Private Value of European Patents

This paper analyzes the initial filing and the subsequent renewal decisions of the international patent applicants. Specifically I use as data input a comprehensive patent documentation collected from the EUropean Patent Office (EPO) that was unprecedented in its level of disaggregation by various characteristics such as nationality of inventor, type of technology and designated country of patent protection, as well as the prolonged time period it covers. The nonparametic test results reveal that all of these characteristics have significant influence on the renewal pattern, and that the nationality of inventor as well as the technological classification has significant influence on the application pattern of European patents. I also formulate a structural model and analyze the initial filing and designation decisions faced by the EPO patent applicants, and find that the model is able to capture the distinctively different filing patterns across different nationality groups and technological classifications groups reasonably well. JEL Classification: C12, C13, C33, D23, K11, L15 ∗Special thanks go to Jean Lanjouw, Ariel Pakes and Steven Berry for their insightful suggestions and comments. I am much obliged to the OECD for allowing me to access the patent data. Financial support from Yale University Dissertation Fellowship is gratefully acknowledged. Email: [email protected]. Address correspondence to: Yi Deng, Department of Economics, Southern Methodist University, Dallas, TX 75275, USA.