Innovation and its Discontents

In the last two decades, the role of patents in the US innovation system has become increasingly troublesome, driven by two apparently mundane changes in patent law and policy. Economic analysis does not support abolishing patents, and even weakening the fundamental presumption of validity for appropriately issued patents would carry serious policy risks. The alternative is to make sure that, before they can be used to restrict the commercial activities of competitors, patents have gotten the appropriate scrutiny to ensure their validity. At the same time, we need to accept that the PTO will still make mistakes, and create a judicial system that deals with those mistakes in a balanced way. Doing this without an infeasible increase in resources for the Patent Office will require that the system be significantly modified. The modifications should be carefully tuned to create incentives so that private parties have the incentive and opportunity to bring information to bear, but have limited incentive and opportunity to act simply to gum up the works.