Innovation and Patents

by Stan Lass

Last update 7-22-08.

Introduction

Facilitating Innovation

Filing for a patent would be as simple as sending a description of the invention to the USPTO (United States Patent and Trademark Office). No claims would be needed. Drawings, if appropriate, would be helpful. Uniformity in terminology would aid a search engine in providing useful results to searchers.

Received patent applications would be classified by USPTO examiners, examined for clarity and usage of standardized terminology,then placed in a PTO repository. (If an application is lacking in clarity, the examiner could point it out to the applicant, and then the applicant might revise it.)

(James Bessen pointed out that this is a patent registry system.)

Instead of the current licensing of patents, each industry would pay a patent tax, with the revenues going into a fund, out of which patent owners would be paid in proportion to the value of their patents. The value of a patent would be defined as the extent to which the patented invention is used and it's contribution to the value of the product.

In more detail, engineers within companies would report their usage of inventions and their estimate of the perceived value. Another source of perceived value would be industry engineers, academics and observers. If all reports of perceived value are largely in the same ballpark, that value would be averaged to arrive at the perceived value. Else, some discussion should help in arriving at values more in agreement.

I'd guess that those with a several or more years experience in an industry could estimate the perceived values for their industry in a few hours. In some cases, they could just email in their previous estimate for the industry. In cases of a very complex product, estimates would only be made if the person had relevant knowledge.

For example, if performance was increased 10% at the same manufacturing cost, and the invention was used in 20% of the production of that industry, the value of that particular invention for that industry would be 2%.

Then the perceived value of all inventions for that industry would be totaled, and a share apportioned to each invention, followed by a corresponding allocation of the tax revenues to the invention's owner(s).

However, some inventions are the result of a sequence of innovations. The prior innovations in the sequence deserve a share of the allocated tax revenues. The perceived value of prior innovations would be arrived at in a manner similar to how perceived value of the invention is arrived at. The age of an invention in the sequence would be considered in arriving at it's perceived value.

The patent tax rate for each industry, or product category, would be set by law, e.g. roughly 25-50% of the total value of the patents to an industry. For example, if the patented inventions improve the products enough to justify selling them for an average of 10% more, the patent tax could be 2.5 - 5% of sales. This 25-50% of value received should be reasonable to an industry, and help the industry to be more competitive in that it can then freely use the available patents, both in the U.S. and abroad.

Industries like coal mining should have an essentially zero patent tax rate. However, the suppliers of coal mining equipment might have a patent tax.

If every company acted in good faith, the above system would work well enough. The law could be gamed, shading the results and affecting the distribution from the patent tax fund. Penalties could apply if the shading is extreme. Arbitration could be used to settle disputes, with the courts being a last resort. However, in the long run, it's in everyone's interest that the system be perceived as fair.

When someone seeks to learn the latest in a particular field, he could search the PTO repository. A weekly email could summarize the last week's patent submissions.

Further, clarified descriptions, enhanced versions, and a simulation model of an invention have value and deserve some compensation.

Further, an artificially intelligent search program, given a description of a product's function, could return search results.

An intelligent CAD (computer aided design) program could guide a designer in developing his product. The CAD program could utilize an invention's simulation model as the product is being designed. The CAD program could develop a bill of materials and order the parts, including rapid prototype parts.

Wished for inventions could be included in the PTO data base. These would be an indication to inventors of problems that need solving and for which a market exists. Some web sites already do something similar.

Observations

In the really old days, a product might be based on a single patented invention, or none at all. Today, a product, e.g. a computer, could be based on many patented inventions. The fear of exorbitant patent licensing fees prevents some product development under the current patent system. There's also the problem of "submarine" patents, i.e. patents which only become known after a product is designed and perhaps on the market. In other cases, much effort goes into designing around patents.

In the proposed system, an engineering team could design without regard to the financial aspects of patents, and likely engineer a better product. As a result, engineering talent would be used more efficiently. The U.S. population would benefit from having better products, and the products would be more competitive abroad.

Treaties could provide access to foreign nations' patents on the same terms that U.S. patents would be available to U.S. companies. It'd seem that this approach to patents would appeal to foreign nations as well.

With near immediate publication of inventions in the repository, others can see an invention, which may trigger an improvement or variation on the invention. The pace of innovation could be expected to be significantly faster.

With computers, it's becoming less expensive to invent. Computer simulation, rapid prototyping and CNC make it much easier to be an inventor on the cheap. (CNC is computer numerical control of machine tools. This makes it easier to build models.) There's already a significant amount of open source software which can aid an inventor. The developers of the useful open source software deserve some compensation as well.

There should be more educational materials available on the net. This would help the self taught inventor.

Succeeding as an independent inventor is somewhat like playing the lottery. There is significant time and cost in preparing a patent application. This alone is enough to discourage many patent applications. Also, with the 18 months to publication, other inventors don't get to use your invention as inspiration until the 18 months is up.

With this new approach, worthwhile inventions are more likely to yield revenue to an inventor. (Employed inventors could receive a minimum of 10% of the revenue for the invention.) And then the really good inventors could make a living at inventing. This would serve as a way to make good use of talented inventors.

Many patents do not have much innovation in them. In the proposed patent law, such patents would mostly be ignored.

Some monopolies utilize patents to help maintain their monopoly. With this new approach to patents, the playing field would be leveled.

Conclusions

With this new approach, the pace of innovation would increase. Innovation can improve the quality of life. With an improved quality of life, there will be fewer recruits for terrorist organizations, making for a safer world.

This new approach to patents dovetails well with the following: Scientific American Magazine - April 21, 2008 "Science 2.0 -- Is Open Access Science the Future?" "Is posting raw results online, for all to see, a great tool or a great risk?"

By the way, I'm an independent inventor.

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