Over at Marginal Revolution, Alex Tabarrok summarizes his new paper on the disconnect between the economic theory of patents and the political reality of patent law. Prof. Tabarrok was kind enough to send me a pdf of the paper, in which he points out the absurdity, from an economic point of view, of rewarding “inventors” with 20-year monopolies on ideas of the kind that occur while taking a shower: ideas like Amazon.com’s infamous patent on “one-click purchasing.” He proposes a system in which the scope of the patent – its length or its breadth – would vary with the amount of sunk costs that go into the invention.

The best quote of the paper:

Edison famously that “Genius is one percent inspiration, ninety-nine percent perspiration.” A patent system should reward the ninety-nine percent perspiration, not the one percent inspiration.

Also noteworthy are studies he cites showing that “most innovations would occur without patents.” The notable exceptions – the chemical industry and the pharmaceutical industry, where firms do face major development costs.

(And the paper is accessible even to a non-economist like me. So if you have any interest at all in intellectual property law, get Prof. Tabarrok to send you a copy.)