Inventors and Impostors: an Economic Analysis of Patent Examination
Title: Inventors and Impostors: an Economic Analysis of Patent Examination
Author: SCHUETT, Florian
Series/Report no.: EUI MWP; 2009/15
The objective of patent examination is to separate the wheat from the chaff. Good applications – those satisfying the patentability criteria, particularly novelty and non-obviousness – should be accepted, while bad applications should be rejected. How should incentives for examiners be designed to further this objective? This paper develops a theoretical model of patent examination to address the question. It argues that examination can be described as a moral-hazard problem followed by an adverse selection problem: the examiner must be given incentives to exert effort (looking for evidence to reject), but also to truthfully reveal the evidence he finds (or lack thereof). The model can explain the puzzling compensation scheme in use at the U.S. patent office, where examiners are essentially rewarded for granting patents, as well as variation in compensation schemes across patent offices. It also has implications for the retention of examiners and for administrative patent review.
Subject: Innovation; patent office; soft information; intrinsic motivation; incentives for bureaucrats; O31; O38; D73; D82; L50
Type of Access: openAccess