Term tailoring patents based on the contribution and cost of each innovation and the industry solves and is the optimum patent protection law.

In the following years, various legal and economic scholars have weighed in. Paul Klemperer, an economist at Oxford University, suggested that “optimal patent policies vary across different classes of products.”91 In the late 1990s, economist Thomas Mandeville pointed out the problem of a unified patent term system, in which he observed that “[a] new perspective on the patent system, indeed a new theory of the patent system is needed.” 92 In this regard, Mandeville suggested taking into account of the “economic characteristics of information.” 93 Similarly, Lester Thurow questioned the rationality of providing an equal patent duration to all inventions on the grounds that the contribution and cost for each invention can be vastly different. 94 He proposed an optimal patent system, which would take into account the technology and income of the country, the industry, and the type of knowledge. 95 For instance, he used electronics and pharmaceutical invention as examples, with the former warranting a shorter term and the latter deserving longer protection. He also believed that “fundamental advances” and “logical extensions of existing knowledge” should be treated differently.96 More recently, a number of lawyers and economists have advocated for flexible and shorter patent terms. Law professor Michael Carroll criticized the flat twenty-year patent term for all industries.97 And in his book Launching the Innovation Renaissance, economist Alex Tabarrok also questioned the notion that all patents should be twenty years long.98 He suggests that:

[P]atents should be stronger in industries with high innovation-to-imitation costs such as pharmaceuticals and weaker in industries with low innovation-to-imitation costs such as software. Patents of say three, 10 and 12 years could be offered with the divisions either based on industry—with software and business-method patents getting three years, pharmaceuticals 20 years, and other innovations 10 years—or based on evidence of sunk costs. An innovator that wanted a three-year patent, for example, need not offer any evidence on sunk costs and would receive a quick response. Innovators applying for 10- and 20-year patents would have to provide more information and would need to pass a higher hurdle. 99

In essence, the length of the term would be tied to the costs involved in innovating. Patent terms of far less than twenty years will often be sufficient.100 Tabarrok has also stressed the importance of sunk costs in determining patent duration. He points out that:

[P]atent law extends protection to many classes of innovations-including software, medical procedures, and business processes as well as to many vague ‘ideas’ – where innovation costs are low relative to imitation cost. Unnecessary monopoly distortions and perhaps reduced innovation are the result. A patent system based on the economic theory of patents would take sunk costs into consideration – extending fewer protections when sunk costs are low. Sunk costs could be taken into consideration in the allowing of patentable product classes, in ruling on individual patents, in setting the duration of patents, or in setting patent breadth. 101

Along the same lines, federal judge and legal scholar Richard Posner also supports varying the patent term. In this regard, he has stated that “U.S. patent law does not discriminate among types of inventions or particular industries. This is, or should be, the most controversial feature of that law. The reason is that need for patent protection in order to provide incentives for innovation varies greatly across industries.”102 As an illustration, he notes some cases where a shorter patent duration is warranted:

[P]harmaceuticals are the poster child for the patent system. But few industries resemble pharmaceuticals in the respects that I’ve just described. In most, the cost of invention is low; or just being first confers a durable competitive advantage because consumers associate the inventing company’s brand name with the product itself; or just being first gives the first company in the market a head start in reducing its costs as it becomes more experienced at producing and marketing the product; or the product will be superseded soon anyway, so there’s no point to a patent monopoly that will last 20 years; or some or all of these factors are present. Most industries could get along fine without patent protection. . . . There are a variety of measures that could be taken to alleviate the problems I’ve described. They include reducing the patent term for inventors in industries that do not have the peculiar characteristics of pharmaceuticals that I described. 103