Probabilistic Patents

Probabilistic Patents Journal of Economic Perspectives—Volume 19, Number 2—Spring 2005—Pages 75–98 or many years, economists typically conceptualized patents as well-defined property rights giving their owners either a monopoly over some market or at least a significant competitive advantage in that market due to control over a product improvement or a low-cost method of production (Nordhaus, 1969; Reinganum, 1989). Once a patent was issued, this approach tended to assume that the patent was valid, that it granted a right of definite scope, and that users of the patented technology respected that right or were forced by courts to do so. Treating patents as well-defined rights to exclude rivals has permitted economists to focus on important and complex relationships among patents, innovation, competition and the diffusion of technology. More recently, however, scholars and policymakers have begun to look more closely at the empirical evidence regarding the issuance of patents and patent litigation. Nearly 200,000 patents are issued every year after a very limited examination process. Most issued patents turn out to have little or no commercial significance, which is one reason that only 1.5 percent of patents are ever litigated, and only 0.1 percent of patents are ever litigated to trial. Given http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Perspectives American Economic Association

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Publisher
American Economic Association
Copyright
Copyright © 2005 by the American Economic Association
Subject
Symposia
ISSN
0895-3309
DOI
10.1257/0895330054048650
Publisher site
See Article on Publisher Site

Abstract

Journal of Economic Perspectives—Volume 19, Number 2—Spring 2005—Pages 75–98 or many years, economists typically conceptualized patents as well-defined property rights giving their owners either a monopoly over some market or at least a significant competitive advantage in that market due to control over a product improvement or a low-cost method of production (Nordhaus, 1969; Reinganum, 1989). Once a patent was issued, this approach tended to assume that the patent was valid, that it granted a right of definite scope, and that users of the patented technology respected that right or were forced by courts to do so. Treating patents as well-defined rights to exclude rivals has permitted economists to focus on important and complex relationships among patents, innovation, competition and the diffusion of technology. More recently, however, scholars and policymakers have begun to look more closely at the empirical evidence regarding the issuance of patents and patent litigation. Nearly 200,000 patents are issued every year after a very limited examination process. Most issued patents turn out to have little or no commercial significance, which is one reason that only 1.5 percent of patents are ever litigated, and only 0.1 percent of patents are ever litigated to trial. Given

Journal

Journal of Economic PerspectivesAmerican Economic Association

Published: May 1, 2005

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