Notice Failure Revisited: Evidence on the Use of Virtual Patent Marking

Abstract

The notice failure in patents is a significant source of legal uncertainty for innovators. One aspect of notice failure relates to the identification of products that are protected with a patent. This paper studies the adoption by U.S. patentees of ‘virtual patent marking,’ namely the online provision of constructive notice to the public that an article is patented. It proposes a simple model of the decision to adopt patent marking and empirically examines factors that affect adoption. Data suggest that about 12 percent of patent holders overall provide virtual marking information (and perhaps about 25 percent of commercially active patent holders). Econometric analysis reveals that firms are more likely to mark their products if they have a higher likelihood of being infringed, if they pursue an active branding strategy, and if they are in greater need of external financing.

Keywords: infringement, notice failure, virtual patent marking, webmarking

JEL Classification: K29, D23, O34