First, the DOE displaces the judgment of the Patent Office and the Federal Circuit, and substitutes the judgment of the fact finder at trial regarding the breadth of patent rights. Second, the uncertainty about patent rights created by the doctrine undermines the notice function of the patent.29 Potential competitors have a difficult time competing aggressively by using technology that is adjacent to the technology controlled by the patent owner.
And third, uncertainty promotes opportunistic and anticompetitive patent lawsuits.
Part III presents the refinement theory within an economic model of invention
and patent prosecution. The model contains a single potential inventor/patentee
and a single potential competitor.
The inventor moves first and decides whether to try to invent E, a set of embodiments of a patentable invention.
If an invention occurs, the inventor can draft a patent that claims E or she can make a further investment to refine her understanding of the invention and draft a broader patent that claims E plus an additional set of embodiments F. The set F can only be obtained after E. If the inventor obtains E but not F, then the competitor has a chance to develop an embodiment in F and use the embodi-ment in competition with the inventor.
We incorporate a stylized version of the DOE in the model and compare
equilibrium outcomes with and without the doctrine. Under the DOE, the
inventor simply claims E and has the right to exclude the competitor from
making and using any embodiment in E or F; thus, the doctrine allows the
inventor to avoid literally claiming F and incurring the cost of refinement. In
contrast, in the version of the model without the DOE, the inventor must pay
refinement costs and literally claim F to get protection over the embodiments in
The model demonstrates the social costs and benefits of the DOE. When
refinement costs are high, social value arises from the DOE because it provides
an important incentive to inventors, and because it promotes efficient invest-
ment in refinement. When refinement costs are low, the DOE offers neither of
these benefits, and thus should be curtailed to increase certainty and decrease
rent-seeking.