The Leahy-Smith America Invents Act, the most significant patent law reform effort in two generations, may have a dark side: it seems likely to decrease the patenting behavior of individual inventors, a category which occupies special significance in American innovation history. In this Article, we empirically predict the effects of the major change in the law, which shifts the patent priority rules from the United States’ traditional “first-to-invent” system to the internationally predominant “first-to-file” system. While there has been some theoretical work on this topic, we use an analogous law change in Canada as a natural experiment to shed the first empirical light on the question.
Our analysis uses a difference-in-difference framework to estimate the impact of the Canadian law change on small inventors. Using data on all patents granted by the Canadian Intellectual Property Office and the U.S. Patent and Trademark Office, we find a significant drop in the share of patents granted to individual inventors in Canada coincident with the implementation of a first-tofile system. We find no measurable changes in patent quality and perform several additional analyses to rule out alternative explanations. While the net welfare impact that can be expected from a shift to first-to-file is unclear, our results reveal that, contrary to the conventional wisdom, the March 2013 implementation of a first-to-file rule in the United States is likely to result in a reduced share of patents granted to individual inventors.