Working Paper: CEPR ID: DP18334
Authors: William Matcham; Mark Schankerman
Abstract: We develop a dynamic structural model of patent screening incorporating incentives, intrinsic motivation, and multi-round negotiation. We estimate the model using detailed data on examiner decisions and employ natural language processing to create a new measure of patent distance that enables us to study strategic decisions by applicants and examiners. The estimated parameters and counterfactual analysis imply three main findings. First, patent screening is moderately effective, given the existingstandards for patentability. Second, examiners exhibit substantial intrinsic motivation that significantly improves the effectiveness, and reduces the net social costs, of screening. Third, limiting the number of negotiation rounds strongly increases the speed and quality of screening. We quantify the net social costs of patent screening and find that the annual social cost of the existing system is $25.5bn, equivalent to 6.5% of U.S. R&D performed by the private sector.
Keywords: patents; innovation; incentives; screening; intrinsic motivation
JEL Codes: D73; L32; O31; O34; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intrinsic motivation (O31) | screening effectiveness (C52) |
| limiting negotiation rounds (C78) | screening quality (L15) |
| turning off intrinsic motivation (C92) | increase in invalid patents (O34) |
| examiner motivation (C99) | integrity of the patent system (O34) |
| applicants padding patent applications (O34) | patent rights claimed (O34) |
| negotiation structure (C78) | patent quality (L15) |