Patent System Reform: Economic Analysis and Critique

Abstract

Considerable recent research suggests that the U.S. patent system is out of balance: the PTO's typically brief review process is allowing too many patents to be issued that would likely be found invalid with more thorough review. When patents are issued for inventions that are not truly novel, or are obvious, consumers are harmed, competition is restricted, and innovation is hindered-all contrary to the underlying purposes of the patent system. Critics of the current system claim that patents are indeed having significant, adverse effects on consumers, competition, and innovation. The Federal Trade Commission and the National Academies of Science recently issued extensive reports suggesting that major reforms to the U.S. patent system are needed to reduce these adverse effects. This Article reviews some of the evidence on the prevalence of such questionable patents, diagnoses their commercial impact, and then critiques a number of the FTC and NAS patent reform proposals. A strong economic case can be made for proposals to strengthen the PTO to improve the speed and accuracy of the patent examination process; to publish all patent applications after eighteen months; to establish a new administrative procedure to allow post-grant review of patents; to strengthen prior user rights; and to restrict the ability of patent owners to seek treble damages for willful infringement.