In future, Science and technology policy reform in China clarify the administrative power by functionalism. In order to maintain and increase the value of state-owned assets under the principle of investment, the administrative power of service inventions formed a three-level power structure by law. This structure leaded to the unclear relation between rights and responsibilities and poor linkage with intellectual property law.it reduces institutional stability and predictability. The root of the problem is to clarify the foundation of administrative power by functionalism. Therefore, categorize service inventions by national security, national interests and major social interests. service inventions contain marketization service inventions and non- marketization service inventions. The former uses the administrative power to manage and safeguard the technical superiority of the state. The latter use Intellectual Property Law that permit to create civil rules and restrict administrative power with laws. This way can promote institutional innovation.