Opening Word document…

It's administratively impossible to calculate the prize, but the perm’s better because it allows the patentee to profit from the patent and has the prize match that

Keith N. Hylton, 2023 – Professor of Law, Boston University School of Law “A Patent and a Prize” Research Paper Series No. 23-7, 2/8, https://scholarship.law.bu.edu/cgi/viewcontent.cgi?article=4398&context=faculty_scholarship //DH

Giving a patentee a prize equal to the patentee’s profit is more realistic than the proposals of Shavell and Ypersele and of Kremer. The Shavell and Ypersele proposal requires the government to estimate the total surplus within the patented market and to offer that amount as a prize to the patentee. I have already noted some of the practical and public choice issues related to the Shavell and Ypersele proposal. Setting those aside, one additional issue is whether the government can estimate the total surplus reasonably efficiently. The administrative costs would be substantial. There are now roughly 160,000 utility patents granted to U.S. applicants each year. Estimating the potential market for each of these grants would require carrying out 55 of these estimations for each hour the patent office is open. The administrative burden can be lessened by limiting the prize to a narrow sector, such as pharmaceutical patents, but even this would involve a significant administrative cost. Between 2010 and 2019 an average of 38 new drugs were approved by the FDA each year.9 Estimating market surplus for 38 patented drugs in a year is a more plausible burden than doing so for 160,000 patents of all sorts, but drugs are increasingly being protected by multiple patents. The top-selling branded drug, Humira, on the market since 2002, is protected by 132 patents that block competition for nearly 40 years.10 Presumably some of the patents are being used, or may be used, to protect other drugs produced by its manufacturer, Abbvie. If so, it would be difficult to estimate the market surplus associated with the bundle of 132 patents protecting Humira.

Sign in to recut, update, or save this card.