Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk

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Princeton University Press, 2008 - Law - 331 pages
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In recent years, business leaders, policymakers, and inventors have complained to the media and to Congress that today's patent system stifles innovation instead of fostering it. But like the infamous patent on the peanut butter and jelly sandwich, much of the cited evidence about the patent system is pure anecdote--making realistic policy formation difficult. Is the patent system fundamentally broken, or can it be fixed with a few modest reforms? Moving beyond rhetoric, Patent Failure provides the first authoritative and comprehensive look at the economic performance of patents in forty years. James Bessen and Michael Meurer ask whether patents work well as property rights, and, if not, what institutional and legal reforms are necessary to make the patent system more effective.



Patent Failure presents a wide range of empirical evidence from history, law, and economics. The book's findings are stark and conclusive. While patents do provide incentives to invest in research, development, and commercialization, for most businesses today, patents fail to provide predictable property rights. Instead, they produce costly disputes and excessive litigation that outweigh positive incentives. Only in some sectors, such as the pharmaceutical industry, do patents act as advertised, with their benefits outweighing the related costs.


By showing how the patent system has fallen short in providing predictable legal boundaries, Patent Failure serves as a call for change in institutions and laws. There are no simple solutions, but Bessen and Meurer's reform proposals need to be heard. The health and competitiveness of the nation's economy depend on it.

 

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Bessen and Meurer argue that America's patent system is in trouble because "it fail[s] to provide clear and efficient notice of the boundaries of the rights granted." Patent litigation has exploded, they say, and the costs of the system now outweigh the benefits. Generally speaking, with the exception of the chemical and pharmaceutical industries, Bessen and Meurer don't feel the patent system does a lot of good."[I]t seems unlikely that patents today are an effective policy instrument to encourage innovation overall," they conclude. They detail several reforms to help improve notice and to "make patents work as property" again the way they claim they once did.
Although the authors deal with patents broadly, the book has great relevance to digital technology policy because of their discussion of business method patents and software patents. They argue that software technology is especially prone to problems of "abstraction" and obviousness. As a result, software patenting has been a major contributor to the litigation explosion we have seen in recent years.
Although I agree with their case against software patents, I remain unconvinced that the patent system is failing as badly as Bessen and Meurer claim. Nonetheless, they present a powerful case that deserves to be taken seriously. Patent Failure will have an enormous impact on these debates going forward.
 

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A meticulous analysis of the problems in the U.S. patent system, which works well for the chemical and pharmaceutical industries, and not at all for software, owing in part to the ambiguity permitted in claims. It's written with a level of detail that will interest only a small audience: policymakers, lawyers, and business school professors. The core ideas of this book could be condensed into a ten-page paper. But it'd be a spectacular paper. 

Contents

The Argument in Brief
1
Why Property Rights Work How Property Rights Fail
29
If You Cant Tell the Boundaries Then It Aint Property
46
Survey of Empirical Research Do Patents Perform Like Property?
73
What Are US Patents Worth to Their Owners?
95
The Cost of Disputes
120
How Important Is the Failure of Patent Notice?
147
Small Inventors
165
Abstract Patents and Software
187
Making Patents Work as Property
215
Reforms to Improve Notice
235
A Glance Forward
254
Notes
261
References
295
Index
315
Copyright

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Popular passages

Page 308 - US Senate Committee on the Judiciary, Subcommittee on Patents, Trademarks and Copyrights. Washington, DC: Government Printing Office. Machlup, Fritz, and Edith Penrose. 1950. "The Patent Controversy in the Nineteenth Century.

About the author (2008)

James Bessen, a former software developer and CEO, is lecturer at Boston University School of Law. Michael J. Meurer is the Michaels Faculty Research Scholar and professor of law at Boston University.

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