In this paper, a system dynamics model for explaining the application, grant and maintenance of patents is provided. Existing literatures regarding the patent application system are mostly econometric approaches that consider only economic variables such as GDP and R&D. The model in this paper includes patent variables such as disputes as well as economic variables. Moreover, we show that the model can be used in not only a quantitative prediction but also policy experiment. The results of the policy experiment shows that strengthening protection of patents tend to increase the propensity to patent more than R&D investment.