Many studies agree that a weak intellectual property right (IPR) legal system likely reduces innovation or creation; they also predict that increasing intellectual properties (IPs) in developing countries will automatically lead to local needs for stronger formal protection. However, the situation is found to be more complex in China. With a focus on the use of IPs and relevant protection mechanisms in China, this study points out that many companies acquire IPs for purposes that do not depend on their enforcement; many companies have informal ways of protecting their IPs without resorting to court enforcement. Both the alternative functions and the alternative enforcement mechanisms are shaped by industrial characteristics, especially in four aspects: technological features, administrative regulation, market characteristics, and network structure. Based on studies of different industrial sectors in China, this article develops a general framework for analyzing the role of IPRs in industrial practice.
