Where’s the Innovation? an Analysis of the Quantity and Qualities of Anticipated and Obvious Patents

While the main theoretical benefit of patent protection is increased innovation, some assert a swamped U.S. Patent and Trademark Office has granted an inefficiently large number of patents with negligible innovation value. I test this argument’s plausibility and determine the characteristics of patents without innovation by analyzing 980 litigated patents subject to anticipation or obviousness decisions between 2000 and 2010. Using a selection corrected probit model, I obtain unconditional estimates of the likelihood patents with given characteristics lack innovation value. I estimate a surprising 28 percent of all patents would be found at least partially invalid if litigated. Software, business method and licensing firm-owned patents possess significantly higher innovation-based invalidity rates. Miller: Where’s the Innovation? 1