13. Lemley, M.A. and Myhrvold, N. (2007), How to make a patent market.pdf Flashcards
(12 cards)
What is the main argument of “How to Make a Patent Market”?
The patent system is inefficient because there’s no transparency—license prices are secret—making it hard for buyers and sellers to match. A real market requires open information.
Example: Like trying to buy a house without knowing what similar homes sold for—no one knows a fair price.
Why is the current patent market considered “blind”?
Because most patent licensing deals are confidential, so neither buyers nor sellers know what others have paid for similar patents.
Example: Like trading baseball cards in secret—some kids pay $10, others $100 for the same card.
What are the consequences of a blind patent market
Fewer deals happen, prices vary wildly, and both overpayment and underpayment are common. Some people exploit this to game the system.
Example: A company might demand a huge fee for a minor patent because the court has no idea what it’s actually worth.
What do the authors propose to fix the patent market?
Require publication of patent license and assignment terms to create transparency, allowing fairer and more informed deals.
Example: Just like real estate websites show sale prices to help buyers know market value.
How would publishing license terms help courts?
It would give courts benchmarks to determine “reasonable royalties” in infringement cases.
Example: Like giving a judge a Kelley Blue Book for patents to know what’s normal
What objection do some patent lawyers have to license transparency?
They claim companies won’t license patents if the deal has to be public.
Example: Like saying people won’t buy cars if their price is visible—yet car sales still happen.
How do the authors counter the objection that transparency will stop licensing?
They argue that mandatory disclosure won’t hurt if everyone has to do it—it levels the playing field.
Example: If every restaurant posts calorie counts, no one is unfairly singled out.
What industries already require some disclosure of patent licenses?
Pharmaceutical companies in settlements and publicly traded companies when deals are material to finances.
Example: Drug companies must sometimes report patent deals when settling with generic makers.
Who benefits from keeping patent licenses secret?
Those who exploit the secrecy—like “patent trolls” holding up companies or infringers avoiding fair payment.
Example: Someone who sells fake event tickets because there’s no public list of valid seats.
What analogy do the authors use to describe the patent market?
They compare it to a stock market where no one knows past trade prices, calling it absurd.
Example: Like investing in a company without knowing what shares have ever sold for—total guesswork.
What broader benefit would a transparent patent market provide?
It would turn one-off secret deals into a functional, competitive market for innovation.
Example: Like transforming an underground flea market into an Amazon-style platform with fair prices.
What partial steps do the authors suggest toward transparency?
Start by requiring public companies and litigants to disclose license terms in certain cases.
Example: Like first making calorie counts mandatory in chain restaurants before applying it everywhere.
