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Patent quality and incentives at the patent office
Author(s) -
Schuett Florian
Publication year - 2013
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12021
Subject(s) - incentive , adverse selection , compensation (psychology) , moral hazard , patent office , quality (philosophy) , business , patent troll , intellectual property , patent law , actuarial science , economics , microeconomics , law , psychology , political science , philosophy , epistemology , psychoanalysis
Patent examination is a problem of moral hazard followed by adverse selection: examiners must have incentives to exert effort, but also to truthfully reveal the evidence they find. I develop a theoretical model to study the design of incentives for examiners. The model can explain the puzzling compensation scheme in use at the U.S. patent office, where examiners are essentially rewarded for granting patents, as well as the variation in compensation schemes and patent quality across patent offices. It also has implications for the retention of examiners and for administrative patent review.