Inventors and Impostors: An Economic Analysis of Patent Examination

Florian Schuett ()

No ECO2009/28, Economics Working Papers from European University Institute

Abstract: The objective of patent examination is to separate the wheat from the chaff. Good applications - those satisfying the patentability criteria, particularly novelty and nonobviousness - 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.

Keywords: innovation; patent office; soft information; intrinsic motivation; incentives for bureaucrats (search for similar items in EconPapers)
JEL-codes: O31 O38 D73 D82 L50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-ino, nep-ipr and nep-pke
Date: 2009
View list of references

Downloads: (external link)
http://cadmus.eui.eu/dspace/bitstream/1814/12051/1/ECO_2009_28.pdf main text

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eui:euiwps:eco2009/28

Access Statistics for this paper

More papers in Economics Working Papers from European University Institute
Address: Badia Fiesolana, Via dei Roccettini, 9, 50016 San Domenico di Fiesole (FI) Italy
Contact information at EDIRC.
Series data maintained by Marcia Gastaldo ().