Costly Screens and Patent Examination

The United States Patent and Trademark Office has acquired a well-deserved reputation for inefficacy and inefficiency. Proposals for reforming the patent office have thus focused on improving the quality of patent review while decreasing its cost. Yet this view overlooks the valuable function performed by the high costs associated with obtaining a patent: these costs serve as an effective screen against low-value patents. Moreover, due to asymmetries in patent values, the costly screen is likely to select against socially harmful patents in disproportionate numbers. Although the patent office is the most prominent forum in which this type of costly screening operates, it is not the only one. In a variety of other contexts, the private costs of navigating an administrative process may complement the process itself in screening out unwanted participants.