What is the optimal breadth for patents?

Gilbert and Shapiro (1990) associate the ’patent breadth’ to the possibility to protect by means of new collateral patents (incremental improvements) the original design. It means that broader claims could be approved by the patent office, resulting in a larger ’exclusion zone’ around an innovation in product space This could translate into higher monopoly profits if close substitutes are not permissible. According to Gilbert and Shapiro (1990) narrow and long patents be optimal because broad patents are costly for society in that they give excessive monopoly power to the patent holder. Gallini (1992) noted instead that broader patent breadth could be an important lever to limit excessive social welfare losses. Narrow patents increase imitation possibilities perceived by competitors that try to practice the inventing around. This makes entry more attractive, but entrants incur sunk costs and duplicate innovative efforts. This is also a cause of social loss. By setting a larger breadth, imitation is discouraged, there is no resource cost to imitation for any given level of industry profits. Then the best policy is to set breadth large enough to discourage all imitation... and the length to generate the desired reward for innovation. This is an argument for optimal patents to be broad and short. The trade-off between patent breadth and length refers to the balancing act that policymakers and inventors must consider when determining the scope and duration of patent protection.