Linked by Thom Holwerda on Tue 5th Feb 2013 16:49 UTC
Legal "The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded - which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented." Written by economics professors Michelle Boldrin and David K. Levine, published in the winter issue of the Journal of Economic Perspectives. Via John Siracusa.
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A patent tax system to stop patent abuse
by mkone on Wed 6th Feb 2013 19:42 UTC
Member since:

Patents are useful, but companies abuse them because they are relatively cheap to obtain and maintain. So maybe we should make them expensive to obtain and maintain.

I propose a patent tax system. This is how it would work.

The first 10 patent applications made by an individual or a company would attract a nominal "tax" of, say, $100 per patent. So the system allows an individual to have 10 cheap patents per year.

The next 90 patents are a bit more expensive. These would cost $1,000 each. This would allow smaller companies to protect their invention without making it too expensive.

Any other patent costs $100,000 to file.

These fees would also apply when acquiring patents, so if either filed or bought 10 patents in a year, I would pay the government $100 per patent. The next 90 patents bought or filed would incur taxes of $1,000 and the rest would attract the $100,000 tax.

Suddenly, companies would really think twice about submitting 5000 patent applications a year (IBM, I am looking at you!).

A similar tax system could be developed for patents you own. So each patent generates a licensing fee to government. The first 100 patents are license free ($0). The next 900 cost the company (or individual) $2,000 per year (each), and the rest cost you $10,000 per year.

Anything that resembles ownership would be treated as ownership, therefore a company couldn't get away by creating a subsidiary that only owns 10 patents. The owner of the company would be deemed to own those patents, and therefore would be liable for all patents owned directly or indirectly. Exclusive licenses to a patent would be treated in the same way as ownership, with a an initial fee for the exclusive license, and further annual fees for each year in which the patent remains exclusively licensed.

Probably flawed, but this might solve the patent mess.

Reply Score: 3

galvanash Member since:

I've actually heard variations of this one before... The problem is how do you incorporate such an idea into a system where there are already a few million active patents in existence?

IBM has something like 40,000 active patents right now. Do you make them pay license for them? At the rates you stated that would come up to 390 million and some change... a year. Of course it would taper off over 20 years, but it doesn't seem fair to financially punish a company for a bunch of patents they filed for legally in the past.

So you exempt all existing patents and only do it going forward. Now IBM, Microsoft, and others who hold large patent portfolios have an artificial advantage that lasts for 20 years - because smaller players just starting out have to pay huge amounts of money for the privilege of having more than 100 patents - the big guys got there huge portfolios for free - and they will probably use them aggressively. Doesn't seem fair...

Maybe a balance could be struck... Really though, my main issue with it is it is a form of "sin tax". It is a tax like those applied to tobacco - the point is not to generate revenue, but to limit a behavior. I just find it ironic that the patent system is so broken taxing it to disuade it's use sounds like a good idea...

Im still in the "gut the whole thing and start over" camp...

Reply Parent Score: 2

mkone Member since:

The patents system is there to promote progress, and I think it does meet some of its goals. I know patents get a really bad rep in the software circles because the dominant image of them is of them being trivial - the sort of things that someone could knock out lots of in no time.

The idea is to try and encourage, or force, companies to only patent things they genuinely believe are worth patenting, and want to put in production. By graduating the cost, companies will have to decide which of their inventions they want protection for. If a company has a single patent on a very popular and good drug, $50k per year is chump change. What it ought to prevent is a company submitting 10,000 patents just so every rival infringes on some obscure patent that the company doesn't think is really worth much, but allows them to extract economic rents from other players.

I wouldn't exempt existing patents. I might impose lower costs for existing patents - basically grandfather them in at lower rates. However the objective should be to prevent hoarding of patents whose only use is to prevent competitors from trying to compete at all.

One tweak that could be added would be to allow companies to turn over patents to the public domain and thereby relieve themselves of the cost of keeping patents they have no use for. So a company could either sell off patents that it has no use for, or could turn them over to the public domain.

Millions of patents is a bad thing!

Reply Parent Score: 3

kwan_e Member since:

Im still in the "gut the whole thing and start over" camp...

"Don't put your trust in revolutions. They always come around again. That's why they're called revolutions. People die, and nothing changes."

-- (Terry Pratchett, Night Watch)

Reply Parent Score: 3