PublishedNovember 19, 2010

What Election Could Mean For Patent Reform

The results of this week’s mid-term elections have been linked to a public desire for “smaller government” or hostility to “big government.” Assuming this is the case, it may be useful to consider what implications a small-government philosophy has for important policy debates, such as the effort to reform the vast federal patent system.

Patent laws, like copyright, represent a government response to a perceived market failure.  Ideas and expressions are hard to control, as Thomas Jefferson famously observed, and if there is no Federal protection for authors and inventors, ideas will be under-produced.  To incent people to produce a sufficient quantity of ideas, the federal government needs to create a market.  It does this by assigning ‘rights,’ and giving litigants causes of action to sue those who infringe upon their government-granted rights.

It is not hard to overdo this, particularly if one has been led to believe the federal government is making property, rather than regulating.  There is a dangerous attraction here: if ideas have value, and there is a seemingly endless supply of them, then the federal government can manufacture an infinite supply of valuable assets by handing out rights to ideas.  Under closer inspection, this perspective breaks down, and it is incorrect to assume that assigning exclusive rights is a costless exercise.  More relevantly, granting more federal rights could reasonably be viewed as a ‘government-as-solution’ strategy, which, we have assumed, is what voters rejected.  This may suggest that a patent reform bill which would reduce the role of federally-granted privileges should find philosophical support in the new Congress.

While it is too early to rule out the possibility of action on specific patent issues in the ‘lame duck’ session, comprehensive action is likelier to occur in the 112th Congress.  Rep. Lamar Smith, expected to return to the chair of the Judiciary Committee, has indicated that patent reform remains high on the agenda.  As that agenda moves forward, one might expect to hear questions not previously raised, such as whether business method patents (not explicitly ruled out by the Supreme Court’s recent Bilski decision) are consistent with a limited role of the federal government in the free market.

If “less government” is merely a bumper sticker, the ultimate effect of the elections on patent reform may not be great.  If the principle affirmatively guides patent policy, however, then reforms could significantly reshape how the patent system regulates American business.

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