Patent Quality and a Two‐Tiered Patent System

Abstract

In this paper, we study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. We analyze the effects of various policy reforms, specifically, a proposal to establish a two‐tiered patent system. In the two‐tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, ‘gold‐plate’ patent. Introducing a second patent‐tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold‐plate tier attracts inventors with high ex‐ante probability of validity, but not necessarily applicants with innovations of high economic value.

Inventors and Impostors: An Analysis of Patent Examination with Self‐Selection of Firms into R&D

“…I make no assumption on how e affects the profits from activity R . Tighter screening might lead to more rejections even for applications resulting from ambitious projects, but might also reduce the incidence of erroneous rejections (type I error; Régibeau and Rockett []) or increase the value of granted patents because of higher perceived overall patent quality (Atal and Bar []). I assume, however, that profits from activity B decrease faster with e than profits from R .…”

“…Instead, I ignore the time dimension and introduce application fees as an additional instrument. Caillaud and Duchêne [] and Atal and Bar [] study models in which, as in this paper, the patent office chooses examination intensity and application fees. In Caillaud and Duchêne [], valid inventions stem from successful R&D projects and invalid ones from failed projects.…”

“…They focus on the positive part of the analysis, leaving normative considerations about optimal examination intensity and application fees to the side. In Atal and Bar [], inventors have private information about the (heterogenous) probability that their inventions are valid. Unlike here, this probability is exogenous, however.…”

A Survey of the Economics of Patent Systems and Procedures

“…The introduction of a two speed system (or gold‐plate system), which will affect the quality of examination through the behavior of the applicant, has been under consideration at the USPTO (Lemley et al ., ). Such a policy could reduce the total number of applications as, in equilibrium, only good applicants will apply for the gold‐plate whereas those who apply in the regular system will signal that it is more likely they have bad applications (Atal and Bar, ).…”

Subjective performance of patent examiners, implicit contracts, and self‐funded patent offices

“…Picard and van Pottelsberghe de la Potterie () explore how patent fee setting influences the demand for patent examination, and they argue that a self‐funded PTO faces a trade‐off between too soft patent examination and higher quality of granted patents. Increasing patenting fees has an impact on the demand for patents (Atal & Bar, ) but has also an impact on the organization choice of incentives of a self‐funded patent office. Most of these contributions consider the demand for patent examination, which we assume to be inelastic.…”