My colleague Eli Dourado put out this interesting chart based on data from the US Patent and Trademark Office that shows the growth in the number of patents that have been extended since 1900. The data shows that the number of patents issued has grown exponentially in the last 32 years, from 63,005 in 1982 to 325,407 in 2014. Many of the patents for trivial and non-original functions, Dourado explains, “are low quality and not even valid under the most recent Supreme Court jurisprudence.” He writes:
For example, the Government Accountability Office (GAO) reports that more than half of all recent patents granted have been software-related, despite Supreme Court precedents in Parker v. Flook (1978), Bilski v. Kappos (2010), and Alice v. CLS (2014) that abstract ideas such as algorithms and computer programs are not eligible for patents.
Why should we care? While Patents were intended as a way to “promote the progress of science and useful arts,” the reality today is that they can hinder innovation and economic growth by giving rise to countless and groundless “troll” lawsuits against innocent parties.
The number of these destructive patent claims dramatically increased after a special patent court was created in the 1980s:
In 1982 Congress consolidated all patent appeals into a single appeals court, the Federal Circuit. Shortly afterwards, there was an explosion of low-quality patents. The Federal Circuit has systematically changed the law, sometimes even undermining Supreme Court precedent, to favor patent interests. Economists Matthew Henry and John Turner analyzed a dataset of district and appellate patent decisions for the years 1953 to 2002 and report that patentees are three times more likely to win on appeal after a district court ruling of invalidity in the post-1982 era. The result has been an explosion of patents and patent litigation.
The chart above illustrates this history. From 1900 to 1982, the number of patents increased by around 138 percent. After 1982, the number of patents extended increased by an astounding 416 percent by 2014.
This explosion of patents has significantly dampened innovation and imposed considerable costs on entrepreneurs. Companies must now devote considerable resources to scouring the thicket of low-quality patent claims before bringing products to market. Even then, there is no guarantee that they won’t be sued for infringement. Our patent system now costs billions in legal research, litigation, and innovations foregone, according to studies of firms targeted by “patent trolls.”
It looks like Congress is working on addressing the issue of frivolous patent lawsuits by trying to reform patent litigation. That’s all well and good, but Congress should also address the root cause of the problem: the explosion of patents for trivial and non-original functions.
The whole thing is here.