What's Wrong with the Patent System

Essay in First Monday by by James Bessen and Michael J. Meurer.

URL = http://www.firstmonday.org/issues/issue12_6/bessen/index.html

The essay shows that the costs of enforcing patents (the patent taxation) are now higher than the benefits (patent profits), at least since the 1990's. And the system is particularly ill-suited for Software Patents.

Abstract

"We provide evidence below that software patents have more severe boundary problems and generate greater litigation costs than most other patents. Software patents tend to perform badly because the associated property rights are often expressed quite abstractly. The problem of mapping words to technology is difficult for any kind of technology, but it is especially difficult for software inventions because of the abstract nature of the technology. The problem has been made worse because when the courts have considered software inventions they have relaxed patent law doctrines that work to limit abstraction in other areas of technology. As a result, patent–based property rights to software inventions are not tethered to a specific device or to a specific physical or chemical process. Ironically, verbal descriptions corresponding to precise mathematical representations may be ambiguous; this is because of the inherent abstraction of the mathematical representations." (http://www.firstmonday.org/issues/issue12_6/bessen/index.html)

Excerpts

Proposals for Patent Reform

"What will it take to fix the patent system and make it an effective tool for encouraging innovation? Maybe this won’t be a difficult task, given that patents provided positive incentives as recently as the 1980s. Indeed, many people have been quite optimistic that the current round of draft legislation and recently renewed attention from the Supreme Court will soon lead to a rebirth of effective patent policy.

We differ from most other reform advocates because of our focus on fuzzy boundaries instead of patent trolls or problems with patents on old and obvious inventions. We think that effective reform will probably require structural changes in the operation of the Patent Office and the patent courts.

Many of these reforms could be difficult to achieve both as a matter of politics and policy.

They include:

• Changes in the way patent claims are defined, recorded in the application process and made public, including strong limits on hidden claim language.

• A robust “indefiniteness” standard that invalidates patent claims that can be plausibly interpreted in multiple, fundamentally different ways.

• A new role for the Patent Office where, for a fee, innovators can obtain opinion letters on whether their technology infringes a patent.

• Reforms to limit overly abstract patents in software and other technologies. At the very least, patent law should prevent software patents from claiming technologies far beyond what was actually disclosed as the invention. If this proves inadequate, then we suggest subject matter tests to limit the range of software inventions that can be patented, tests similar to those used during the 1970s and 1980s.

• A strong requirement that patents should not be granted on obvious inventions, coupled with substantially higher renewal fees. Ideally, patent renewal fees should be set by a quasi–independent agency and should be based on empirical economic research. These reforms will help stem the patent flood by screening out unwarranted patents and discouraging renewal of low–value patents.

• Besides improving patent boundaries, we also favor reforms to mitigate the harm caused by fuzzy boundaries. These include elimination of punitive damages when the infringing technology was independently invented and other changes in patent remedies that might discourage opportunistic lawsuits.

Our book provides some details about how we would implement these and other patent reforms. We do not present this list as a blueprint for reform. We are not sure which of these reforms is politically feasible, or how effective any one of these reforms will be. Rather, we provide this list as a suggestion of the sort of reforms that are probably required to address the problem of fuzzy patent boundaries." (http://www.firstmonday.org/issues/issue12_6/bessen/index.html)

Key Books to Read

Do Patents Work? (http://researchoninnovation.org/dopatentswork/).