The breakneck pace of innovation across many industries, the explosive developments in particular areas such as biotechnology and software, and the rapidly changing role of universities in the development and ownership of technology create challenges for the U.S. patent system. Fortunately, one of the system's strengths is its ability to adapt to the evolution of technology, and that strength has been particularly apparent in the past two decades. But to ensure that it continues to operate effectively, we need to evaluate the patent system from a broad perspective and continue to update it to meet changing conditions.
Since 1980, a series of judicial, legislative, and administrative actions have extended patenting to new technologies (biotechnology) and to technologies previously without or subject to other forms of intellectual property protection (software and business methods), encouraged the growth of new players (universities), strengthened the position of patent holders vis-a-vis infringers domestically and internationally, relaxed other restraints on the use of patents (antitrust enforcement), and extended its reach upstream from commercial products to scientific research tools and materials.
As a result, patents are being ever-more-zealously acquired, vigorously asserted, and aggressively enforced. There are many indications that firms in a variety of industries, as well as universities and public institutions, are attaching greater importance to patents and are willing to pay higher costs to acquire, exercise, and defend them. Meanwhile, the costs of acquiring patents, promoting or securing licenses to patented technology, and defending against infringement allegations in court are rising rapidly.
In spite of these diverse developments and the obvious importance of patents to the economy, there has been little broad-based study of the effectiveness of the patent system. But now the National Research Council (NRC) has assembled a committee that includes three corporate R & D managers; a university administrator; an inventor; and experts in biotechnology, bioengineering, chemicals, telecommunications, microelectronics, and software; as well as economists; legal scholars; and practicing attorneys. The committee's report, A Patent System for the 21st Century, provides a unique and timely perspective on how well the patent system is adapting to evolving conditions and focuses particularly on how patenting practices affect researchers and universities.
Until now, most study of the patent system has been conducted by practitioners. This has helped keep the system running smoothly and adjusting to new developments, but practitioners cannot be expected to assess the overall effect of the system on the economy or its specific effect on activities such as university research and private-sector R & D spending. This study takes a close look at these questions, makes recommendations in a few key areas, and highlights dimensions where more data is needed to inform policy decisions.
High rates of innovation that have continued, especially in the 1990s, since the patent system made its recent changes are evidence that the patent system is working well and does not require fundamental changes. Nevertheless, there is little evidence that the benefits of more and stronger patents extend very far beyond a few manufacturing industries such as pharmaceuticals, chemicals, and medical devices. It is not clear that patents induce additional R & D investment in the service industries and service functions of the manufacturing economy, although their roles in that diverse sector have not been studied systematically. One obvious conclusion of the committee's study is that we need a much more detailed understanding of how the patent system affects innovation in various economic and technological sectors. But even without additional study, the committee was able to identify areas …