Accelerated examination kills innovation and increases litigation---it increases grant rates and likelihood of worse patents.

An interesting and important observation is that the propensity to grant a patent with accelerated examination request is much higher than that with regular examination request. The patent grant rate with accelerate examination was 93% while it was only 63% with regular examination request during the sample period. Interestingly, the grant rate of accelerated examination was systematically higher than that of the regular examination, and suggests that patent grant decisions may be a positive function of accelerated examination.

We pay attention to this issue and investigate what causes the difference in grant rate, which is not examined in the literature so far. Two competing hypotheses are possible. The one is that the invention with higher quality may apply for the accelerate examination since it has strong demand for early appropriation of invention results. Harhoff and Stoll (2015), Harhoff and Wagner (2009) and Reitzig (2004) argue that the patent for which the accelerated examination is requested has greater potential value and good quality. An application with accelerate examination is basically moved ahead in line and examined before other applications which were filed earlier. Even though it requires an additional fee, the process is a boon for companies with time-sensitive inventions and applications who will benefit greatly from getting to market as soon as possible. This implies that the higher grant rate of patent application with accelerated examination request should be resulted from the high quality of invention.

The other possible explanation is ‘type II error’ of examiners due to the heavy workload of examinations. Oh and Kim (2014), Caillaud and Duchene (2011) and Schuett (2013) address the “overload problem” of patent offices and argue that average examination quality could decline as the workload of patent examiners increases, because examiners struggle with time constraints during prior art searches and increased backlogs. A series of interviews with examiners also indicates that examiners feel more burdened by accelerated examination requests because the examiners are supposed to conduct substantial examinations within a short and fixed time period. Since the examination process is basically imperfect, its quality can be poorer under congestion especially when the policy pressure of decreasing pending period comes with the increased workloads. The examiners may miss the prior art due to lack of time or heavy workloads, and can lead to mistakenly grant or reject patent applications. Such mistakes make it easier or more difficult to obtain a patent, which further deteriorates the quality of examination.

This paper, thus, investigates who is utilizing the accelerate examination and what causes the difference in grant rate between the accelerated versus regular examination. The central goal of the study is to examine whether the observed high grant ratio of applications with accelerated examination is due to the quality of invention or type II error of examiner due to increased workloads.

We believe that this issue is considerably important because it addresses how institutional features such as accelerate examination affects the quality of patent examinations and associated social welfare. The Patent ownership mistakenly granted to an unqualified invention will cause detrimental legal disputes and serious social welfare distortions. These institutional costs will ultimately discourage innovation effort of inventors and cause vice- circle in the innovation markets. Despite the importance, we still lack of explicit evidence on the relationship between accelerated examination and examination quality.