10 Yale J.L. & Tech. 360

Since its inception in 1790, the U.S. patent system has been inextricably linked to innovation, the dissemination of knowledge, and numerous other societal benefits. The adoption of a patent claiming system in 1836 has resulted in a series of historical trends, including: (1) the century-plus trend of yearly increases in applications, straining the agency beyond its capabilities; (2) a highly labor-intensive examination process; and, (3) the majority of patents issued have been valueless. Today the U.S. Patent and Trademark Office (“PTO”) is in a selfdescribed workload crisis and under attack for quality concerns. Former Under Secretary and PTO Director James E. Rogan carefully articulated these problems. Through his leadership, Rogan successfully championed a series of initiatives to modernize the PTO. His central theme was modernizing the agency and transforming its nineteenth century business model for the twenty-first century. However, patent reform has become increasingly difficult recently due to the rigors of the legislative process and political considerations. This Article applies game theory, a branch of applied mathematics, to propose a new patent reform whereby the PTO focuses more resources on more rigorous examination of fewer applications. Empirical patent scholars have concluded that only a small fraction of all patents are “valuable,” and scarce examination resources are not properly allocated. Economists liken the patent system to a lottery–individuals seek windfall rewards for their efforts. The Article’s proposed examination paradigm avoids arbitrary and irrational resource allocation by applying a market-based mechanism: an auction. An auction will discourage lottery strategies and helps weed out worthless applications. Since our history and tradition encourage promoting innovation and entrepreneurship broadly, the proposal offers inventors a choice for the legal protection of their inventions. Through an auction, inventors could vie for an application’s full-scale examination. Alternatively, they would be eligible for another