Perception Pending: What Do Patents Signal to Consumers?

Abstract

Patent law encourages inventors to label their products as “patented,” to mark their legal status and potentially secure monetary damages from infringing competitors. We examine whether such labels might have a separate and direct impact on consumers, by affecting how they view patented products and influencing what they purchase. We develop and conduct two experiments to isolate the impact of patent status on consumer behavior. In an online randomized experiment, we demonstrate how increasing the salience of patent status heightens consumers' beliefs that products are innovative and well made. We also reveal consumers' surprisingly sophisticated understanding of the patenting process and what being patented means. Despite this informed perspective, consumers are not more inclined to buy patented products. To determine if these results hold in a real-world setting, we conduct a field experiment at a small retail pharmacy chain. Using scanner data spanning over 4 years, we find no evidence that consumers respond to increased patent salience. Our collective results suggest that while consumers view patented products as more innovative and well made, these positive attributes do not necessarily translate into heightened purchasing behavior. Our research suggests that patent marking might often serve only a legal, rather than a marketing, function. This has implications for patent policy, including the relevance of patent salience in damage analyses and litigation strategies.