Patent quality and incentives at the patent office

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 compe...

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Bibliographic Details
Published in:The Rand journal of economics 2013-06, Vol.44 (2), p.313-336
Main Author: Schuett, Florian
Format: Article
Language:English
Subjects:
Administration
Business innovation
Compensation
Economic incentives
Empirical evidence
Epics
Fees
Financial incentives
Incentives
Inventions
Moral hazard
Moral hazard models
Patent applications
Quality
Studies
Technological innovation
U.S.A
Variance
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Summary: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.
ISSN:0741-6261
1756-2171
DOI:10.1111/1756-2171.12021