Separating Patent Wheat from Chaff: Would the U.S. Benefit from Adopting a Patent Post-Grant Review?

Abstract:     
This paper assesses the impact in the US of adopting a patent post-grant review procedure (opposition). By employing novel methods for matching US patents to their non-US counterparts, we find that the opposition rate is about three times higher among the European Patent Office (EPO) equivalents of a sample of US litigated patents as against control-group (unlitigated) patents. Contingent upon reaching final judgment in EPO opposition, about 70 percent of these equivalent patents are either completely revoked or narrowed. Using these findings to inform a series of welfare estimates, we calculate a range of net social benefits that would accrue to the US from adopting a patent post-grant review. We discover that large social benefits would result primarily from the elimination of unwarranted market power, and less so from litigation cost savings per se. Our results provide evidence that the US could benefit substantially from adopting an administrative patent post-grant review, provided the mechanism is not too costly.

Number of Pages in PDF File: 33

Keywords: Patents, Patent post-grant review, Patent litigation, Patent opposition, Patent policy, Technology and innovation

JEL Classification: O34, O38, K41, L50

working papers series