Prizes solve better---incentivizes innovation into green tech by creating a monetary incentivize AND it avoids patent thickets

One method that may remedy the issue of positive externalities is a patent prize system (sometimes called a “patent reward”).91 A patent prize is a reward—often, but not exclusively, a monetary award—given to the first individual to meet the reward criteria established by the government.92 Similar to patent systems, inventors “[i]n a pure prize system”93 bear both the cost of development and the risk of failure.94 The difference between patents and prizes, as they relate to innovation incentives, is that market forces determine the value of a patent, while a nonmarket entity (e.g., the government) determines the value of a prize.95 Significant scholarship has focused on developing accurate methods for determining prize value.96 Examples include compensating inventors based on the inventor’s expected profit,97 sales data,98 auction process,99 and a mix of private and government estimates.100 An innovative example of a non-monetary award is found with the Patents for Humanity award, discussed below in section II.C, wherein a successful inventor is awarded a certificate for accelerated patent examination.101 Regardless of the chosen method, the advantage of any prize system is that a nonmarket entity is at least theoretically capable of taking into account not only the market value of the technology but the social value as well.102 Some suggested prize systems propose that the inventor relinquish their patent rights to the government in exchange for the prize,103 but this is not necessary to every prize system.104 Additionally, both patents and prizes are flexible enough in form so that their monetary value can be paid out as either a lump sum or incrementally over time.105 Prizes have several advantages over patent systems. As already mentioned, prizes are not necessarily tied to market demand, meaning that they can internalize positive externalities in ways that patents cannot.106 For example, the market may fail to account for the social value of technologies that generate substantial positive externalities, but a prize established by a government can account for such value.107 Prizes can also reduce the inefficiency caused by companies expending resources to invent around competitors’ patents.108 Furthermore, they can reduce licensing transaction costs, which can further reduce the risk and cost inefficient “patent thickets.”109 Prizes can also eliminate the “deadweight loss” resulting from the noncompetitive pricing of patented inventions (though this implies that the patent is no longer available to the inventor for commercialization purposes).110 A patent prize system is not without its disadvantages. Determining the value of inventions is the most obvious difficulty.111 If the government’s compensation model fails to accurately reflect the invention’s profitability, inventors will take the risk of commercializing the invention themselves.112 If the compensation model fails to accurately compensate for the environmental benefit of the invention, then it provides no advantage over the normal patent system from a market demand perspective.113 This is compounded by the possibility that the government is at an informational disadvantage relative to market actors in establishing commercial value.114 Moreover, prizes do not typically have as great a commercialization incentive as patents because much of a patent’s value is only realized through commercialization (which potentially hinders the distribution of the technology after the prize is awarded).115 Finally, prize mechanisms require the establishment of clear, concrete goals or particular problems to be solved.116 Despite the difficulty of calculating proper compensation, some patent prize models are already in place in several areas.117 For example, there is already a patent prize system in place for atomic weapons inventions.118 The Patent Compensation Board sets compensation for inventions related to atomic weapons and considers the “actual use” and “importance” of the invention when assessing its value.119 Additionally, several administrative agencies already employ environmental valuation strategies when balancing the benefits and costs of environmental regulation,120 suggesting that, while difficult, “[v]aluing the social benefit of environmental innovation is . . . [an] achievable[] task.”121 Lastly, an example of non-monetary compensation is the Patents for Humanity award, which bypasses the difficulty of calculating social benefit by instead awarding a special certificate to expedite the patent process.122