Patents overincentivize the wrong kinds of innovations, undermining efficiency, equity, and fairness.

These theoretical insights have significant practical payoff.

Turning to normative analysis, this Article argues that patent law's externality asymmetry contributes to a host of social ills. Most prominently, it undermines efficiency. Reflecting the enduring influence of law and economics, the objective of efficiently allocating resources for innovation has dominated normative discourse on the patent system. However, by not providing effective mechanisms for internalizing negative externalities, patents likely overincentivize innovation, incentivize the wrong mix of innovations, and provide suboptimal incentives for technological design. While scholars have critiqued the patent system on several grounds other than efficiency, even within the dominant idiom of efficiency, it falls short. Looking beyond efficiency, patent law's externality asymmetry causes other harms as well by undermining distributive equity and fairness.