The patent system results in prices that are too high and innovation that is too low. But there is another way endorsed by a Nobel prize-winning economist
Another concern here is that this only really works for a world government. The problem is if, say, the US government goes and rips up a patent it either is ineffective or ends up in large part benefiting companies in other countries.
Either, in effect, the us government actually purchases the worldwide rights to the patent in which case it's going to be politically infeasible and allow rest of the world to free ride and improve relative economic status (which, theory be damned, people do just directly have preferences regarding). Or the us government only gains us patent rights.
But in the later case the benefit largely disappears because the parent owner in other countries just brings WTO actions to ensure that not part of an infringing product supply chain touches any WTO non-us country.
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If we did have a unified government then I think the better idea is to create a department that has the power to force any company to auction off (w/ something like your mechanism) not just a patent but a whole technology complete with all enabling information and rights.
The commission could simply select the technologies that would genuinely create surplus from being widely shared and avoid the patent troll patents etc. It would fairly compensate the seller and avoid many of these problems.
The problem I see here is that, outside of the pharma industry, that's not really how patents work. In particular, patents don't only function like rewards for a great idea but as property rights that incentivize the owner to develop a property in a way that common ownership never could.
The usual case for a patent is less that it represents a fully developed technology that anyone can go implement and benefit but, rather, that it represents part of an ongoing project whose value is only going to be realized if the team building it believes further effort will be rewarded.
For instance, Google's pagerank system was a neat and valuable idea. But it wasn't the unique way to go index the web, lots of ideas would have worked. Merely releasing to the world the pagerank idea and saying "go implement" would have realized only a small fraction of the value founding google realized. That's because so much of the value came from smart people investing huge amounts of time and energy into figuring out how to make a pagerank system actually do search well.
But they never would have done this had the government bought and shredded the pagerank patent. Mere copyright protection wouldn't be enough to stop Microsoft from poaching a Google employee and rewriting their system with new code. Without that patent the Google founders wouldn't have the incentive to invest the time and effort because all the choices made along the way (eg of the three well known approaches to X, Y produces the best outcome) are frequently not going to be themselves patentable.
Why does the government have to pay a multiple of the bid price to make this work - why can’t they just pay slightly above the price and maybe use some additional funds to compensate bidders in auctions that don’t end up going to a private individual? Also wouldn’t the inventor in the 20% of cases be upset that he only gets the top bid price while most inventors get multiples of that?
In the 80% of cases where the government pays 3x (or whatever multiple) of the bid price how can we be assured that this is cost effective? Is the argument that since there’s evidence that innovation generally has much larger societal benefit than a patent is worth even when paying a multiple of the highest price bid for the patent it’s well worth it?
"they will not be paid equal to the value of the product they produced"
This almost never happens and isn't realistic. If someone captured all the value they produced we'd have a lot of trillionaires and that would be bad for society due to wealth inequality. People are incentivized enough at much smaller levels of inequality. Lots of society-added value is diffuse so hard to capture. 80k Hours had a study where the ROI to society from basic research was on the order of 1000%, which means researchers create way more value on average than they capture.
The better solution to patents is to focus on X-prizes where distribution can be based off Shapley Values. Patents do slow down innovation so more sharing of knowledge is helpful. Make (non info-hazard) information free and reward innovators through govt-funded X prizes.
Another concern here is that this only really works for a world government. The problem is if, say, the US government goes and rips up a patent it either is ineffective or ends up in large part benefiting companies in other countries.
Either, in effect, the us government actually purchases the worldwide rights to the patent in which case it's going to be politically infeasible and allow rest of the world to free ride and improve relative economic status (which, theory be damned, people do just directly have preferences regarding). Or the us government only gains us patent rights.
But in the later case the benefit largely disappears because the parent owner in other countries just brings WTO actions to ensure that not part of an infringing product supply chain touches any WTO non-us country.
--
If we did have a unified government then I think the better idea is to create a department that has the power to force any company to auction off (w/ something like your mechanism) not just a patent but a whole technology complete with all enabling information and rights.
The commission could simply select the technologies that would genuinely create surplus from being widely shared and avoid the patent troll patents etc. It would fairly compensate the seller and avoid many of these problems.
The problem I see here is that, outside of the pharma industry, that's not really how patents work. In particular, patents don't only function like rewards for a great idea but as property rights that incentivize the owner to develop a property in a way that common ownership never could.
The usual case for a patent is less that it represents a fully developed technology that anyone can go implement and benefit but, rather, that it represents part of an ongoing project whose value is only going to be realized if the team building it believes further effort will be rewarded.
For instance, Google's pagerank system was a neat and valuable idea. But it wasn't the unique way to go index the web, lots of ideas would have worked. Merely releasing to the world the pagerank idea and saying "go implement" would have realized only a small fraction of the value founding google realized. That's because so much of the value came from smart people investing huge amounts of time and energy into figuring out how to make a pagerank system actually do search well.
But they never would have done this had the government bought and shredded the pagerank patent. Mere copyright protection wouldn't be enough to stop Microsoft from poaching a Google employee and rewriting their system with new code. Without that patent the Google founders wouldn't have the incentive to invest the time and effort because all the choices made along the way (eg of the three well known approaches to X, Y produces the best outcome) are frequently not going to be themselves patentable.
Why does the government have to pay a multiple of the bid price to make this work - why can’t they just pay slightly above the price and maybe use some additional funds to compensate bidders in auctions that don’t end up going to a private individual? Also wouldn’t the inventor in the 20% of cases be upset that he only gets the top bid price while most inventors get multiples of that?
In the 80% of cases where the government pays 3x (or whatever multiple) of the bid price how can we be assured that this is cost effective? Is the argument that since there’s evidence that innovation generally has much larger societal benefit than a patent is worth even when paying a multiple of the highest price bid for the patent it’s well worth it?
"they will not be paid equal to the value of the product they produced"
This almost never happens and isn't realistic. If someone captured all the value they produced we'd have a lot of trillionaires and that would be bad for society due to wealth inequality. People are incentivized enough at much smaller levels of inequality. Lots of society-added value is diffuse so hard to capture. 80k Hours had a study where the ROI to society from basic research was on the order of 1000%, which means researchers create way more value on average than they capture.
The better solution to patents is to focus on X-prizes where distribution can be based off Shapley Values. Patents do slow down innovation so more sharing of knowledge is helpful. Make (non info-hazard) information free and reward innovators through govt-funded X prizes.
The efficient markets theory is not actually true though, which makes this system fall flat :/
Someone should still probably give this a shot though.