A New Approach to Patent Reform

Boston Univ. School of Law Research Paper No. 23-9

Fordham Law Legal Studies Research Paper No. 4357386

TILEC Discussion Paper No. TILEC Discussion Paper No. 2023-03

LSN: Law and Economics: Public Law

LSN: Litigation and Procedure

ERN IO: Productivity, Innovation, and Technology

LSN: Intellectual Property: Patent Law

58 Pages Posted: 15 Feb 2023 Last revised: 17 Mar 2023

See all articles by Janet Freilich

Janet Freilich

Boston University - School of Law

Michael J. Meurer

Boston University - School of Law

Mark Schankerman

London School of Economics

Florian Schuett

KU Leuven - Department of Economics; Tilburg Law and Economics Center (TILEC); Tilburg University - Tilburg University School of Economics and Management

Date Written: February 14, 2023

Abstract

Scholars and policy makers have tried for years to solve the tenacious and harmful crisis of low quality, erroneously granted patents. Far from resolving the problem, these determined efforts have resulted in hundreds of conflicting policy proposals, failed Congressional bills, and no way to evaluate the policies’ value or impact or to decide between the overwhelming multiplicity of policies.

This Article provides not only new solutions, but a new approach for designing and assessing policies both in patent law and legal systems more generally. We introduce a formal economic model of the patent system that differs from existing scholarship because it permits us to (1) determine how a policy change to one part of the patent system affects the system as a whole; and (2) quantify the impact of policy changes. Existing scholarship typically analyses a policy by assessing its effect on just the targeted element of the patent system, but legal systems are complex with interrelated components and players react along multiple margins, so these analyses are incomplete and sometimes incorrect. Our approach fixes this problem, providing a comprehensive understanding of how a policy change affects the patent system from beginning-to-end. It also permits us to conduct complex analyses such as varying multiple policies at once. Further, much existing scholarship fails to quantify the magnitude of a policy’s effect, and even empirical scholarship can only measure the effect of an already-implemented policy, not predict the effect of a proposed change. Quantification is critical because policies generally have multiple effects, often in countervailing directions. Quantification—as shown using our model—permits scholars to determine the overall direction and size of a theoretically ambiguous effect. Quantification also allows us to compare the social welfare effects of different reforms so that policy-makers know where to focus their efforts.

We apply our model to several of the most prominent policy debates in patent law. We conclude that certain reforms such as regulation of settlement licenses and increased examination intensity yield large gains in social welfare and should be prioritized. Other reforms that are popular with scholars, including decreasing the availability of injunctions and reducing litigation costs produce surprisingly small gains in social welfare. Often existing scholarship operates too much on intuition, which, we show, can be wrong. Our new approach to patent reform provides an approach that offers deeper understanding and a more effective evaluation framework.

Keywords: patent quality, patent reform, calibration, perfect Bayesian equilibrium, rational ignorance

JEL Classification: K20, 034

Suggested Citation

Freilich, Janet and Meurer, Michael J. and Schankerman, Mark and Schuett, Florian, A New Approach to Patent Reform (February 14, 2023). Boston Univ. School of Law Research Paper No. 23-9, Fordham Law Legal Studies Research Paper No. 4357386, TILEC Discussion Paper No. TILEC Discussion Paper No. 2023-03, LSN: Law and Economics: Public Law , LSN: Litigation and Procedure, ERN IO: Productivity, Innovation, and Technology, LSN: Intellectual Property: Patent Law, Available at SSRN: https://ssrn.com/abstract=4357386 or http://dx.doi.org/10.2139/ssrn.4357386

Janet Freilich (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Michael J. Meurer

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-6292 (Phone)
617-353-3077 (Fax)

Mark Schankerman

London School of Economics

Florian Schuett

KU Leuven - Department of Economics ( email )

Leuven
Belgium

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
168
Abstract Views
814
Rank
364,806
PlumX Metrics