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I. INTRODUCTION II. PRIVATE LAW: DEFINING DUTIES THAT WE CAN AND DO OBEY A. Can We Obey B. Do We Obey III. PATENT LAW IS NOT PRIVATE LAW A. Subsidy Reward Theory B. Inability to Understand Our Duties C. No Reason to Feel Obligated to Obey Duties D. Judges and an Internal View of the Patent System IV. EX ANTE TRANSACTIONS: A PRIVATE LAW ALTERNATIVE A. Ex Ante Technology Transfer B. Private Law & Ex Ante Licensing of Inventions V. CONCLUSION I. INTRODUCTION It is hard to find a silver lining in the recent press clippings about the patent system. Descriptors such as "failure," "broken," and "crisis" abound. (1) One line of criticism led by economists James Bessen and Michael Meurer has focused on the overall cost of the patent system for patent holders--the one group that should surely benefit from the system. (2) They found that, even for that group, patents as a whole cost more to acquire, litigate, and defend against than the benefits they generate for the patent holders. (3) In theory, the system is envisaged as a kind of subsidy for inventors, yet in operation, the patent system as a whole is a losing proposition even for the intended recipients (4) The costs are so high, Bessen and Meurer argue, because patent boundaries are imprecisely drawn--forcing patentees into expensive, drawn-out litigation. (5) Patents fail to function as traditional property. (6) These costs are a fatal drag on the system that, on average, burn through any of the revenues it generates. (7) Bessen and Meurer propose improving the precision of patent claims in the hope that this will reduce these costs. (8) Surely this will be an important incremental improvement. (9) But there remains a nagging worry. Will it be enough? I doubt it. Any legal institution that depends heavily upon litigation and its direct coercion is doomed to incur excessive administrative costs. (10) There is a more fundamental problem. Where alarm over excessive enforcement costs arises, as it currently does in patent law, (11) serious consideration and study should be given to private law. Private law shows that not all legal institutions have to bankrupt themselves with enforcement costs. (12) Property, tort, and contract law all entail intricate webs of interpersonal coordination and interaction that thrive and endure while needing only a relatively light judicial touch. (13) For the most part, these institutions are self-enforcing. The stakeholders participating in these institutions know their rights and their duties, and they largely abide by them. (14) Constituents abide not from fear of punishment; rather, they feel an obligation to abide because compliance in some sense is just the right thing to do. With that acceptance, the enforcement costs can be much lower. (15) Unfortunately, patent law faces a serious obstacle blocking access to these efficiencies. Recent patent scholarship by Professor Ted Sichelman has highlighted that the dominant theory of patents isn't readily compatible with private law. (16) The dominant theory envisions patents as a subsidy for encouraging inventing by giving patentees a government reward funded by a tax on anyone who infringes the exclusive rights granted by the patent. The theoretical focus is not a private law-like purpose of preventing or compensating harms. Rather, the theoretical focus is a "public regulatory" aim of optimizing inventive activity. (17) Sichelman's work joins and expands on a long-running debate within patent law: should patents be considered, labeled, or understood as property? (18) Many believe that they should. (19) Others disagree, seeing patents more as a form of government intervention that should be divorced from notions of property. (20) Sichelman argues that there is "nearly universal" agreement that the dominant subsidy view of patents is correct and that the theory is not structured as a private law institution. (21) He argues that this requires "purging" any residual private law elements from the patent system. …

Private Law and the Future of Patents