Patent rights are necessary to incentivize efficient investment

Patent Rights Incentivize Efficient Investment The most common policy argument in support of our patent system is that, assuming invention to be a social good, 51 a patent system assigns entitlements in such a manner as to incentivize productive inventive activity. 52 Unfortunately, as it is impossible to compare the two alternatives - a world with a patent system and one without - in any reliable manner, this thesis does not enjoy much empirical support. 53 But the general efficiency argument does find substantial intuitive support. Returning once again to the Patent Clause, the Constitution envisions a patent system that works "to Promote the Progress of Science and useful Arts." 54 Because of the often significant investments required for both inventive activity (the creation of an idea) and innovative activity (the development of an idea), the patent system "promotes" progress by offering an incentive for these investments - exclusive rights - an incentive that is only strengthened when the exclusive right-holder may enjoin others. 55 [*199] The award of an entitlement to an inventor secures the inventor's ability to realize a return on investment. 56 Although other regimes with different entitlements could also offer returns on investment, a patent regime does so efficiently. For example, unlike a hypothetical regime under which all inventive activities would be publicly funded but no entitlement would remain with the "inventor," a patent regime only offers returns on productive efforts. Failure is not rewarded under a patent regime. Moreover, unlike a hypothetical regime under which inventors would receive set monetary rewards for their inventions (but again, no entitlement would remain), 57 a patent regime offers variable returns, based on the market value of each invention. 58 As a result, a socially useless invention will receive little or no reward in the marketplace, while a socially useful invention may garner tremendous rewards. 59 Simply stated, under a patent regime, neither fruitless efforts nor worthless inventions are rewarded. The efficient allocation of resources in favor of valuable inventive activity thus supports the allocation of entitlements to inventors.