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92 Geo. L.J. 435 (2003-2004)
Valuable Patents

handle is hein.journals/glj92 and id is 449 raw text is: ARTICLES Valuable Patents JOHN R. ALLISON,* MARK A. LEMLEY,** KIMBERLY A. MOORE*** & R. DEREK TRUNKEY**** INTRODUCTION Patents. Inventors. To most, these words conjure a vision of the solitary genius, the heroic individual-Edison, Bell, Morse-working late into the evening in a garage to perfect a device that will change the world. While a few patents are in fact for inventions that change the world,' most are not. Inventors come up with a new idea, hire a lawyer, write a patent application, spend years in the arcane and labyrinthine procedures of the U.S. Patent and Trademark Office (PTO), get a patent, and then . . . nothing. Ninety-nine percent of patent owners never even bother to file suit to enforce their rights.2 They spend $4.33 billion per year to obtain patents,3 but no one seems to know exactly what happens to most of them. Call it The Case of the Disappearing Patents. In the last few years, scholars have begun to pay attention to this curious phenomenon and suggest explanations for it. Some posit that patent owners are @ 2004 John R. Allison, Mark A. Lemley, Kimberly A. Moore, and R. Derek Trunkey. * Spence Centennial Professor, McCombs Graduate School of Business, University of Texas at Austin. ** Professor of Law and Faculty Scholar, Stanford Law School; Of Counsel, Keker & Van Nest LP. *** Associate Professor of Law, George Mason University School of Law. I am grateful to the George Mason University Law and Economics Center for its continued support. **** Robert A. Levy Fellow in Law and Liberty, George Mason University School of Law. The authors are particularly grateful to the law firm of Morgan, Lewis & Bockius for underwriting the collection of the litigation data and to Bronwyn Hall for making her database of U.S. patents available to the public. Thanks to Jonathan Barney, Rochelle Dreyfuss, John Duffy, Dan Farber, Stuart Graham, Rose Hagan, Josh Lerner, Doug Lichtman, Clarisa Long, Matthew Moore, Gideon Par- chomovsky, Arti Rai, Polk Wagner, and participants in workshops at the Haas School of Business, University of California at Berkeley, the University of Chicago Law School, and the University of Pennsylvania School of Law for comments on an earlier draft. For statistical expertise and consultation, we thank Tom Bohman of the University of Texas' Information Technology Services. We also thank Sundar Ramamurthy for assistance with the patent prosecution data. 1. See, e.g., Alan Cohen, 10 Patents That Changed the World, IP WORLDWIDE, Aug. 2002, at 27 (identifying ten active patents that have made a big difference-shaking up society for better or worse). 2. Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U. L. REv. 1495, 1501 (2001). Lemley recites this statistic to buttress an argument that improving the rigor of examination by the PTO to produce issued patents of higher average quality is not economically justified because such a small percentage of patents are enforced or licensed. Although this remains a minority position, it has garnered recent support. See E Scott Kieff, The Case for Registering Patents and the Law and Economics of Present Patent-Obtaining Rules, 45 B.C. L. REV. 55 (2003) (arguing for a registration system with no PTO examination). 3. See id. at 1499. 435

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