Poor quality kills innovation---follow-ons are discouraged.

The grant of a patent involves a trade off between providing an incentive for innovation and allowing monopolistic rights during the patent term. In the same vein, what seek to be obtained by patent applicants and patent offices may often diverge. On the one hand, applicants’ attempt is usually to obtain the broadest patent right over the invention, namely to receive a grant with the largest scope. In fact, obtaining a grant with larger scope increases the probability of protecting variations of the core invention and blocks competitors’ innovation activity. On the other hand, patent offices have recently understood the importance to issue patents that are of high quality. Uncertainty over the breadth of patent claims and subsequent high litigation costs have been largely identified as undeserved negative consequences of low quality patents. Particular concern regards patents with broad or vague claims. An excessive scope can be exploited for the purpose of rent seeking, particularly by non-practicing entities (NPEs) (Schwartz and Kesan, 2013). In specific industries, characterized by cumulative innovation, unclear patent claim language or too broad patents may hamper subsequent follow-on innovation (Merges and Nelson, 1990). Among different dimension of patent quality, in this paper we focus on patent legal quality, that is we refer to “low quality patents” as those that are “overly broad relative to the inventive contribution or (...) unduly vague or ambiguous” (Marco et al., 2019). In both cases, the patent system is found to be responsible of “either decisional errors in granting patents or systemic errors in legally authorizing such patents in the first instance”(Marco et al., 2019). During the application procedure, it is indeed the scope of the patent, defined by the structure and wording of its claims, together with its allowability, to be discussed by the patent office’s examiner and the applicant. Once the patent is issued, if the applicant is not satisfied with the claims allowed, the negotiations among the two parts may even continue through a prosecution process, leaving space to different degree of uncertainty about the boundaries of the invention (Lemley and Shapiro, 2005). Recent studies have pointed out that a large share of granted patents should be entirely or partially invalidated because they do not meet the criteria of novelty or non-obviousness (Henkel and Zischka, 2019), suggesting widespread errors during the application procedure. Recently, Frakes and Wasserman (2022) suggest that having few time allocated for the examination is causing examiners to grant low quality patents. These “undeserved” monopolistic rights, which some scholars call “probabilistic patents” (Lemley and Shapiro, 2005), represent sources of uncertainty that might hamper the innovation process. In an attempt to solve these issues, several patent system around the world allow administrative procedure of post-grant review, to challenge the validity of newly granted patents.