In a recent NY times article, two former Boston University Law School colleagues occupied the headlines on Sunday in a discussion of the economics of patent law. Michael Meurer and Jim Bessen are both economists and law professors. Over the past few years, the pair have complied a tremendous amount of economic data regarding patents and companies who patent. Their data shows that for pharmaceutical companies patents do spur economic growth by allowing them to pull billions in profits from brand name drugs, but for information technology companies patents just don’t work.
Meurer & Bessen’s conclusions is that , with the exception of the pharmaceutical industry, the patent system is bad for innovation. They find that the disincentives created by other people’s patents outweigh the incentives to build your own portfolio. It is widely known in the USPTO that the patent system for IT needs to be overhauled. Meurer & Bessen do not suggest dismantling the patent system, rather they believe that a number of serious reform measures are needed to shift the balance back to a positive state where patents incentivize innovation. Technological inventions are often not obvious, especially when it comes to the esoteric world of software, where it can be unclear what the patent will be good for.
Current reform proposals call for clear predictable patent boundaries. There are also patent reform bills in the House and Senate aimed at reining in litigation and damage awards. Another possible improvement to the system might be to increase the number of appeals courts handling patent cases, since right now there is only one.
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