Prizes solve better---their author.

Alternative Patent Models for Fostering Innovation Patent Reward System

One potential solution to address the above-noted positive externalities involves the implementation of a patent prize system, also referred to as a “patent reward” (Mandel 2005). In this approach, a reward — often in the form of a monetary prize — is granted to the first individual who fulfills the predetermined criteria set by the government (Adler 2011, 12–13). Comparable to traditional patent systems, inventors “in a pure prize system” (Hemel and Ouellette 2019, 560) bear both the costs of development and the associated risks of potential failure (ibid., 560–61). The key distinction between patents and prizes, particularly in the context of incentivizing innovation, lies in how their values are determined (ibid.). While market forces establish the value of a patent, a non-market entity, such as the government, determines the value of a prize (ibid.). 10

Patent as a Tool for Facilitating Innovation: Lessons from Green Technology

Substantial scholarly attention has been devoted to devising accurate methods for assessing the value of prizes (Abramowicz 2003). These methods include compensation based on an inventor’s anticipated profit (Mandel 2005), analysis of sales data (Shavell and Van Ypersele 2001), utilization of auction processes (Kremer 1998), and a combination of private and government estimates (Hemel and Ouellette 2019, 574). Irrespective of the selected approach, the primary advantage of any prize system lies in the theoretical capacity of a non-market entity to consider not only the market value of a technology but also its social value (ibid., 574–75). Some proposed prize systems suggest that inventors should surrender their patent rights to the government in exchange for the prize (Mandel 2005), although this is not a mandatory feature of every prize system (Hemel and Ouellette 2013, 316). Moreover, both patents and prizes offer flexibility in terms of their financial structure, allowing for payment in either a lump sum or incremental installments over time (Hemel and Ouellette 2019, 560). Prizes present numerous benefits compared to patent systems. As mentioned earlier, prizes are not strictly bound by market demand, allowing them to internalize positive externalities in ways that patents cannot (Tur-Sinai 2018). For instance, the market might neglect the social value of technologies with substantial positive externalities, while a prize established by the government can incorporate and recognize such value (Hemel and Ouellette 2019, 555). Moreover, prizes hold the potential to address inefficiencies arising from companies diverting resources to invent around competitors’ patents (Mandel 2005, 65). Additionally, they can diminish licensing transaction costs, thereby lowering the overall risk and expenses linked to inefficient “patent thickets” (Shapiro 2001, 119). Given the concerns mentioned, the patent reward system may be considered the most appropriate tool for fostering innovation in AI-powered, climate-smart agricultural technologies. This is because these technologies often carry social and environmental value, aspects that may not be adequately valued by typical market forces. If innovators agree to surrender their patent rights in exchange for the prize, arguably the UNFCCC Technology Mechanism may also consider buying these patent rights and creating an open-source pool for the same.

Patents for Humanity Award

The Patents for Humanity award stands out as a successful patent prize system, as evidenced by its achievements.12 Initiated by the United States Patent and Trademark Office (USPTO), it is characterized as an “awards competition recognizing innovators who use game-changing technology to meet global humanitarian challenges.” In the realm of green technology, eligible invention categories encompass “sanitation,” which involves innovations addressing clean water, waste treatment, air pollution and toxic substances, and “household energy,” which pertains to technologies supplying power to “energy-poor homes and communities.”13 The program was initially introduced as a pilot in 2012, and from 2012 to 2020, 36 inventors were honoured with the Patents for Humanity award, while 19 received honourable mentions.14 Applications undergo evaluation based on their demonstrated positive real-world impacts on humanitarian issues, along with the degree to which applicants have shared their technologies with other humanitarian researchers, especially those working in areas lacking commercial application (Kim 2020). Recipients of the Patents for Humanity award not only receive public recognition but also an acceleration certificate that can be used to expedite the processing of a single matter in the inventor’s portfolio or accelerate specific post-grant proceedings before the USPTO.15 These certificates are transferable, allowing winners to exchange them for compensation or transfer them to a third party.16 This transferability partially shifts the valuation mechanism back to the market, sidestepping the complexities of the government determining the monetary value of the invention (Sampson 2021). Importantly, the Patents for Humanity award serves as an additional incentive for innovation by offering publicity benefits to successful inventors (ibid.). It is noteworthy that this award is specifically geared toward inventions that are either in the process of patent approval or have already been patented.17 Arguably, the introduction of Patents for Humanity awards across diverse jurisdictions could be a very effective stimulating agent for the innovation of AI-powered, climate-smart agricultural technologies. Since climate change is considered as a “common concern of humankind,” any AI-based, climate-smart agricultural technologies will reasonably be eligible for the Patents for Humanity award.

Conclusion

This study identifies various collaborative patent models, such as the Eco-Patent Commons, Green Xchange and COSIA, as options available for fostering innovation in AI-powered, climate-smart agricultural technologies. Each model comes with its own set of pros and cons. Considering the advantages and disadvantages of these existing models, the study suggests that if a model, such as the Eco-Patent Commons, is introduced to stimulate the innovation of AI-powered, climatesmart agricultural technologies, it should be designed to resolve the weaknesses experienced by the previously existing Eco-Patent Commons. Importantly, consulting with the demand side of the technologies from the outset is deemed essential. Additionally, the study notes that while Green Xchange fell short of its main goals, it generated intriguing ideas applicable to the establishment of any similar mechanism aimed at fostering innovation in AI-powered, climatesmart agricultural technologies. For instance, the three distinct licensing structures — standard, standard-plus and research non-exempt — could prove beneficial in increasing the participation of suggested initiatives.

Patent as a Tool for Facilitating Innovation: Lessons from Green Technology Further, the study finds that the COSIA model could serve as an inspiration for investors who prefer a semi-open collaboration method and hesitate to share their innovation methodology or patent rights with anyone outside the pool. In addition to collaborative patent models, this study evaluates the suitability of the fast-track green patent program for fostering innovation in AI-powered climatesmart agricultural technologies. In this regard, the paper considers that the program has the potential to promote innovation if rules and regulations governing fasttrack programs across diverse jurisdictions are appropriately harmonized.

Finally, the study suggests two alternative patent models, namely the “patent reward” and “Patents for Humanity award,” as the most suitable options for stimulating innovation in AI-powered, climate-smart agricultural technologies. The patent reward system is highlighted as one of the most appropriate tools for fostering innovation in these technologies, as the social and environmental value of these technologies are often overlooked under the usual patent system. If innovators agree to surrender their patent rights in exchange for the prize, the study suggests that the UNFCCC Technology Mechanism may also consider buying these patent rights and creating an open-source pool for this kind of technology. The introduction of Patents for Humanity awards across diverse jurisdictions may also be considered a highly effective stimulating factor for innovation in AI-powered, climate-smart agricultural technologies, given that climate change is deemed a “common concern of humankind,”18 making any AI-based, climatesmart agricultural technologies reasonably eligible for the Patents for Humanity award