Yes, our patent system is broken

Lynne Kiesling

In yesterday’s New York Times, Charles Duhigg and Steve Lohr have a detailed, thorough article analyzing the myriad ways that our traditional patent system is ill-suited to beneficial innovation processes in technology. Here’s a taste, but you should really read the whole thing, as I will be having my freshman seminar students do in about a month:

Patents are vitally important to protecting intellectual property. Plenty of creativity occurs within the technology industry, and without patents, executives say they could never justify spending fortunes on new products. And academics say that some aspects of the patent system, like protections for pharmaceuticals, often function smoothly.

However, many people argue that the nation’s patent rules, intended for a mechanical world, are inadequate in today’s digital marketplace. Unlike patents for new drug formulas, patents on software often effectively grant ownership of concepts, rather than tangible creations. Today, the patent office routinely approves patents that describe vague algorithms or business methods, like a software system for calculating online prices, without patent examiners demanding specifics about how those calculations occur or how the software operates.

As a result, some patents are so broad that they allow patent holders to claim sweeping ownership of seemingly unrelated products built by others. Often, companies are sued for violating patents they never knew existed or never dreamed might apply to their creations, at a cost shouldered by consumers in the form of higher prices and fewer choices.

“There’s a real chaos,” said Richard A. Posner, a federal appellate judge who has helped shape patent law, in an interview. “The standards for granting patents are too loose.”

And with credit to Dan Cole, from whom I got the link, I think he gets it right when he says

Thanks in large part to a patent bar operating under the self-serving but socially misguided mantra that more property rights is always better than less property rights, the patent system is out of control and requires change. The problem, of course, is that the required changes, including differential patent terms for different kinds of innovations, will be fought tooth and nail by the same patent bar that overwhelmingly benefits from the current system’s pathologies.

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4 thoughts on “Yes, our patent system is broken

  1. I think that a “first to market” scheme would be the best way to award patent rights. In such a scheme, you would ignore who invents first or who files first. You would reward the inventor who actually gets his invention to market first. The current system offers no incentive to push ideas to market.

  2. I would offer one concern with a “first to market” scheme. There is a significant risk of introducing products to market which are “not ready for prime time”. That was the case years ago with the first electric heat pumps, which were little more than air conditioners with reversing valves. They were unsuited to the longer operating hours and tougher operating conditions during the winter, particularly in cold climates. Such market entry failures can delay ultimate market success for decades, or forever.

  3. “socially misguided mantra that more property rights is always better than less property rights”

    I would quibble that whether that is “socially misguided” or not, it isn’t the “mantra” of the current patent system.

    There is a tendency to look at something that is broken, and then ascribe motives to that brokenness which best fit the mental caricature one has of one’s opponents. This quote has that flavour.

  4. Ed, the risk of introducing products to market “not ready for prime” is an endemic feature of capitalism and the market process. I say it is a feature, not a bug. When one market actor errs, there is always another ready to learn from the mistake and try again. It is Better to have introduced a product and fail, than never to introduce at all.

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