3 ms·

We could apply a kind of value-added tax to every good sold that might possibly be encumbered by patents, say 5%, put that money in a pool overseen by a special

We could apply a kind of value-added tax to every good sold that might possibly be encumbered by patents, say 5%, put that money in a pool overseen by a special court, then let patent-holders file with the court to claim a portion of the money based on what products their patent applies to and how important it is relative to the other patents that apply. The other patent-holders can then file challenges if they think they're getting short shrift. The filing fees should float such that it covers the costs of the entire system.

leoc 12y ago
One nice thing about such a system is that would give the holders of non-trivial patents a direct interest in demanding a high bar for patentability, because other people's trivial or obvious patents would be directly taking a slice out of their revenues.
AnthonyMouse 12y ago
I'm assuming you're only wanting to implement this for software. (It obviously doesn't work for e.g. drugs, the amount that patents contribute to drug prices is far in excess of 5%.) But I don't see that it works for software either because you still have the same problem. 5% of a billion dollars is 50 million dollars. A billion dollars on the high side for a single product; the Galaxy Note doesn't infringe all the same patents as the Galaxy S3. 10,000 patent holders fighting over 50 million dollars means they'll get an average of $5000. You can't hire a lawyer to fight over your share and expect to have any left over when "your share" is $5000. Which means that a) the lawyers would get all the money, and b) world+dog would still have the incentive to file for a million low-quality patents because having a patent gets you a share and nobody can afford to look too closely at whether you deserve one.
- leoc 12y ago
  > (It obviously doesn't work for e.g. drugs, the amount that patents contribute to drug prices is far in excess of 5%.) For one thing, it's arguable that the amount that patents contribute to drug prices, and to drugmakers' revenues, is too damn high. Secondly, the basic scheme is obviously compatible with setting a higher percentage of sale price in the case of drugs. Alternatively, about 10 or 15 years ago some lawyers proposed a kind of mandatory Dutch-auction scheme for drug patents, which seemed interesting. > world+dog would still have the incentive to file for a million low-quality patents because having a patent gets you a share and nobody can afford to look too closely at whether you deserve one. The nice thing about this is that it would be somewhat of a self-resolving problem, since it would give the holders of non-trivial patents reason to lobby for high standards for patentability.
  - AnthonyMouse 12y ago
    > The nice thing about this is that it would be somewhat of a self-resolving problem, since it would give the holders of non-trivial patents reason to lobby for high standards for patentability. It would also give the holders of trivial patents (and patent lawyers who want more business) reason to lobby for low standards for patentability.
    - leoc 12y ago
      No, the trivial-patent holders already have that incentive. In any case, in a direct lobbying/political conflict between IBM, GSK, Dow Chemical and whoever versus pure-play trolls, even big ones like IV, my money is on the former. The way in which a fixed levy would or could facilitate trivial-patent holders is by putting in place a revenue-collecting process (making claims on the 5% pool) which might (or might not) be smoother and more reliable than the process by which these gentlemen make their money nowadays.
- evunveot 12y ago
  For drugs, you could allow the product maker to opt into having a greater percentage going to patent holders. (Edit: Sorry, I see what you're saying. You couldn't keep another drug company from copying the drug and only paying 5% to the inventor. Fair point.) I doubt that a typical smartphone actually infringes on 10,000 patents held by outside entities, or that 10,000 separate entities each hold one of those patents apiece, but taking that for granted, if filing fees are set so as to cover the entire costs of the court and system, and the system has a fairly inelastic capacity (supply), the increased demand for services would cause the filing fees to rise. Presumably an equilibrium would be reached where only those with large and realistic claims would bother to file, whereas those with low quality patents would be priced out. Ideally the system could always afford to look closely, because it's self-funding. It wouldn't necessarily need to be adversarial, either -- it could be more like arbitration, where you file, paying the court to evaluate your claim, and the court makes a decision. No need for lawyers, unless you need help putting your claim together.
  - AnthonyMouse 12y ago
    > I doubt that a typical smartphone actually infringes on 10,000 patents held by outside entities, or that 10,000 separate entities each hold one of those patents apiece 10,000 is probably in the ballpark. People have no recognition of how incredibly complicated phones are today. They're obviously not owned by that many separate entities, but that doesn't really help much. It takes about the same amount of time to determine whether a device infringes the claims of a patent regardless of whether the same patent holder also holds other patents. The "savings" come when you stop looking at the claims and start paying royalties based on the quantity of patents the patent holder claims you're infringing, but that's where the incentive to get low-quality patents comes from. > if filing fees are set so as to cover the entire costs of the court and system, and the system has a fairly inelastic capacity (supply), the increased demand for services would cause the filing fees to rise. Presumably an equilibrium would be reached where only those with large and realistic claims would bother to file, whereas those with low quality patents would be priced out. The counterargument you're going to get there is that you'll price small inventors out of the patent system. > Ideally the system could always afford to look closely, because it's self-funding. It wouldn't necessarily need to be adversarial, either -- it could be more like arbitration, where you file, paying the court to evaluate your claim, and the court makes a decision. No need for lawyers, unless you need help putting your claim together. But you're still not solving the pricing issue. What objective metric is an arbitrator supposed to use to evaluate the value of a patent?

leoc 12y ago

One nice thing about such a system is that would give the holders of non-trivial patents a direct interest in demanding a high bar for patentability, because other people's trivial or obvious patents would be directly taking a slice out of their revenues.

