Rational Ignorance at the Patent Office

It is common to assert that the Patent and Trademark Office does a bad jobof examining patents, and that it should spend more time and money weedingout bad patents. In this article, Professor Lemley challenges thatconventional wisdom. Using available data regarding the cost and incidenceof patent prosecution, litigation, licensing and other uses of patents, hedemonstrates that strengthening the examination process is not costeffective. The core insight is that very few patents are actually litigatedor licensed; most simply sit on a shelf unused, or are used only fornoncontroversial purposes like financing. Because of this, society would bebetter off spending its resources in a more searching judicial inquiry intovalidity in those few cases in which it matters than paying for a moreprotracted examination of all patents ex ante. In economic terms, thepatent office is "rationally ignorant" of the objective validity of thepatents it issues.