1Policy Implications of Weak Patent Rights

Patents vary substantially in the degree of protection provided against unau-thorized imitation. In this chapter we explore a range of work addressing the economic and policy implications of "weak " patentspatents that have a significant probability of being overturned or being circumvented relatively easilyon innovation and disclosure incentives, antitrust policy, and organiza-tional incentives and entrepreneurial activity Weak patents cause firms to rely more heavily on secrecy. Thus, the competi-tive environment is characterized by private information about the extent of the innovator's know-how. In such an environment weak patents increase the likelihood of imitation and infringement, reduce the amount of knowledge publicly disclosed, and potentially reduce the incentives to innovate. The discussion also highlights some implications of weak patents for antitrust policy. Weak patent rights increase the likelthood ofpatent litigation over com-mercially valuable patents and raise the specter of anticompetitive settlements. Encouraging the antitrust agencies to refer some patents for re-examination b