Razing the Patent Bar
48 Pages Posted: 22 Dec 2015 Last revised: 25 Aug 2017
Date Written: December 21, 2015
Innovation is vital to economic prosperity, and lawmakers consequently strive to craft patent laws that efficiently promote the discovery and commercialization of new inventions. Commentators have long recognized that legal fees are a significant cost affecting innovation, but remarkably a crucial driver of these costs has largely escaped scrutiny: the Patent Bar. Every year innovators spend billions of dollars on legal fees for representation in the U.S. Patent and Trademark Office (“USPTO”), where inventors apply for patents and potential infringers seek to invalidate issued patents. Supply in this essential legal services market, however, is sharply limited because patent law requires innovators to select representation from the ranks of the Patent Bar, which only extends membership to persons with extensive technical educations, like engineering degrees. Although this educational requirement bars entry in a market that is critical to innovation, scholars, lawmakers, and commentators have largely ignored this feature of the Patent Bar.
This Article begins to fill this void and demonstrates that the technical-education requirement of the Patent Bar lacks economic justification. This Article explains that a trade-off lies at the heart of efficient occupational licensing: licensing creates harmful barriers to entry in regulated markets, but can also improve the quality of services offered in that market, thus helping those markets to function more effectively. In the case of the Patent Bar, however, service quality improvements have not been—and likely cannot be—shown to justify the deleterious market effects. Paradoxically, the USPTO’s misguided efforts to ensure quality service actually threatens to undermine innovation by raising the cost of patent acquisition and other services in the USPTO.
Accordingly, this Article proposes that the labor market for representation in the USPTO be expanded by making lawyers without technical educations eligible to join the Patent Bar. This Article details barriers to this proposal, including the revolving-door relationship between the USPTO and the Patent Bar. In light of these concerns, this Article recommends avenues for effecting the proposed reforms.
Keywords: patent, patent bar, innovation, efficiency, occupational licensing, bar exam, competition
JEL Classification: D61, D72, D73, H30, I2, J3, J44, K23
Suggested Citation: Suggested Citation