Working Paper: CEPR ID: DP16715
Authors: Gerard Llobet; Álvaro Parra; Javier Suarez
Abstract: This paper explores the interplay between patent screening and patent enforcement. Costly enforcement involves type I and type II errors. When the patent office takes the rates at which such errors occur as given, granting some invalid patents is socially optimal even in the absence of screening costs because it encourages innovation. When the influence on courts’ enforcement effort is considered, thesesame forces imply that screening and enforcement are complementary. This means that, contrary to common wisdom, better screening induces better enforcement but also that an increase in enforcement costs could be optimally accommodated with less rather than more ex-ante screening.
Keywords: intellectual property; innovation; imitation; patent screening; patent enforcement; industry dynamics
JEL Codes: L26; O31; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| better screening by the patent office (O34) | better enforcement by judges (K40) |
| increase in screening (I14) | judicial effort (K41) |
| increase in enforcement costs (K40) | less ex-ante screening (D82) |
| lower screening (C24) | more efficient enforcement costs (K40) |
| allowing some invalid patents (O34) | encourages innovation (O35) |
| type II errors (C52) | positive effects on entry and welfare (D69) |
| better screening (I14) | importance of type I errors increases (C52) |
| optimal level of ex-ante screening (D82) | balances rational ignorance and complementarity effect of judicial effort (D79) |