Sources and Characteristics of Software Patents in the European Union: Some Empirical Considerations

Abstract

Software patenting in the United States has been a relevant and well regulated phenomenon since the 1980s. On the contrary, the European Union lagged behind for a long time. This work gives an account of the above mentioned topic. The fact that European Patent Convention expressively prohibits software patenting has not been a major problem for firms and inventors who have patented it as well. First of all, a reliable database of software patents is presented. These patents are accorded by the European Patent Office (EPO) and, to our knowledge, more than 30,000 software patents have been accorded so far to both European and Non-European companies.

Second, we investigate the relevant factors explaining firm-level software patenting at the EPO. To this respect, a large part of them has been found to belong to American and Japanese firms. Then, the Knowledge Production Function (KPF) approach is put into practice in order to unravel factors affecting the output of the innovation process at the firm level. Results show that software patents are characterised by an higher average length of the granting procedure and by the fact that firms belonging to the software sector do not apply for patent protection. Finally, results from non linear panel data estimation reveal that patents are not deemed as useful appropriability instruments by software firms and that a 'threat effect' by hardware firms is growing in importance.

Keywords: Software Patenting, Intellectual Property Rights, IPRs, Patent, Innovation, Empirical

JEL Classification: O34, D23, L86