Patent expiration, AI, and follow-on innovation

Patent expiration releases disclosed inventions for unrestricted use, but firms differ in their ability to search and recombine this knowledge. This study examines whether AI is associated with more effective use of expired patents. Using Chinese A-share listed firms from 2016 to 2024, we construct a firm-level measure of exposure to patents reaching statutory expiration and find that such exposure is associated with higher subsequent patenting. This association is amplified for firms with higher AI engagement. Further tests show that higher AI-engaged firms are better able to convert expired patents into follow-on innovation when the patents are technologically distant or complex, suggesting that AI helps firms use public-domain technical knowledge even when search and recombination barriers are high. We also find that this amplification effect is concentrated for high-tech firms and firms with fewer prior licencing channels to related technologies. Overall, the results show that patent expiration remains an economically meaningful stage of the patent life cycle and that AI may change how firms draw on technical knowledge after it enters the public domain.