pending cases, or both. The costs of acquiring patents, promoting or securing licenses to patented technology, and defending against infringement allegations in court are rising rapidly. The benefits of patents in stimulating innovation appear to be highly variable across technologies and industries, but there has been little systematic investigation of the differences. In some cases patenting appears to have departed from its traditional role, as firms build large portfolios to gain access to others’ technologies and reduce their vulnerability to litigation.

In light of these strains, now is an opportune time to examine the system’s performance and consider how it can continue to reinvent itself. In spite of its pervasive influence, patent policy for the last 50 years has been the preserve of practicing attorneys, judges, patent office administrators, and legally trained legislators. The National Academies believe that patent policy will benefit from the additional insights of economists, scientists, and engineers in different disciplines, inventors, business managers, and legal scholars, and they appointed our committee to reflect that diversity of expertise.

We in turn benefited from the insights and data of nine groups of scholars supported by the National Research Council’s Board on Science, Technology, and Economic Policy (STEP) to conduct a series of policy-related empirical studies. These are collected in this report’s companion volume, Patents in the Knowledge-Based Economy. This work is part of a growing body of economic and legal research since 1980. Still, it is quite limited, and the range of industries examined in any detail is quite narrow. We do not know whether the benefits of more and “stronger” patents extend very far beyond a few manufacturing industries, such as pharmaceuticals, chemicals, and medical devices. It is even less clear that patents induce additional research and development investment in the service industries and service functions of the manufacturing economy. One obvious conclusion of our work is that we need a much more detailed understanding of how the patent system affects innovation in various sectors. But even without additional study we can identify areas of strain, inefficiency, excessive cost on the one hand and inadequate resources on the other hand that need to be addressed now.

CRITERIA FOR EVALUATING THE PATENT SYSTEM

In circumstances that at this stage defy a comprehensive evaluation of the patent system’s impact on innovation, we identify seven performance criteria that are widely thought to be important if not necessary conditions for innovation and that are in some degree measurable.

First Criterion: The patent system should accommodate new technologies. The U.S. patent system has excelled at adapting to change because it is a unitary system with few a priori exclusions. The initiative to extend patenting to new areas lies in the first instance with inventors and commercial developers rather



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