Private Law Theory

ABSTRACT
Patents are well-known economic policy instruments that can incentivize innovation and human creativity. This paper shows that when lawmakers embed the acquisition of patents into social policies relating to education, migration, and criminal sentencing, they can trigger patenting crazes among individuals. However, these policies have two negative effects on social welfare: first, they encourage the acquisition of patents for their own sake over any socially valuable innovation; and second, they compound problems with patent quality by multiplying the related social costs. This paper offers the first in-depth study of the recent Chinese ‘patentomania’ phenomenon, which led to patent crazes not only among corporate and academic researchers, but also ordinary individuals ranging from school children and migrants to incarcerated prisoners. This top-down emphasis on patenting soon divorced individual patenting behaviour from the patent system’s ambition to encourage innovation. As a result, many of these policies had to be phased out or redesigned. This study suggests that traditional incentive-based models of patent policy fail to account for the effect of policies that encourage patenting for its own sake. When such ‘tokenization’ of patents occurs, reliance on ex-post safeguards to keep patents aligned with socially beneficial innovation, such as post-grant validity review or litigation, might become inadequate to weed out expanding numbers of ‘bad’ patents. As a result, bad patents remain on the books and socially dubious schemes for maximizing patent acquisition arise. In such cases, only a pre-grant (ex-ante) patent quality mechanism can help to address the resulting social costs. This finding suggests that the quality of the patent system’s ex-ante screening mechanism is even more important than previously recognised.

Heng, Genevieve and Husovec, Martin and Contreras, Jorge L, Patentomania: The Cost of Embedding Patents in Social Policies (November 29, 2023), University of Utah College of Law Research Paper No 581.