Patent Quality and Pro-patent Policy

Abstract

This paper analyzes the patent examination and litigation process in terms of a simple Perfect Bayesian Equilibrium model, and interprets the results in line with real pro-patent trends in the US and other countries. Each country’s pro-patent policy option is different from the other because of reflecting its own path-dependent patent situation. That is, when a country adopts an easy patent policy (a pro-patent policy), firms in the country gain larger payoffs in the short term. Hence, every country seeks to adopt an easy patent policy. However, the easy patent policy undermines the true invention incentive. In this situation, it is difficult for any country to escape the problem, depending on the historical inertia.