Where's the Innovation? An Analysis of the Quantity and Qualities of Anticipated and Obvious Patents

Abstract

While more innovation is the main theoretical benefit of patent protection, some have argued an increasingly swamped U.S. Patent Office has granted many patents with negligible innovation value. I test this argument and determine the characteristics of patents that lack innovation value by analyzing 980 litigated patents that were subject to anticipation or obviousness decisions during the last decade. Using a selection corrected probit model, I obtain unconditional estimates of the likelihood that patents with given characteristics would be found to lack innovation value. I estimate a surprising 27 percent of all patents would be found at least partially invalid if subject to an anticipation or obviousness decision. Types of patents that have been particularly criticized, including those covering software and business methods and those owned by licensing firms, possess significantly higher innovation-based invalidity rates.

Keywords: Patent, NPE, Software, Method, Anticipation, Obviousness, Innovation, USPTO

JEL Classification: K00, K41, L00, O34