Patent Reform I

Lynne Kiesling

This week’s Economist has a couple of good articles about the need for patent law reform. The first one (subscription required), entitled “Monopolies of the Mind”, starts off with a great quote from Thomas Jefferson:

PATENTS, said Thomas Jefferson, should draw “a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.”

I found this wording peculiarly interesting. Embarrassment? The close of the article explains:

Patents are, after all, government-enforced monopolies and so, as Jefferson had it, there should be some “embarrassment” (and hesitation) in granting them.

Hear hear! In any case, the article then goes on to discuss “business method” patents in the US and elsewhere, and their effects on innovation:

In 1998 America introduced so-called “business-method” patents, granting for the first time patent monopolies simply for new ways of doing business, many of which were not so new. This was a mistake. It not only ushered in a wave of new applications, but it is probably inhibiting, rather than encouraging, commercial innovation, which had never received, or needed, legal protection in the past. Europe has not, so far, made the same blunder, but the European Parliament is considering the easing of rules for innovations incorporated in software. This might have a similarly deleterious effect as business-method patents, because many of these have been simply the application of computers to long-established practices. In Japan, firms are winning large numbers of patents with extremely narrow claims, mostly to obfuscate what is new and so to ward off rivals. As more innovation happens in China and India, these problems are likely to spread there as well.

But even though Europe has not fallen into the business process patent trap, it does impose transaction costs that can reduce innovation:

Europe’s patent system is also in a mess in another regard: the quilt of national patent offices and languages means that the cost of obtaining a patent for the entire European Union is too high, a burden in particular on smaller firms and individual inventors. The European Patent Office may award a patent, but the patent holder must then file certified translations at national patent offices to receive protection. Negotiations to simplify this have gone on for over a decade without success.

Their recommendation? Start by making patent applications (that’s applications, not awards) public, which should certainly reduce the number of applications for some more sensitive and easy to replicate or reverse engineer ideas.

One thought on “Patent Reform I

  1. Look, the way things work now, a patent application must be kept secret because the inventor has no special rights to his/her invention before a patent issues (assuming a patent is granted at all). If patent applications were published, then competitors would make and sell the invention while the patent application was pending (that is, for a couple of years on average). That would deprive the inventor of much or all of the profits from the invention.

    If you wanted to publish patent applications, you’d have to make patent rights retroactive (that is, make them cover the time between publication of the application and issuance of the patent). But that would be supremely difficult: even with a retroactive patent, how could the inventor get royalties from, say, a bankrupt competitor?

    The “publish applications” proposal is ill-considered. An expedited challenge/review process for issued patents would probably be more useful.

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