Does Agency Funding Affect Decisionmaking?: An Empirical Assessment of the PTO’s Granting Patterns

This Article undertakes the first empirical study of the influence of the PTO’s funding on the agency’s decision-making. More specifically, this Article studies the influence of the PTO’s budgetary structure on the most important decision made by the agency: whether or not to grant a patent. It begins by setting forth a theoretical model predicting that certain elements of the PTO’s fee schedule, such as issuance and maintenance fees, which are only collected in the event that patents issue, create incentives for the PTO to grant additional patents. Using a rich database of previously-unavailable patent grant rates, we then empirically test the predictions of the theoretical model by comparing the agency’s granting patterns before and after 1991, the period at which the agency became almost exclusively funded by user fees.