DP11688 | Screening for Patent Quality

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To study how governments can improve the quality of patent screening, we develop an integrative framework incorporating four main policy instruments: patent office examination, pre- and post-grant fees, and challenges in the courts. We show that examination and pre-grant fees are complementary, and that pre-grant fees screen more effectively than post-grant fees. Simulations of the model, calibrated on U.S. patent and litigation data, indicate that patenting is socially excessive and the patent office does not effectively weed out low-quality applications. We use the calibrated model to quantify the welfare effects of various counterfactual policy reforms.