There is an effective mechanism for PTO implementation.

Unfortunately, regulatory monopolies often fail to harness the power of differential pricing. For instance, instead of differentially pricing patents, the PTO charges patent applicants and patentees uniform fees that do not depend on the underlying invention type.9 This is inefficient because, as has been shown empirically, inventors in different industries value patent rights differently,10 and the PTO’s cost of reviewing patent applications varies across these industries.11

This Article explains how the PTO could instead use its power as a regulatory monopoly to differentially price patents across industries. Using insights from both neoclassical and behavioral economics, the Article focuses on two primary ways in which this kind of pricing could enhance social welfare. First, differential pricing across industries, particularly with respect to patent maintenance fees, would increase PTO revenues.12 In particular, the PTO could increase maintenance fees on patentees in industries that, on average, care more about patent protection. An increase in these late-stage fees would enable the PTO to lower front-end patent application fees for everyone, thereby reducing the total cost of patenting for most applicants. Alternatively, the PTO could use the additional revenues to improve its application review process, such as by hiring additional examiners to expedite review. To the extent we believe heightened availability of patent protection or a more efficient patent review process leads to more inventive activity, differential patent pricing could promote innovation.13

Second, the Article explains how the PTO could use differential pricing to tailor patent term across industries. In the United States, patents receive a one-size-fits-all baseline term of twenty years from the date of patent application filing. Many scholars have recognized problems with this approach because a uniform term seems at odds with the fact that the social costs and benefits of patenting likely differ across industries. Accordingly, some have suggested patent term should be tailored, with term shortened for some categories of inventions.14

This Article uses differential patent pricing to suggest a more flexible and practical approach to term shortening: to reduce term on patents within a particular industry, one could raise maintenance fees on patents in that industry to the point where patentees no longer renew their patents. In other words, if a maintenance fee is sufficiently high for patentees in a particular industry, then those patentees will stop paying this fee and their patents will lapse. The Article highlights advantages of using differential pricing to limit term in this manner, such as increased flexibility to update prices as technology evolves, heightened control over the number of patents within an industry that terminate at a particular time, and ease of implementation from a political economy standpoint.