The Apathy Economy: Patents, Advertising, and Consumer Indifference
Abstract
Patents function as signals as well as rights to exclude. They inform competitors, investors, employees, and consumers about the invention and its owner. How this information affects consumers is not well understood. Existing studies disagree about how advertising a product or service as patented, or patent pending, affects the price consumers will pay. This Article offers the first major empirical study of that question and finds that consumers behave with surprising rationality: they will not pay any price premium for a patented product. A product’s patent status conveys little information about whether it is superior to competing offerings. The results hold across different products and consumer characteristics.
These findings have critical implications for both patent and advertising law. They suggest the changes to patent marking rules in the American Invents Act were irrelevant. They also indicate that the theoretical problems with patent advertising do not substantially exist in practice, making systemic reforms unjustified. Similarly, falsely advertising something as patented should not create liability under federal trademark law because such claims are irrelevant to consumer purchasing decisions. Finally, the inclusion of patent status in consumer advertising is a puzzle. The Article hypothesizes that such advertising occurs due to mixed audiences for content, efforts to bolster brands, and competition for employees.
Read the full piece at SSRN.