Patents only live twice: a patent survival analysis in Europe

The length of patent rights is an issue of considerable importance in the design of patent systems, and its optimality has been intensively discussed in the literature. This dimension – taking the form of the number of years during which a given patent has been maintained – has been considered in the empirical literature as a direct indication of the private value of patents. But the lack of comprehensive data on both the renewal of patents and their characteristics has prevented so far any systematic analysis of the determinants of this duration. Relying on a comprehensive dataset including detailed information on all patent applications filed to the European Patent Office from 1980 to 2000 and on the renewal of those of them that were granted, this paper presents a survival time analysis of the determinants of patent length in Europe. The results are threefold: first, they clearly establish that patent rights have significantly increased in length over the past decades despite a small decline in the average grant rate, and due to the dilatation of the examination process and higher maintenance rates. Second, they show that some filing strategies induce considerable delays in the examination process, possibly to the benefits of the patentee, but most certainly to the expense of legal uncertainty on the markets and undue exploitation of the provisional protection granted to pending applications by the European Patent Convention. And third, they confirm that more valuable patents (more cited or covering a larger geographical scope) take more time to be processed and live longer, whereas more complex applications are associated with longer decision lags but also with lower grant and renewal rates. These results have many policy implications for technology markets, patent systems and all their stakeholders.