Abstract: In order to overcome the shortage of patents number measure of innovation, we put forward the concept of patent's knowledge scope to reflect innovation quality and construct an indicator based on IPC. Then we empirically analyze its applicability in measuring innovation and find that it is a more suitable indicator for measuring innovation abilities and it is patent scope rather than patent quantity that promotes profit growth. Then we examine the factors that influence innovation quality and compare their impact on both innovation quality and quantity. It shows that the incentives have heterogeneous impacts on them: monopoly and industry policies have a significantly positive effect on innovation quantity but a negative effect on innovation quality; size and demand growth has a significantly positive effect on innovation quantity but no effect on its quality.