An Analysis of the Incentive and Welfare Effects of the European Unitary Patent


The harmonization of European patent (EP) systems through the upcoming European Unitary Patent (UP) is one of the largest recent changes in a major intellectual policy regime. Using a model of patent renewals and data for chemical patents granted in 2000 by the European Patent Office we find that i) the average EP patent is worth 230K€; ii) essentially all inventors would have used UP had it been available; iii) private value of patents increases by 7% on average with the largest contributions coming from increased patent length and reduced fees; iv) private value of patents is 55 – 58% and consumer surplus 42 – 45% of total surplus; and v) welfare increases by only 1% as consumer surplus is reduced by 6%.