Abstract: In this article, I examine the three main arguments for and against the America Invents Act (AIA). I begin by setting the terms of the discussion: since the purpose of the patent system is to increase innovation, we should judge the AIA by its effect on innovation. I first consider efficiency, the main argument of proponents of the Act, and conclude that a) the marginal increase in economic efficiency from the Act is small and b) there is no evidence linking efficiency in the patent system to increased innovation. Next, I consider disclosure, the argument which links first-to-file with increased innovation. However, I find no evidence to back up this claim. Finally, I focus on the impact to small businesses. I began by establishing that small businesses are key to innovation, and thus could be a deciding issue in the debate. Then, I weigh the empirical evidence and find that a switch to first-to-file has hurt small businesses in other countries. From the analysis of these three issues, a clear conclusion emerges: the America Invents Act ought to be amended to restore the first-to-invent system in order to protect America’s unique innovation climate.
Author: Katherine Dannenmaier is a third-year at Stanford University, majoring in Economics.