Alice in Wonderland Meets the U.S. Patent System

This article uses the FTC's October 2003 white paper on the U.S. patent system as the point of departure for a plenary critique of the system from an economic perspective. Taking the fresh viewpoint of "Alice in Wonderland" - an Englishwoman familiar with the Statute of Monopolies and comfortable with quantitative science and mathematical logic - it looks at the system's two most fundamental economic questions: (1) what things are patentable, and (2) what a patent protects. In each case it demonstrates, by detailed reference to current U.S. patent law, how far the U.S. system is from providing clear, let alone economically rational, answers to those questions. It then proposes more fruitful economic approaches. On the subject-matter question, it proposes a test based upon technological risk (as distinguished from market risk), defined as a risk of total failure for reasons other than market acceptance. On the question of breadth, it proposes abandoning the vain quest for an effective formalism and instead judging the breadth and infringement of patents in a single proceeding with expert witnesses (perhaps including neutral, court-appointed experts), based on substantial scientific, technological and economic effects. The article ends by listing the new innovative industries that have arisen since 1952, when the present patent statute was enacted, and noting how little that statute differs in substance from the patent exception to the Statute of Monopolies enacted nearly four centuries ago. It concludes with an analysis of the pros and cons of the FTC White Paper from an economic perspective and a plea for plenary revision of U.S. patent law