• Lital Helman

Toward a Decentralized Patent System

The structure of the patent system is a fundamental matter. The patent system confers exclusive rights upon inventions after an examination process concludes that they foster a substantial enough leap over the current technology. As a result, patent law is the paradigmatic case for a system in which effectiveness depends not only on the substantive law in place but also—and perhaps more so—on establishing a structure that supports good decision-making on a case-by-case basis.

Currently, the patent system features a centralized structure almost from end to end. Patent Offices are in charge of examining inventions to decide which ones merit a patent. Patent Offices are also responsible for publishing the granted patents to the public and increasingly for managing post-examination proceedings.

Is a centralized structure optimal for patent decision-making? In my new article, entitled “Decentralized Patent System”, I argue that the answer is almost certainly negative. The centralized nature of the patent system leads to well-known inefficiencies, including production problems, high error rates in the examination outputs, and slow introduction of new technologies to the public. Production problems, because under a centralized setting, a single agency is responsible for examining the entire pool of patent applications—over which it has no control—and inevitably turns into a bottleneck. High error rate, because central agencies are more likely to face information problems as well as public choice and other problems that may skew decision-making. Finally, centralization causes slow introduction of inventions to the public because Patent Offices lack critical information and tools that are required for effective communication, distribution and commercialization of inventions.

Despite all their shortcomings, central Patent Offices appear inevitable. How else can we ensure adherence to legal standards, consistency, secrecy of under-examination inventions, and an impartial examination process? Indeed, despite intense criticism of the system, Patent Offices’ dominance faces no actual threat, and has in fact increased with recent laws, such as the enactment of the America Invents Act (AIA).

What would an alternative, decentralized, patent system look like? One option is to create competition to the examination services by certifying private examination firms. This option was raised by Michael Abramowicz and John F. Duffy back in 2009. My article presented here considers a different idea, which builds on technological advancements in the area of databases, such as blockchain, and focuses on decentralization of the patent record. Under this proposal, patents would be filed to a public database that, after a grace period, would be accessible to all. During and following the examination process and throughout the lifetime of the patent, industry and state actors would be able to access the record and add information to it. For example, third parties would be able to submit prior art, scientists—to weigh in on obviousness, patentees—to offer licenses, and courts—to register decisions and outstanding cases that pertain to the patent. A more far-reaching step could allow industry subject matter experts to serve as first-line examiners and issue prima facie patent decisions themselves.

Such a system would boost the quality of patent examination and improve productivity by providing examiners with more information and allowing knowledgeable scientists to shoulder some of the tasks that patent examiners now perform alone. It would also generate an accessible and effective patent record that would facilitate the realization of the patents’ potential. A comprehensive patent record would generate information advantages and reduce waste by preventing innovators from racing for patents that have already been filed. Such a record would also boost commercialization by facilitating licenses and cooperation on patents.

One natural reaction to this proposal is to argue that it would make it impossible to protect the secrecy of outstanding inventions, avoid conflicts of interest, and ensure good faith of the patent community that participates in creating the patent record. My article responds to these concerns by proposing ways to alleviate these concerns in the form of market incentives, liability rules, and regulatory supervision. The article also shows that the current regime suffers from similar shortcomings and that a decentralized regime would be better equipped to mitigate these issues. Even though some concerns remain, the benefits of the proposed system strikingly outweigh its costs.

Lital Helman - Ono Academic College, Israel

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