Abstract:As China"s seed industry is under low level innovation, and counterfeit products is prevailing, this paper analyzed the firms" innovation behaviors and used Evolutionary Game Theory to predict the factors influencing companies ‘group innovation behavior, with which trying to explain the innovation dilemma. The conclusions are as follow: firstly, imperfect intellectual property protection system lead to "Lemon Market"; secondly, technology diffusion is constrained under false prosperity market; thirdly, low market concentration constrained the imitative innovation companies" R D investment and pricing ability; fourthly, consumers" risk avoidance preference negatively influences the companies" innovation; finally, shortsighted companies constrained the industry innovation.