Keeping patents and making the prize optional solves the risk of expropriation

Most prize advocates ultimately propose that the prize system be optional to avoid the expropriation problem.294 In an optional-prize system, the innovator is given a choice between a prize and an intellectual property right, allowing the firm to decline any prize that is less than what the innovator expects to earn through a monopoly. This choice can protect innovators against unduly conservative prizes offered by the government.295

The check on inadequate government rewards provided by intellectual property is similar to the imagined operation of an optional-prize system, in which the innovator has the choice of accepting either a prize or a patent for its invention. As discussed in Part I, an optional-prize system deters suboptimal government rewards by giving the innovator a choice between a patent and a prize, thereby allowing the innovator to decline any prize that is less that what it believes the public is willing to pay.296 Governments achieve a similar effect by granting an intellectual property right that will not be consulted in determining the social value and incentives for an invention. Here also, suboptimal government rewards are checked by the innovator’s right to decline to sell for anything less than what it believes the public would be willing to pay. This is true even if the government imposes price controls or prohibits sales by the patent holder to anyone but itself. So long as the innovator has an intellectual property right, it can decline to sell and prevent others from selling the invention.297 The power to deny the public access gives the patent holder a platform to challenge a suboptimal