Essays in International Intellectual Property

Abstract

This dissertation studies bilateral patent flows between countries arising from the firm-level decisions to apply for patents in each market. Chapter One presents a model of these patenting decisions that results in a gravity equation that incorporates patent-specific costs and frictions. Bilateral patent flows are constructed from the PATSTAT database using a novel origin assignment method. Estimation techniques are borrowed from the trade gravity literature to estimate the impact of Patent Cooperation Treaty membership and other trade and intellectual property treaties on bilateral patent flows. I find that joint membership in these treaties has a significant positive impact on patent flows, but this is limited in large part to north-to-north and south-to-south country pairs. Chapter Two enriches the patent data with measures of patent value. Modifying the gravity equation to focus on aggregate and average patent value flows shows that reductions in patenting frictions have a negative impact on average patent values. I estimate the effect of trade and intellectual property treaties and demonstrate this negative relationship for the PCT. Chapter Three enriches the underlying model to allow domestic firms to imitate unpatented innovations imperfectly. This makes the marginal expected value of a patent dependent on the ability of domestic firms to replicate a product efficiently. We measure the imitative capacity of a market using the number of patents generated by firms in the market. Since innovation activity can be highly variable across industries, we control for industries using patent IPC codes. We modify our empirical specification to allow for the inclusion of destination innovative activity and find that increased risk of imitation in a destination market has a strong positive impact on patent flows. Collectively, these papers contribute to the literature studying firms' decisions regarding where to apply for patents and what factors affect them.