The Anti-Patent: A Proposal for Startup Immunity
63 Pages Posted: 20 Aug 2014 Last revised: 5 Oct 2014
Date Written: August 19, 2014
The controversy surrounding the current implementation of the patent system is well known. Some question whether the system has become entirely dysfunctional and disincentives innovation, particularly as the law operates within some industries. Moreover, early stage companies, particularly those just beginning to gain success, are particularly vulnerable targets for lawsuits. Notably, these same companies can be rich sources of important technological innovation.
Because the U.S. has always had a patent system, it is impossible to understand the intended and unintended consequences of eliminating this form of intellectual property protection even in a limited manner. As economist Fritz Machlup stated in 1958, "[i]f we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it." The current one-size-fits all patent system locks companies into the system, even for those that might prefer to leave it.
This paper proposes an entirely new, limited immunity for a small sector of innovative organizations that wish to operate outside the patent system for a limited period of time. Specifically, this article proposes the outlines of program for a voluntary class of "patent free" startups and emerging companies. This allows the grantee to obtain immunity from all patent assertions during the allotted time period. As a true opt-out, start-ups are precluded from obtaining patents during the opt-out period. Instead, the inventions created by these entities pass to the public domain. Because the program is voluntary, it will permit each entity to balance the benefits against the burdens of the patent system and make and individualized determination whether to "go patent-free" for a limited twenty-year term. Further, this piece considers the risks that a startup might encounter by engaging with this proposed program.
Keywords: Patent, Innovation, Economics, Intellectual Property, Creativity
JEL Classification: 031, 030, K41, D20
Suggested Citation: Suggested Citation