Perception Pending: What Do Patents Signal to Consumers?
39 Pages Posted: 14 Jun 2023 Last revised: 20 Feb 2024
Date Written: June 6, 2023
Patent law encourages inventors to label their products as "patented," to mark their legal status and potentially secure monetary damages from infringing competitors. In this paper, we empirically examine whether such labels might have a separate and direct impact on consumers, by affecting how they view patented products and influencing their purchasing behavior.
We develop and conduct two experiments to isolate the impact of patent status on consumer behavior. In the first study, an online randomized experiment, we demonstrate how increasing the salience of patent status heightens consumers' beliefs that products are innovative and of high quality. We also reveal consumers’ surprisingly sophisticated understanding of the patent process and what being patented means. Despite this informed perspective, consumers are not more inclined to buy patented products.
To determine if these results hold in a real-world setting, we conduct a field experiment at a small retail pharmacy chain. Using scanner data spanning over five years, we find no evidence consumers respond to increased patent salience. Our collective results suggest that while consumers view patented products as more innovative and of higher quality, these positive attributes do not necessarily translate into heightened purchasing behavior.
Keywords: Innovation, Patent, Salience, Patent Salience, Field Experiment, Online Experiment, Mechanical Turk
JEL Classification: K1, O31
Suggested Citation: Suggested Citation