Why we need a multi-tiered patent system.

Summary: A change to the patent system that provides short term and long term patents dependent upon the amount of effort and scrutiny applied by the applicant and reviewers.

In my last two posts (one, two), I talked about today's patent problems, and one idea to improve the situation. I said I had one more big idea. I actually have plenty of ideas, but this one I felt was unique, while others are commonly known ideas.

The details are important here, but at a high level, I think we need more than one level of patents. Today, there is one type of patent, the 20 year, exclusive and unrestricted patent. This may have worked well when all patents were of mechanical tools or machines, but today patents cover a much larger body of content. The one size fits all approach has driven up costs for acquiring, protecting and licensing patents. It has also left the door open for abuses by leaving the Patent and Trademark Office (PTO) with only two options: approve/deny.

To resolve this, I would suggest a multi-tier system. At the highest level, you would have a full patent grant similar or the same as today. There are opportunities to fix this tier as well, but rather than getting bogged down in discussing traditional reform theories I’ll plunge ahead.

Tier 1 - Automatic Documentation of Claims

The lowest tier, which I will call tier 1, would be very easy to get a grant for, but would have corresponding limited rights. I would imagine automated submission process could grant tier 1 patents, tied to an algorithmic search of the patent database. Knowing that this is a very low bar, a tier 1 patent would provide no value in enforcing claims, but would function more as matter of documentation. It would be useful to defend against claims from patent trolls, and would provide a stepping-stone to higher patent levels. In many ways, this is similar to filing a patent application today, with two big differences.

For one, a patent application is very expensive because it must fulfill not just basic documentation rights, but must also serve as a vehicle to a patent grant. Another difference is that there is no process today to request just the documentation rights, without seeking a general patent grant. These two differences leave inventors with two options: the expensive patent process, or secrecy. After obtaining a patent, it seems natural to the grantee to enforce it vigilantly, due to the rights and the costs associated with acquiring those rights. A tier 1 patent would protect an inventor from lawsuits, without granting rights that would encourage stifling competition.

Tier 2 - Fixed Public Domain Buyout

Of course, many or maybe most inventors will not find tier 1 patents sufficient, and so there would be additional tiers. The next level, tier 2, would be similar to a full patent grant, but with some key limitations. The most important is that tier 2 patents would have a set buyout price. The buyout price would be a set price any entity can pay to the inventor to convert the patent to the public domain. This ties in very well with my first idea, but would not necessarily need to be the government performing the buyout. It could also be individual corporations, industry groups, any organization or even a generous individual.

Tier 3 upto Final Tier with Current Law Rights

Additional tiers would fit between a full patent grant and tier 2, but they would be graduated variations of tier 2 that would vary the buyout price in correspondence to the amount of review, rigor, specificity and opportunity for contestation involved in the patent process. You might vary other factors such as durations in these tiers as well, but I think the most important factor would be the buyout price.

To save in legal fees, patentees would be encouraged not to always seek a full grant, but to seek a grant commensurate with the specificity and value of their claim. When applying for a full grant you would acquire the lower tier rights along the way, and even if denied at any higher level you would retain the lower tier rights.

It turns out that this idea is not entirely unique. What is unique is the idea of a public buyout price. I consider this a far better safety valve than limited durations. It is difficult to find a term that works equally well for innovation in fast paced industries like software, and in industries that rely upon lengthy manufacturing upgrades and implementations. Shorter durations increase risk for inventors, since they may fail to productize within a shortened duration. Buyout prices however give inventors a much clearer perspective on trade-offs. Buyout prices need not be trivial. Even at tier 2 I would suggest a buyout price of at least $250,000. Higher tiers could have buyout prices as high as hundreds of million dollars.

What do you think of this framework?