Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Let's See: Pallas, Pan, Patents, Persephone, Perses, Poseidon, Prometheus...

When people think of patents, if they do at all, they usually picture a crazed inventor who looks a lot like Christopher Lloyd in Back to the Future, working late nights in the lab to come up with something completely crazy and absolutely amazing, that no one else would ever have thought of:

What a DeLorean is Good For...

If you've read this series of posts you know that this image is mostly mythological. The vast majority of patents are owned by corporations at filing, and describe minor modifications of what has gone before, if they describe anything useful at all. But that doesn't mean there isn't the occasional individual making a real contribution to a field.

Today, if that person wants to realize a profit from her or his work, they may choose to file for one or more patents and then either try to fund a company, sell the patents to a company, or just go sue people after others come up with the idea on their own. We have argued that the last behavior should not be supported or encouraged: no social value has been added. Let's replace it with a more worthwhile alternative, consistent with the open-source world, for individuals filing patents.

Once a patent filed by an individual or group of individuals is allowed, they should have the option of laying the patent open to the public. We might forgive them the issuance fee (only a few hundred bucks anyway for a "micro-entity"). Once a patent is laid open, it becomes part of the public domain, and cannot be converted back to property. However, the inventor or inventors become eligible for inventor awards. The USPTO will be responsible to administer the awards, which should be granted to inventors whose patents have proven useful in the relevant fields. Evaluation could sensibly wait 3 to 5 years to separate out stuff that actually works from the merely promising. That's also a time scale a government agency can handle, and it's not very different from the time needed to form a company and build a business. Awards ought to be big enough to get excited about - say $100,000, providing a 5-10x return on the cost to file. This is similar to the popular small business innovation research grants (SBIR) program, whose awards range from $40,000 to $100,000 for phase 1. Note that once a patent is laid open, all continuations must also be open, since otherwise the inventor could do a bait-and-switch to sue the user of the laid-open version with slightly different claims.

These awards could be easily funded from application fees. As we noted in a previous post, only 10% of applications are assigned to individual inventors. If 10% of those are laid open, and 10% of laid open patents receive an award (which is pretty generous), only one of 1000 granted patents is awarded. Adding $100 to application fees would cover the direct cost. That's about $40M for the 400,000 patents issued each year -- not a lot of money, but certainly welcome for the winners. Including a few special awards at e.g. $1M each would make a big public impact without costing much.

Having the USPTO administer the system is no worse than having the USPTO grant these monopolies in the first place. If the USPTO were required to reach out to industry to evaluate candidates, the process would have the ancillary benefit of exposing examiners to how ideas become useful (or not) in the real world. Companies will have no particular incentive to be deceptive about a method they are free to use, or an award they pay for anyway (as do their competitors), though of course political games and under-the-table payments will naturally occur at times. The candidate inventors could take no action, or campaign vigorously for companies to adopt their methods -- the latter being a great way to see if they've actually done anything useful.

A change like this would require legislation, but it should be relatively easy to achieve. The cost is small, it is in accord with public perception of the system, and provides nifty photo ops. Should some of the changes proposed in previous posts be implemented (not likely any time soon!), an award system would provide a way to compensate individuals for whom, for example, the path to demonstrating enablement had become prohibitively expensive and time-consuming.

And if it didn't work out, you could always get in the DeLorean, accelerate to 88, and go back the way things were before. Doesn't that work?


Seems like a kinda bizarre proposal to me. We just need to abolish the patent system, not replace it with a system where the government has the discretion to grant monetary awards to people that the government thinks "deserve" a reward. Though I suppose this would be a more honest system. Maybe cheaper, too, if done' right, However I have seen similar proposals that if implemented across the board, would cost taxpayers literally trillions of dollars per year, so I'm very skeptical of this approach.

See e.g. http://www.againstmonopoly.org/index.php?perm=593056000000000206 and http://c4sif.org/2011/12/tabarroks-launching-the-innovation-renaissance-statism-not-renaissance/

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