The Impacts of Intellectual Property-Related Preferential Trade Agreements on Bilateral Patent Applications

Intellectual property rights have become a central emphasis in the negotiation of "deep" preferential trade agreements containing provisions on regulatory environments besides trade policy. These provisions typically require member countries to implement heightened standards on various aspects of intellectual property rights, such as coverage and enforcement, that go beyond the baseline requirements of international intellectual property rights agreements such as the World Tarde Organization's Trade-Related Aspects of Intellectual Property Rights agreement. This study implements a structural gravity framework to investigate empirically the impacts of these agreements on bilateral international patenting, to quantify the effects of countries' membership in intellectual property-related preferential trade agreements on within-agreement patent applications at national patent offices, as well as extra-preferential trade agreement patenting at member country destinations originating from non-member countries. The study further explores the heterogeneity of these effects as originating from the attributes of the agreements, such as whether the major partner in the agreement is the United States or the European Union/European Free Trade Association, and the presence of key "Trade-Related Aspects of Intellectual Property Rights-Plus" provisions in the agreement texts. The findings suggest that intellectual property rights standards in preferential trade agreements tend to generate positive impacts on international patenting, and that the specific features of the agreements give rise to significant disparities in these impacts. Most intriguing is that those agreements involving multiple Trade-Related Aspects of Intellectual Property Rights-Plus norms significantly increase patenting within members compared to patenting from outside those areas, while other types of intellectual property rights encourage more patenting from non-members