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Abstract
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This article examines the screening function of the International Search authorities, which produce International Search Reports (ISRs) for international patent applications filed under the Patent Cooperation Treaty. It first reveals that the patent examination policy change from quantity-oriented to quality-oriented by the Patent Office of the Japanese government in 1999 increased the number of references cited in ISRs significantly. It uses this unexpected drastic policy change as an instrument for the quality of ISRs and finds that the effect of improving the quality of ISRs on the applicant’s decision to enter the national/regional phase procedure is significant, resulting in decrease in the entrance rates, by four percent for the United States national phase procedure and six percent for European regional phase procedure. Thus, the examination policy change made the information provided by ISRs on prior art become significantly more useful to applicants (e.g., more findings of unexpected prior art) and thus enhanced the screening function of ISRs significantly. The estimated coefficients of improving the quality of ISRs are more than ten times larger than those estimated by using the ordinary least squares method (OLS), showing that the endogeneity of examiner’s citations with respect to the patenting value is so significant that it leads to substantial underestimations by using the OLS.
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