Patent screening, innovation, and welfare

Mark Schankerman and Florian Schuett

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Critics claim that patent screening is ineffective, granting low-quality patents that impose unnecessary social costs. We develop an integrated framework, involving patent office exami- nation, fees, and endogenous validity challenges in the courts, to study patent screening both theoretically and quantitatively. In our model, some inventions require the patent incentive while others do not, and asymmetric information creates a need for screening. We show that the endogeneity of challenges implies that courts, even if perfect, cannot solve the screening problem. Simulations of the model, calibrated on U.S. data, indicate that screening is highly imperfect, with almost half of all patents issued on inventions that do not require the patent incentive. While we find that the current patent system generates positive social value, in- tensifying examination would yield large welfare gains. The social value of the patent system would also be larger if complemented by antitrust limits on licensing.

Keywords: innovation; patent quality; screening; litigation; courts; patent fees; licensing (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2022-07-01
New Economics Papers: this item is included in nep-com, nep-dem and nep-ipr
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Published in Review of Economic Studies, 1, July, 2022, 89(4), pp. 2101 – 2148. ISSN: 0034-6527

Downloads: (external link)
http://eprints.lse.ac.uk/112450/ Open access version. (application/pdf)

Related works:
Journal Article: Patent Screening, Innovation, and Welfare (2022)
Working Paper: Patent Screening, Innovation, and Welfare (2020)
Working Paper: Patent Screening, Innovation, and Welfare (2020)
Working Paper: Patent Screening, Innovation, and Welfare (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:112450

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