Even their solvency advocate agrees

It is well-documented that patent systems fail to adequately incentivize green technology.80 This is due in part to the inherent market failure for inventions directed toward solving “common pool”81 issues, like reducing greenhouse gases. Because there is no direct economic incentive to reduce greenhouse gases, the market fails to provide an adequate innovation incentive.82 Since the value of a patent largely depends on the market demand for the underlying technology, patent systems fail to offer adequate incentives where market demand does not exist.83

Even when a market exists, the patent system fails to properly incentivize green technologies due to positive externalities.84 Positive externalities exist when some portion of the benefits created by a technology “spillover”85 to third parties;86 that is, when not all the benefits are internalized by the business that created the technology. When deciding whether to invest in a particular green technology, a profit-maximizing business will likely focus on the technology’s direct costs and benefits rather than the additional benefits conferred to third parties.87 This results in suboptimal investment because the actual value of the benefits of the technology—commercial plus social—was not properly considered.88 If the market fails to capture the social value of a given technology, the technology is unlikely to attract an optimal amount of investment concomitant with its actual value.89 Thus, the value of a patent on the technology will also be suboptimal.90