DP11688 Screening for Patent Quality

Author(s): Mark Schankerman, Florian Schuett
Publication Date: December 2016
Date Revised: March 2018
Keyword(s): courts, innovation, litigation, patent fees, patents, screening
JEL(s): D82, K41, L24, O31, O34, O38
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11688

To study how governments can improve the quality of patent screening, we develop an integrative framework incorporating four main policy instruments: patent office examination, pre- and post-grant fees, and challenges in the courts. We show that examination and pre grant fees are complementary, and that pre-grant fees screen more effectively than post-grant fees. Simulations of the model, calibrated on U.S. patent and litigation data, indicate that patenting is socially excessive and the patent office does not effectively weed out low quality applications. We use the calibrated model to quantify the welfare effects of various counterfactual policy reforms.