But they also provide important incentives to make the details of inventions public.
So how might we get the benefits without the costs? A thread:
He came up with a fascinating policy in 1998, which he called the patent buyout.
tenentrepreneurs.org/blog/bringing-…
Just like the French government did in 1839, to release Louis Daguerre's patent for photography.
After all, when key patents expire, we sometimes see a similar effect.
Take 3D-printing. The technology seems new, but it's actually been around since the 1980s.
While those patents were in force, the number of 3D-printing patents in the US never exceeded 3,000 per year (mostly marginal improvements).
And that doesn't even capture the now-flourishing movement to create open-source improvements too.
So imagine if the key patents had been bought out earlier.
There would have to be some kind of consultation to narrow down the industries, ideally to a long-list of potential bottleneck patents before randomly selecting a shortlist to even consider buying.
If it pays too much, then it might be seen as rent-seeking. And if it offers too little, then the inventors will be unwilling to sell their patents.
Here's where Kremer came in, with an ingenious solution.
The idea, specifically, was this:
So the bidders would still have an incentive to provide accurate valuations, as there would be a chance of them actually winning.
Then the government would step in for some of them - ideally randomly selected, again to prevent collusion - and offer an amount that is a fixed % above the winning bid.
The government simply pays inventors of a bottleneck patent for it to essentially expire earlier. All without messing with the underlying working of the patent system itself.
With our current worries about innovation slowing down, perhaps it's time to give the patent buyout a go and see what it unleashes.
More here: tenentrepreneurs.org/blog/bringing-…