Technological Progress and Well-Being

Under the utilitarian justification for the patent system, patents advance overall well-being by promoting technological progress. As patents incentivize innovation through the grant of market exclusivity, market demand has a leading role in directing innovation. The reliance on market demand reflects a choice of preference satisfaction as the criterion of well-being underlying the patent system. Accordingly, the concept of technological progress that the patent system is set to promote is rather simplistic. It includes those future goods that current market participants would value the most, or in other words: new stuff that sells. This Article deviates from this conventional account of technological progress that governs the field. It criticizes the reliance on preference satisfaction and the ensuing equation between market value and social value. Drawing on philosophical literature and empirical studies in economics and psychology, this Article reveals the shortcomings of the preference satisfaction criterion of well-being, and demonstrates that an innovative product’s high-market demand does not guarantee that it will significantly enhance overall well-being. Ultimately, by incentivizing the development of certain innovations with a relatively low social value, the patent system might divert resources away from other, more beneficial, activities. To better align incentives with social value, this Article contends that innovation law and policy should be predicated on an objective criterion of well-being rather than on preference satisfaction. By holding that certain things are intrinsically valuable for people, an objective criterion allows a shift away from a view of technological progress as an end in itself to a view of technological progress as a means to enable better lives. This new perspective entails a more significant role for the state in directing innovation. On a prescriptive level, the proposed approach mandates assigning greater weight to various schemes of direct government funding of innovation, including prizes and grants, as well as certain revisions within patent law itself