Presenting a wide range of empirical evidence from history, law, and economics, this text is an authoritative and comprehensive look at the economic performance of patents. It asks whether patents work well as property rights, and, if not, what institutional and legal reforms are necessary to make the patent system more effective.

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.

This essay is the introduction to a book of the same title, forthcoming in summer of 2021 from Oxford University Press. The purpose is to document the ways in which patent systems are products of battles over the economic surplus from innovation. The features of these systems take shape as interests at different points in the production chain seek advantage in any way they can, and consequently, they are riven with imperfections. The interesting historical question is why US-style patent systems with all their imperfections have come to dominate other methods of encouraging inventive activity. The essays in the book suggest that the creation of a tradable but temporary property right facilitates the transfer of technological knowledge and thus fosters a highly productive decentralized ecology of inventors and firms.

This essay reviews and extends the arguments that James Bessen and Michael J. Meurer present in Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk. Patent Failure raises the bar for contributions to the ongoing debates over both the need for patent reform and the type of patent reform that is needed. Based on an innovative and elegant empirical analysis, Bessen and Meurer defend the counterintuitive position that, outside of the chemical and pharmaceutical industries, the contemporary patent regime functions as a tax on innovation. In other words, taking a world without any patent protection at all as the baseline, they argue that patents decrease the welfare of the very innovating firms that are today seeking and obtaining patents. To explain this phenomenon, they point to the poor notice of the existence and scope of patent rights that the contemporary patent regime provides to the public. Poor notice, in turn, means that innovating firms bear an unavoidable risk of infringing other innovating firms' patents and bearing the costs of litigation. Bessen and Meurer simply argue that the average benefit that an innovating firm receives from owning its own patents is smaller than the average cost it incurs to fend of allegations of patent infringement. After summarizing and critiquing the book's principal arguments, this Essay extends Bessen and Meurer's analysis by exploring the import of their findings for legal scholarship on property failures. Although they do not themselves articulate this point, Bessen and Meurer enrich the literature on property failures by positing a new model for property failure: a tragedy of property. A tragedy of property is the true mirror image of the tragedy of the commons: it is a rush to ruin that is caused, rather than remedied, by property. An innovating firm receives a private welfare benefit from obtaining and enforcing each additional patent. However, each innovator's self-interested decision to increase his or her own "herd" of patents decreases the welfare of innovators as a group because the inter-innovator externalities of patents outweigh the benefits that patent owners internalize. A tragedy of the commons results from the inefficient, externality-generating overuse of a rival, scarce resource. A tragedy of property results from the inefficient, externality-generating overuse of the institution of property itself.

The paper is from a 2008 Symposium at the University of Georgia devoted to the book by James Bessen and Michael J. Meurer, "Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators At Risk". The paper provides an Overall Comment as to the conclusions of the book, Topical Comments as to specific items in the book, and then concludes with the author's proposals for Patent Reform to Foster Innovation.The Overall Comment notes that the conclusions of the Bessen-Meurer book are sound. The U.S. patent system is not working for innovators or consumers. But the problems of the U.S. patent system go beyond the "imperfect notice" problem noted by the book's authors. Not addressed by the book is the question of to what extent, if any, is patent ownership essential for innovation. References cited in the book suggest that patents owned by innovators are only infrequently important for innovation, and patents owned by others than the innovator can be impediments to innovation. The policy suggestion that flows the foregoing is that a patent system that fosters innovation requires high standards for patentability that result in fewer marginal patents to impede innovation.The Topical Comments note, among other things, that the Court of Appeals for the Federal Circuit was established (in 1982) despite the recommendation against a specialist patent court by the Hruska Commission in 1975, and that it almost immediately lowered the standards for patentability in the United States despite assurances to the contrary.The Two Fundamental Patent Reforms proposed by the author are (1) restoration to patent law of a self-correcting structure like that which applies to most other areas of federal law, and (2) enabling the United States Patent & Trademark Office to obtain final decisions as to the patentability of applications it has examined. The former reform can be accomplished by adopting the Nard-Duffy proposal for parallel appellate tracks for patent appeals or by restoring appellate jurisdiction in patent infringement cases to the regular courts of appeals. The latter reform can be achieved by abolishing all forms of continuing patent applications except for divisional applications filed pursuant to a 35 U.S.C. § 121 requirement for restriction so as to eliminate the ability of patent applicants to evade such final decisions.

A new perspective on United States software development, seen through the patent battles that shaped our technological landscape This first comprehensive history of software patenting explores how patent law made software development the powerful industry that it is today. Historian Gerardo Con Díaz reveals how patent law has transformed the ways computing firms make, own, and profit from software. He shows that securing patent protection for computer programs has been a central concern among computer developers since the 1950s and traces how patents and copyrights became inseparable from software development in the Internet age. Software patents, he argues, facilitated the emergence of software as a product and a technology, enabled firms to challenge each other’s place in the computing industry, and expanded the range of creations for which American intellectual property law provides protection. Powerful market forces, aggressive litigation strategies, and new cultures of computing usage and development transformed software into one of the most controversial technologies ever to encounter the American patent system.

Through a collaboration among twenty legal scholars from North America, Europe and Asia, this book presents an international consensus on the use of patent remedies for complex products such as smartphones, computer networks, and the Internet of Things. This title is also available as Open Access on Cambridge Core.

The primary purpose of a patent law system should be to enhance economic efficiency, in particular by providing incentives for making inventions. The conventional wisdom is that patents should therefore be strictly exclusive rights. Moreover, in practice patent owners are almost never forced to give up their right to exclude others and receive only a certain amount of remuneration with, for instance, compulsory licensing. Other economically interesting patent-law objectives, however, include the transfer and dissemination of knowledge. Mechanisms exist by which the patent owner decides if he or she would prefer exclusive or non-exclusive rights, for instance the opportunity to declare the willingness to license and create patent pools. But it is questionable whether these mechanisms are sufficient and efficient enough in view of the existence of patent trolls and other problems. This work challenges the conventional wisdom to a certain extent and makes proposals for improvements.

Patents often contain technical information intertwined with legal meaning, and inventions are often difficult to describe in words. Despite complex interpretive rules, patent law has failed in one of its essential missions - giving those who need to read patents the ability to understand the scope of a patent's claims in a consistent and predictable manner. As a result, those who rely on patents - patentees, potential and actual licensees, potential and actual defendants, future patent applicants, courts, and even the Patent and Trademark Office - may find it difficult or impossible to discern the metes and bounds of any particular patent at any particular time. This article examines a root cause of this failing: patents are interpreted in different ways during the application and enforcement processes. When someone applies for a patent, the patent examiner considers the 'broadest reasonable construction' of the claims regardless of how one skilled in the art might construe them. During litigation, the court considers how one skilled in the art would interpret the claims. The article considers why different interpretive rules are applied, whether the rules are applied as intended, and the problems associated with using two different rules. Finally, the article suggests that patent claims should have the same meaning at all times, namely the standard used in litigation: patents should be interpreted as one skilled in the art might interpret them. The article then suggests additional policies designed to help achieve the goals ascribed to the 'broadest reasonable construction' standard: rejection of poorly drafted patent specifications, the use of disclaimers and definitions to clarify vague claims, and a relaxing of the evidence required to find a patent claim obvious.