Directed innovation incentives like prizes minimize antisocial innovation.

One possible response to patent law’s inability to screen out antisocial innovation is for the government to rely less on patents as incentives and, instead, to favor more targeted interventions. In other words, the prevalence of antisocial innovation should inform both the “who decides” and “who pays” debates regarding allocation of innovation funding. As we outlined above, policymakers have a range of different mechanisms for encouraging innovation, including—in addition to patents—grants and prizes.394 Recent consensus has tended to prefer patents to grants and prizes, because the latter have increased informational demands for the government.395 The government must have a sense of which innovations will be most valuable, how much motivation is needed to pursue them, and, in the case of grants, which innovators are most likely to succeed. Patents, in theory, solve these informational problems by relying on consumers and markets to pick winners and motivate innovation.

This Article has shown, however, that our faith in innovation markets—and thus in patents—is overblown. Many markets are far from perfect and will tend to generate products that do not make people better off on balance. And due to cognitive biases or addiction, consumers may repeatedly purchase products that harm them. Finally, markets will often fail to internalize innovation’s costs to the environment and privacy, and its impact on distributional outcomes. To the extent that this is correct, policymakers should, all else equal, tend to prefer more directed innovation incentives like grants and prizes.396