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Why weak patents? Rational ignorance or pro-"customer" Tilt?

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Author Info
Lei, Zhen
Wright, Brian D.

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Abstract

The issuance of weak patents is widely viewed as a fundamental problem in the current US patent system. Reasons that have been offered for the granting of weak patents by the US Patent and Trademark Office (USPTO) include examiners’ “rational ignorance” of the patentability of applications and pro-“customer” rules and institutions that create incentives for examiners to grant patents of dubious validity to their “customers”- applicants. In this paper, we study whether US examiners’ behavior in prior art search betrays their assessment of applications’ patentability. For a sample of US patents for which applications were also filed at the European Patent Office (EPO), we construct a measure of the fraction of prior art that is missed by US examiners. We find that this measure significantly explains the probability of receiving a patent at the EPO. The results are robust to different empirical specifications. US examiners’ prior art searches indicate that they are, on average, not “rationally ignorant”. On the contrary, they identify and dedicate more search effort to those applications that seem more problematic, because they bear the burden of proof of non-patentability. Our study offers empirical evidence that a systematic problem of weak patents likely exists, and suggests that the problem may be more strongly attributable to the pro-applicant rules and policies than to examiners’ ignorance. The current prevalence of weak patents does not appear to be caused at the margin by lack of resources at the USPTO.

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Publisher Info
Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49279.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49279

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Related research
Keywords: Weak patents; Rational ignorance; cited prior art; missed prior art; Industrial Organization; Institutional and Behavioral Economics; Research and Development/Tech Change/Emerging Technologies;

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  1. Lanjouw, Jean Olson, 1998. "Patent Protection in the Shadow of Infringement: Simulation Estimations of Patent Value," Review of Economic Studies, Blackwell Publishing, vol. 65(4), pages 671-710, October. [Downloadable!] (restricted)
  2. Joseph Farrell & Carl Shapiro, 2008. "How Strong Are Weak Patents?," American Economic Review, American Economic Association, vol. 98(4), pages 1347-69, September. [Downloadable!]
  3. Lanjouw, Jean O & Pakes, Ariel & Putnam, Jonathan, 1998. "How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data," Journal of Industrial Economics, Blackwell Publishing, vol. 46(4), pages 405-32, December. [Downloadable!] (restricted)
  4. Mark A. Lemley & Carl Shapiro, 2005. "Probabilistic Patents," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 75-98, Spring. [Downloadable!] (restricted)
  5. Jay Pil Choi, 2005. "Live and Let Live: A Tale of Weak Patents," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 724-733, 04/05. [Downloadable!] (restricted)
  6. Hall, Bronwyn H & Jaffe, Adam B & Trajtenberg, Manuel, 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," CEPR Discussion Papers 3094, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
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