Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It

Princeton University Press
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The United States patent system has become sand rather than lubricant in the wheels of American progress. Such is the premise behind this provocative and timely book by two of the nation's leading experts on patents and economic innovation.

Innovation and Its Discontents tells the story of how recent changes in patenting--an institutional process that was created to nurture innovation--have wreaked havoc on innovators, businesses, and economic productivity. Jaffe and Lerner, who have spent the past two decades studying the patent system, show how legal changes initiated in the 1980s converted the system from a stimulator of innovation to a creator of litigation and uncertainty that threatens the innovation process itself.


In one telling vignette, Jaffe and Lerner cite a patent litigation campaign brought by a a semi-conductor chip designer that claims control of an entire category of computer memory chips. The firm's claims are based on a modest 15-year old invention, whose scope and influenced were broadened by secretly manipulating an industry-wide cooperative standard-setting body.


Such cases are largely the result of two changes in the patent climate, Jaffe and Lerner contend. First, new laws have made it easier for businesses and inventors to secure patents on products of all kinds, and second, the laws have tilted the table to favor patent holders, no matter how tenuous their claims.


After analyzing the economic incentives created by the current policies, Jaffe and Lerner suggest a three-pronged solution for restoring the patent system: create incentives to motivate parties who have information about the novelty of a patent; provide multiple levels of patent review; and replace juries with judges and special masters to preside over certain aspects of infringement cases.


Well-argued and engagingly written, Innovation and Its Discontents offers a fresh approach for enhancing both the nation's creativity and its economic growth.

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About the author

Adam B. Jaffe is Professor of Economics and Dean of Arts and Sciences at Brandeis University. He is the author, with Manuel Trajtenberg, of Patents, Citations, and Innovations: A Window on the Knowledge Economy. Josh Lerner is Jacob H. Schiff professor of Investment Banking at Harvard Business School, with a joint appointment in the Finance and the Entrepreneurial Management Units. His books include The Money of Invention.
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Additional Information

Publisher
Princeton University Press
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Published on
May 27, 2011
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Pages
256
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ISBN
9781400837342
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Language
English
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Genres
Business & Economics / Government & Business
Business & Economics / Research & Development
Law / Intellectual Property / General
Law / Intellectual Property / Patent
Political Science / Public Policy / Economic Policy
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Content Protection
This content is DRM protected.
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Available on Android devices
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Eligible for Family Library

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Silicon Valley, Singapore, Tel Aviv--the global hubs of entrepreneurial activity--all bear the marks of government investment. Yet, for every public intervention that spurs entrepreneurial activity, there are many failed efforts that waste untold billions in taxpayer dollars. When has governmental sponsorship succeeded in boosting growth, and when has it fallen terribly short? Should the government be involved in such undertakings at all? Boulevard of Broken Dreams is the first extensive look at the ways governments have supported entrepreneurs and venture capitalists across decades and continents. Josh Lerner, one of the foremost experts in the field, provides valuable insights into why some public initiatives work while others are hobbled by pitfalls, and he offers suggestions for how public ventures should be implemented in the future.

Discussing the complex history of Silicon Valley and other pioneering centers of venture capital, Lerner uncovers the extent of government influence in prompting growth. He examines the public strategies used to advance new ventures, points to the challenges of these endeavors, and reveals the common flaws undermining far too many programs--poor design, a lack of understanding for the entrepreneurial process, and implementation problems. Lerner explains why governments cannot dictate how venture markets evolve, and why they must balance their positions as catalysts with an awareness of their limited ability to stimulate the entrepreneurial sector.


As governments worldwide seek to spur economic growth in ever more aggressive ways, Boulevard of Broken Dreams offers an important caution. The book argues for a careful approach to government support of entrepreneurial activities, so that the mistakes of earlier efforts are not repeated.

In recent years, business leaders, policymakers, and inventors have complained to the media and to Congress that today's patent system stifles innovation instead of fostering it. But like the infamous patent on the peanut butter and jelly sandwich, much of the cited evidence about the patent system is pure anecdote--making realistic policy formation difficult. Is the patent system fundamentally broken, or can it be fixed with a few modest reforms? Moving beyond rhetoric, Patent Failure provides the first authoritative and comprehensive look at the economic performance of patents in forty years. James Bessen and Michael Meurer ask whether patents work well as property rights, and, if not, what institutional and legal reforms are necessary to make the patent system more effective.

Patent Failure presents a wide range of empirical evidence from history, law, and economics. The book's findings are stark and conclusive. While patents do provide incentives to invest in research, development, and commercialization, for most businesses today, patents fail to provide predictable property rights. Instead, they produce costly disputes and excessive litigation that outweigh positive incentives. Only in some sectors, such as the pharmaceutical industry, do patents act as advertised, with their benefits outweighing the related costs.


By showing how the patent system has fallen short in providing predictable legal boundaries, Patent Failure serves as a call for change in institutions and laws. There are no simple solutions, but Bessen and Meurer's reform proposals need to be heard. The health and competitiveness of the nation's economy depend on it.

The Laurence and Lynne Brown Democracy Medal recognizes outstanding individuals, groups, and organizations that produce exceptional innovations to further democracy in the United States or around the world.The inaugural medal winner, the Participatory Budgeting Project (PBP), is an innovative not-for-profit organization that promotes "participatory budgeting," an inclusive process that empowers community members to make informed decisions about public spending. More than 46,000 people in communities across the United States have decided how to spend $45 million through programs that PBP helped spark over the last five years. In Everyone Counts, PBP co-founder and executive director Josh Lerner provides a concise history of the organization's origins and its vision, highlighting its real-world successes in fostering grassroots budgeting campaigns in such cities as New York, Boston, and Chicago. As more and more communities turn to participatory budgeting as a means of engaging citizens, prioritizing civic projects, and allocating local, state, and federal funding, this cogent volume will offer guidance and inspiration to others who want to transform democracy in the United States and elsewhere."The Participatory Budgeting Project exemplifies the essential features the award committee was looking for in its inaugural recipient. Political and economic inequality is part of the American national discussion, and participatory budgeting helps empower marginalized groups that do not normally take part in a process that is so critical for democratic life."— John Gastil, Director of the McCourtney Institute for Democracy
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