Does the Patent Cooperation Treaty work? A global analysis of patent applications by non-residents.

We study drivers of international patent applications by non-residents and assess the importance of the PCT membership in their motivations. We construct bilateral measures of foreign patent applications for all countries active as both a source of patents and a destination of applications filed between 1970 and 2009. The data used originates from the EPO Patstat database. Applying a gravity model to explain the determinants of seeking patent protection in foreign markets, we find that there is a negative relationship between PCT membership and a country's attractiveness for foreign applicants. It is mainly the size of the market and a country's inventive capacity that attract foreign applicants to seek for patent protection in foreign countries.