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Poisoning the Next Apple? The America Invents Act and Individual Inventors

48 Pages Posted: 12 Jul 2011 Last revised: 4 Feb 2014

David Abrams

University of Pennsylvania Law School

R. Polk Wagner

University of Pennsylvania Law School

Date Written: March 2013

Abstract

The Leahy-Smith America Invents Act, the most significant patent law reform effort in two generations, has a dark side: It seems likely to decrease the patenting behavior of small inventors, a category which occupies special significance in American innovation history. In this paper we empirically predict the effects of the major change in the law: a shift in the patent priority rules from the United States’ traditional “first-to-invent” system to the predominant “first-to-file” system. While there has been some theoretical work on this topic, we use the Canadian experience with a similar change as a natural experiment to shed the first empirical light on the question.

Our analysis uses a difference-in-difference framework to estimate the impact of the Canadian law change on small inventors. Using data on all patents granted by the Canadian Intellectual Property Office and the US Patent and Trademark Office, we find a significant drop in the fraction of patents granted to small inventors in Canada coincident with the implementation of first-to-file. We also find no measurable changes in patent quality and perform several additional analyses to rule out alternative explanations. While the net welfare impact that can be expected from a shift to first-to-file is unclear, our results do reveal that, contrary to the conventional wisdom, the March 2013 implementation of a first-to-file rule in the U.S. is likely to result in reduced patenting behavior by individual inventors.

Keywords: Patent, Priority, IP, IP Economics, Patent Economics, Patent Priority, First to File, First to Invent, Canadian Patents

JEL Classification: K00, K11, O31, O34

Suggested Citation

Abrams, David and Wagner, R. Polk, Poisoning the Next Apple? The America Invents Act and Individual Inventors (March 2013). Stanford Law Review, Vol. 65, P. 517, 2013; U of Penn, Inst for Law & Econ Research Paper No. 11-29. Available at SSRN: https://ssrn.com/abstract=1883821 or http://dx.doi.org/10.2139/ssrn.1883821

David S. Abrams

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

R. Polk Wagner (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
267-433-4431 (Phone)

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