Prior Art: To Search or Not to Search

To determine patentability, inventions are evaluated in light of existing prior art. Innovators have a duty to disclose any prior art that they are aware of, but have no obligation to search. We study innovators' incentives to search for prior art, their search intensities and the timing. We distinguish between early state of the art search - conducted before R&D investment, and novelty search - conducted right before applying for a patent. We identify conditions in which innovators have no incentive to search for prior art. Search intensity increases with R&D cost, the examiners' expected search effort, and with patenting fees. We also find that innovators prefer to correlate their search technology with that of the patent office. In light of our model, we discuss the implications of some proposed policy reforms.