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Patent Boxes and the Success Rate of Applications

Ronald Davies (), Ryan Hynes and Dieter Kogler ()

No 202109, Working Papers from School of Economics, University College Dublin

Abstract: Patent boxes significantly reduce the corporate tax rate applied to income earned from a patent. This incentivizes firms to increase the likelihood of a patent application being granted by creating more novel research and using more successful legal representation when filing the application. Conversely, it supports submitting applications for marginally novel innovations that otherwise would not have been submitted, lowering the probability of success. We use data from applications to the European Patent Office from 1978 to 2019 and find that the introduction of a patent box increases the average success rate of applications from large, corporate innovators by 6.9 percentage points. This impact only materializes two years after a patent box takes effect, suggesting that improved research effort is the dominant response by firms. Therefore patent boxes may help to increase innovation novelty and improve the overall quality of research.

Keywords: Patent Box; Patents; Application Success; Corporate Taxation (search for similar items in EconPapers)
JEL-codes: H25 O31 O32 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2021-04
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pbe and nep-tid
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http://hdl.handle.net/10197/12105 First version, 2021 (application/pdf)

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Working Paper: Patent Boxes and the Success Rate of Applications (2020) Downloads
Working Paper: Patent Boxes and the Success Rate of Applications (2020) Downloads
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