Patent Quality and a Two-Tiered Patent System
Forthcoming in Journal of Industrial Economics
28 Pages Posted: 14 Apr 2011 Last revised: 3 Jan 2015
Date Written: July 16, 2013
In this paper, we study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. We analyze the effects of various policy reforms, specifically, a proposal to establish a two-tiered patent system. In the two-tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, "gold-plate" patent. Introducing a second patent-tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold-plate tier attracts inventors with high ex-ante probability of validity, but not necessarily applicants with innovations of high economic value.
Keywords: patent, patent quality, gold-plate patent, two-tiered patent system, innovation, research and development, prior art
JEL Classification: D83, O31, O34
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