Designing an Inventive Contribution System

Abstract: Proposals to replace patents with rewards assume government funding, providing a significant potential benefit (reduction of deadweight loss) but also a seemingly intractable political obstacle, the need to raise governmental funds instead of relying on payments by eventual users of inventions. This Article describes a system of inventive contribution, an alternative to patents that, like rewards, makes inventors’ returns dependent on governmental assessments, but that, like patents, is funded by users. The system relies on two sets of intermediaries between producers of products and services and the inventors to whom they may owe contribution. First, producers would be required to pay contribution insurers to cover any money owed. Second, inventors would contract with contribution aggregators, who would buy compensation rights from them. A small percentage of insured products or services would be randomly selected, and a governmental agency would estimate (1) the proportion of gross consumer surplus provided by the product attributable to inventions generated by the contribution system, and (2) the relative contribution of various aggregators to this. Such estimates would determine insurers’ payments into a fund and the aggregators’ share of that fund.