DP5944 The Cost Factor in Patent Systems

Author(s): Didier Francois , Bruno van Pottelsberghe de la Potterie

Publication Date: November 2006

Keyword(s): patents , cost elasticity , cost per claim per capita , patent systems

JEL(s): O34 , P14 , P51

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP5944.asp.asp

The objective of this paper is to assess whether and to what extent the cost of patenting affects the demand for patents. The empirical analysis, which focuses on the patent systems of the USA, Japan, and Europe during the year 2003, leads to the following methodological and empirical observations: i) after the grant, the translation, validation and transaction costs induced by an effective protection in several European countries witness a highly fragmented and very expensive European market for intellectual property; ii) for a proper international comparison, the size of the market and the average number of claims must be accounted for; iii) when the cost per claim per capita (the 3C-index) is considered, a negative linear relationship appears between the cost of patenting and the number of claims that are filed; iv) for a patent designating 13 European countries, the 3C-index is about 10 (2) times higher than in the US (Japanese) system (for process and translation costs up to the grant); v) The European market being more than twice as large as the US market in terms of inhabitants, the 3C-index suggests that there would be a clear justification for higher nominal examination fees at the EPO, that would ensure a rigorous granting process.