and grant—with the granting process typically taking three years to complete. Once patent rights are granted, there is no time to spare in the approval process for commercialization. Establishing a fast-track review channel for patents with commercialization potential is an effective way to improve efficiency.”

Third, establish a comprehensive patent management system covering the entire lifecycle.

The Technology Transfer Office shall establish a comprehensive patent evaluation system to actively manage and control the entire process of patent commercialization.

Specifically,Prior to initiating the patent application,Patent projects shall be comprehensively reviewed and searched in accordance with market demand. For inventions-creations that are not grantable patent rights as stipulated in the Patent Law, or technologies lacking prospects for market commercialization, it is unnecessary to initiate patent development.

In terms of patent application and strategy,Conduct thorough analysis and assessment to clearly define and refine the scope of patent claims, thereby establishing a robust patent defense line, patent domain, and patent space.

Zhang Xiaoyu believes that the industrialization of patents follows a discernible pattern. By referencing various reference documents published by the China National Intellectual Property Administration, it is possible to strengthen intellectual property layouts in industries related to strategic emerging industries and major national economic sectors, centered on advantageous and distinctive disciplines, and to design clear pathways for the conversion of scientific and technological achievements from the outset.

He told Chengguo Bureau, “Follow the theoretical path and execute each step well; technology transfer will then happen naturally. Avoid making arbitrary decisions that turn patent commercialization into a gamble.”

After obtaining patent grants and refining the patent portfolio,It is also necessary to continuously monitor the stability of its operations and adjust the project toward a direction suitable for industrialization.

Meanwhile, the technology transfer department must identify potential partners, industrial incubation scenarios, and social capital tailored to researchers’ technical fields, while also negotiating patent licensing and assignment agreements with enterprises.

Zhang Xiaoyu believes that the aforementioned steps constitute the foundational conditions for venture capital firms to identify high-quality projects and enter investments safely. “Once patent-related projects are executed through the entire process, venture capital firms will have the confidence to invest and enter the market.”

Professor Shi Yigong once stated that academic publications and technological strength are two distinct matters. Similarly, the volume of granted patents does not reflect the actual value of university patents in meeting market demands and driving economic development.

In fact, the relevant authorities have recognized the existing issues and are actively deploying adjustments.

In recent years, the Ministry of Education, the China National Intellectual Property Administration, and the Ministry of Science and Technology have jointly issued the “Several Opinions on Improving the Quality of Patents in Higher Education Institutions and Promoting Their Conversion and Application” and the “Several Opinions on Strengthening the Transfer and Conversion of Scientific and Technological Achievements in Higher Education Institutions.” These initiatives aim to promote the conversion of scientific and technological achievements by reforming patent subsidy and reward policies as well as assessment and evaluation mechanisms.

Anhui Province also released a plan in July this year to accelerate the transformation and application of scientific and technological achievements, emphasizing market orientation, optimizing the transformation environment, empowering researchers with greater autonomy, and providing ample resource and financial support.

Currently, favorable policies can be seen as a crucial entry point for breaking through the 3% patent industrialization rate in universities. However, it is also important to recognize that the transformation of university patents is not an overnight process and involves multiple stakeholders. Whether the patent industrialization rate can actually increase still needs to be tested over time.