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

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  • Lei, Zhen
  • Wright, Brian D.

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.

Suggested Citation

  • Lei, Zhen & Wright, Brian D., 2009. "Why weak patents? Rational ignorance or pro-"customer" Tilt?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49279, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea09:49279
    DOI: 10.22004/ag.econ.49279
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    References listed on IDEAS

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    Cited by:

    1. David Encaoua & Thierry Madiès, 2012. "Dysfunctions of the patent system and their effects on competition," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00740716, HAL.
    2. Kensuke Kubo, 2011. "Explaining vertical integration in the generic pharmaceutical industry," Discussion Papers 11-02, Indian Statistical Institute, Delhi.
    3. Dietmar Harhoff & Georg von Graevenitz & Stefan Wagner, 2016. "Conflict Resolution, Public Goods, and Patent Thickets," Management Science, INFORMS, vol. 62(3), pages 704-721, March.
    4. Dr Chiara Rosazza Bondibene, 2012. "A Study of Patent Thickets," National Institute of Economic and Social Research (NIESR) Discussion Papers 401, National Institute of Economic and Social Research.
    5. David Encaoua & Yassine Lefouili, 2009. "Licensing ‘Weak’ Patents," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 492-525, September.
    6. Ralph Siebert, 2013. "Are Ex Ante and Ex Post Licensing Agreements Useful Instruments to Lessen Uncertainty in R&D?," CESifo Working Paper Series 4535, CESifo.
    7. Dr Chiara Rosazza Bondibene, 2012. "A Study of Patent Thickets," National Institute of Economic and Social Research (NIESR) Discussion Papers 401, National Institute of Economic and Social Research.
    8. repec:hal:wpaper:halshs-00848247 is not listed on IDEAS

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    Keywords

    Industrial Organization; Institutional and Behavioral Economics; Research and Development/Tech Change/Emerging Technologies;
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