Abstract: As intellectual property rights become the commanding heights of the future industrial competition, firm patent behavior receives widespread attention from the academic and practical fields. Patent is not only a manifestation of a firm’s innovation achievement and technological strength, but also a very valuable signal to external stakeholders. Based on the signaling theory, previous research has emphasized the positive influence of patents as signals on firms’ resource acquisition. Particularly, compared with the developed countries with complete patent and market systems, the signal function of patents is more prominent in China. When firms give up the patent right due to the low patent value or firms have patent exceeding the protection period, patent termination happens, resulting in the reduction of firm patent number. Patent termination poses a threat of signal loss for firms, whereas whether and how firms respond to this threat is still underexamined. From the perspective of signal loss, this paper proposes that patent termination will trigger a positive response from firms, ing firms’ patent application behavior. At the same time, the response of a firm is affected by internal and external contextual factors such as firm network centrality, political connections, and firm performance. Specifically, the reduction of patent number caused by firm patent termination, will trigger firms’ response behaviors and encourage firms to apply for more patents in order to restore signal function of patents indicating firm capability to external environment. Furthermore, internal and external factors have contingent effects on this process. We propose that network centrality in interlocks will mitigates the positive effect of patent termination on firm’s subsequent patent application behaviors. This is because higher network centrality diminishes the information asymmetry and facilitates firms more easily acquire resources from the external networks, and therefore substitute the signal function of patents. Similarly, political connections also mitigate the positive effect of patent termination on firm’s subsequent patent application. Political connections may reduce firms’ dependence on the signal function of patents to external stakeholders. In addition, firm performance will positively moderate the effect of patent termination on patent application. The reduced patent number signaling low firm capability, is inconsistent with high firm performance indicating high firm capability, hence firms will apply for more patents to send unitive signals to convince external stakeholders that they perform well. We use the panel data of Chinese patent-intensive listed firms from 2008 to 2017, and adopt the negative binomial regression for analysis. The results show that patent termination has a positive effect on firm patent application behavior. Firm network centrality and political connections will weaken, while firm performance will strengthen the positive relationship between patent termination and firm patent application behaviors. This paper sheds light on patent termination and reveals the patent application strategy of Chinese firms from a new perspective of signal loss, expanding the theoretical spectrum of patent literature. This paper also has valuable practical implications for firms, especially some enlightenment for the promotion of firm innovation. Managers should realize that patent termination is an essential factor in the innovation process, and carefully consider firm patent strategy to decide whether to put more efforts into patent application behaviors. Moreover, when firms are confronted with patent termination and respond to increase patent applications, they should pay special attention to the impact of network embedded.