There are lots of signs that the patent system needs reform. Have you noticed that some IP lawyers are now filing their own patents, and forming shell companies which exist only to generate lawsuits? Many writers have alarming stories about why IP law reform is needed. However, here is an eminently readable macro-analysis of issues facing the patent system and their real costs to innovators.

Economist and entrepreneur James Bessen has authored this analysis of the current state of the patent system with law academic Michael Meuer. Both are faculty members at Boston University, and their book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk has drawn praise for its economic analysis of our patent system.

Nobel Laureate in Economics Eric Maskin calls the book “a pioneering and heroic effort to quantify the ways in which our patent system has failed to live up to its raison d’être: promoting innovation.” You can hear Michael Meuer discuss the book for about an hour on Stanford University’s Hearsay Culture Show, or view a sample chapter.

What’s impressive is that they go beyond providing examples of erroneous patents, or costs on individual innovators, to provide an economic and legal analysis of the system. They marshal data from decades of filings by publicly traded companies to compare the costs and benefits of the patent system.

Their fundamental conclusion is that in most industries, the hard cost on innovators defending against patent suits outstrips the financial benefit they gain through licensing. They compare the patent system’s conventions to those used to assign real estate property.

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