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Patents Should Require Commercialization To Remain In Force, Professors Propose

August 11, 2009

Many proposals to reform the U.S. patent system are on the table, but for Penn Law professors Polk Wagner and Gideon Parchomovsky most of them do not achieve a balance between improving patent quality and promoting innovation.

Since the mid-1980s, the number of patent applications has soared, creating a huge backlog and resulting in the approval of inventions that don’t meet the basic criteria of being useful, novel or non-obvious to a person skilled in the relevant field.

The increase in patent applications can be linked to a growing corporate tendency to use patents strategically, instead of using them to protect inventions.   Some companies began procuring patents to avoid future litigation, while for others patents are like lottery tickets, said Wagner.   Most patents have no commercial value whatsoever, but a small percentage do yield immense profits. Recognizing this needle in the haystack potential of patents, companies began creating large patent portfolios on the chance that one of them will yield some profit, he said.

Since only perhaps 6 percent of patents are commercialized, Wagner and Parchomovsky are proposing a fourth requirement for patentability — commercialization — to reduce the number of enforceable patents to lessen patent congestion. 

Their proposal “piggybacks on the existing system of renewals,” in that owners would have to file an affidavit of commercialization at renewal time, said Wagner. (While patents have a 20-year term, owners have to pay fees to renew them at 3.5, 7.5 and 11.5 years.)  Wagner and Parchomovosky hope that this can cut the survival rate of patents in half, greatly reducing enforceable patents without significantly impacting the incentives to innovate.