AnthonyMouse 12y ago

I'm assuming you're only wanting to implement this for software. (It obviously doesn't work for e.g. drugs, the amount that patents contribute to drug prices is far in excess of 5%.) But I don't see that it works for software either because you still have the same problem. 5% of a billion dollars is 50 million dollars. A billion dollars on the high side for a single product; the Galaxy Note doesn't infringe all the same patents as the Galaxy S3. 10,000 patent holders fighting over 50 million dollars means they'll get an average of $5000. You can't hire a lawyer to fight over your share and expect to have any left over when "your share" is $5000. Which means that a) the lawyers would get all the money, and b) world+dog would still have the incentive to file for a million low-quality patents because having a patent gets you a share and nobody can afford to look too closely at whether you deserve one.

leoc 12y ago
> (It obviously doesn't work for e.g. drugs, the amount that patents contribute to drug prices is far in excess of 5%.) For one thing, it's arguable that the amount that patents contribute to drug prices, and to drugmakers' revenues, is too damn high. Secondly, the basic scheme is obviously compatible with setting a higher percentage of sale price in the case of drugs. Alternatively, about 10 or 15 years ago some lawyers proposed a kind of mandatory Dutch-auction scheme for drug patents, which seemed interesting. > world+dog would still have the incentive to file for a million low-quality patents because having a patent gets you a share and nobody can afford to look too closely at whether you deserve one. The nice thing about this is that it would be somewhat of a self-resolving problem, since it would give the holders of non-trivial patents reason to lobby for high standards for patentability.
- AnthonyMouse 12y ago
  > The nice thing about this is that it would be somewhat of a self-resolving problem, since it would give the holders of non-trivial patents reason to lobby for high standards for patentability. It would also give the holders of trivial patents (and patent lawyers who want more business) reason to lobby for low standards for patentability.
  - leoc 12y ago
    No, the trivial-patent holders already have that incentive. In any case, in a direct lobbying/political conflict between IBM, GSK, Dow Chemical and whoever versus pure-play trolls, even big ones like IV, my money is on the former. The way in which a fixed levy would or could facilitate trivial-patent holders is by putting in place a revenue-collecting process (making claims on the 5% pool) which might (or might not) be smoother and more reliable than the process by which these gentlemen make their money nowadays.
evunveot 12y ago
For drugs, you could allow the product maker to opt into having a greater percentage going to patent holders. (Edit: Sorry, I see what you're saying. You couldn't keep another drug company from copying the drug and only paying 5% to the inventor. Fair point.) I doubt that a typical smartphone actually infringes on 10,000 patents held by outside entities, or that 10,000 separate entities each hold one of those patents apiece, but taking that for granted, if filing fees are set so as to cover the entire costs of the court and system, and the system has a fairly inelastic capacity (supply), the increased demand for services would cause the filing fees to rise. Presumably an equilibrium would be reached where only those with large and realistic claims would bother to file, whereas those with low quality patents would be priced out. Ideally the system could always afford to look closely, because it's self-funding. It wouldn't necessarily need to be adversarial, either -- it could be more like arbitration, where you file, paying the court to evaluate your claim, and the court makes a decision. No need for lawyers, unless you need help putting your claim together.
- AnthonyMouse 12y ago
  > I doubt that a typical smartphone actually infringes on 10,000 patents held by outside entities, or that 10,000 separate entities each hold one of those patents apiece 10,000 is probably in the ballpark. People have no recognition of how incredibly complicated phones are today. They're obviously not owned by that many separate entities, but that doesn't really help much. It takes about the same amount of time to determine whether a device infringes the claims of a patent regardless of whether the same patent holder also holds other patents. The "savings" come when you stop looking at the claims and start paying royalties based on the quantity of patents the patent holder claims you're infringing, but that's where the incentive to get low-quality patents comes from. > if filing fees are set so as to cover the entire costs of the court and system, and the system has a fairly inelastic capacity (supply), the increased demand for services would cause the filing fees to rise. Presumably an equilibrium would be reached where only those with large and realistic claims would bother to file, whereas those with low quality patents would be priced out. The counterargument you're going to get there is that you'll price small inventors out of the patent system. > Ideally the system could always afford to look closely, because it's self-funding. It wouldn't necessarily need to be adversarial, either -- it could be more like arbitration, where you file, paying the court to evaluate your claim, and the court makes a decision. No need for lawyers, unless you need help putting your claim together. But you're still not solving the pricing issue. What objective metric is an arbitrator supposed to use to evaluate the value of a patent?