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

34 Pages Posted: 16 Oct 2009 Last revised: 29 Oct 2015

See all articles by Stuart J.H. Graham

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business

Dietmar Harhoff

Max Planck Institute for Innovation and Competition; Ludwig-Maximilians-Universität München; Centre for Economic Policy Research (CEPR)

Date Written: October 14, 2009

Abstract

This article assesses the impact in the US of adopting a patent post-grant review (PGR) procedure similar to one provided in the America Invents Act (AIA) of 2011. We employ novel methods for matching US patents to their European counterparts to find that opposition rates are about three times higher among European Patent Office (EPO) equivalents of US litigated patents as against control-group (unlitigated) patents. Contingent on reaching a final judgment in EPO post-grant opposition, we find that about 70% of these equivalents have challenged claims that are either completely revoked or amended. Using our empirical findings to inform a series of welfare estimates, we calculate benefit-to-cost ratios that the US may expect from implementing PGR in the range of 4:1–10:1. We also discover that these large social benefits result primarily from eliminating unwarranted market power in the current stock of granted patents, and much less so from litigation cost savings per se. Our results provide evidence that the US may benefit substantially from adopting the AIA post-grant review, but only provided that costs are controlled and that administration and appeals are not allowed to become too costly.

Keywords: Patents; Litigation; Innovation policy; Comparative institutional analysis

JEL Classification: O34, O38, K41, L50

Suggested Citation

Graham, Stuart J.H. and Harhoff, Dietmar, Separating Patent Wheat from Chaff: Would the U.S. Benefit from Adopting a Patent Post-Grant Review? (October 14, 2009). Research Policy 43 (2014), pp. 1649-1659, DOI:10.1016/j.respol.2014.07.002.. Available at SSRN: https://ssrn.com/abstract=1489579 or http://dx.doi.org/10.2139/ssrn.1489579

Stuart J.H. Graham (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St. NW
Atlanta, GA 30308
United States
404-385-0953 (Phone)
404-894-6030 (Fax)

HOME PAGE: http://https://www.scheller.gatech.edu/graham

Dietmar Harhoff

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany
+49 89 24246 550 (Phone)
+49 89 24246 599 (Fax)

HOME PAGE: http://www.ip.mpg.de

Ludwig-Maximilians-Universität München ( email )

Munich, 80539
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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