Week 4: Patents

Since Christos just covered patents in TP2 and we touched on it in Lecture 1 of TP1 (and will be briefly returning to the subject next week), I thought this seemed like a worthy topic for discussion, particularly if we can give it an ‘institutions’ spin.

The main question for this is whether the existing patent system is fit for purpose? The principle is clear enough, but Christos points to some important tradeoffs and decisions that need to be made.  Moreover, what happens when real-world institutions need to implement and administer a patent system?

For the last few years, there have been a number of efforts to reform the patent system, including dealing with issues like patent trolls (whose ranks includes a famous name).  Some recent court decisions have encouraged reform but left more questions than answers. Moreover, the current head of the USPTO has recently pushed back on the ‘patent troll narrative’.  Some of the patents awarded also sometimes beggar belief, most famous being Amazon’s ability to patent ‘one-click’ shopping (“Method and system for placing a purchase order via a communications network” (U.S. Patent 5,960,411)).

There is also a tension between patent holders and consumers, many of which are in developing countries and access to cheaper drugs is literally a matter of life and death.  Moreover, which institutions are best placed to carry out reform — should the focus be on the courts or on the national patent offices? or perhaps the focus should be on encouraging innovation through the tax system rather than awarding monopoly rights?

A few years ago the Economist highlighted some of the flaws in the existing system describing many of the efforts by which patents can either block or undermine innovation, and they offer a good place to start.

  1. Should patents demand that they are awarded for genuinely ‘non-obvious’ contributions?
  2. Are patent lifetimes too long?
  3. Should there be differential approaches taken in different industries?
  4. Should a ‘use-it-or-lose-it’ doctrine be implemented?
  5. How to deal with valid concerns from consumers and developing countries?
  6. If there is to be reform, what is/are the best institution(s) for carrying out reform?
  7. What are the barriers to seemingly sensible reforms?