Seth A. Cohen


The patent system has traditionally been viewed as having two primary functions: the reward function and the prospect function. Although these theories do explain some behavior which results from the practical applications of the patent system, they also overlook some behavior of the patent system which indicates a failure of these functions. In order to properly prevent such failure, this paper proposes that the patent system adopt an orientation that will lead to increased innovative rivalry and competition. In Part I, using the computer operating system software market as an example, I propose a framework for reconceptualizing patent protection as it applies to software operating system platforms. Part II briefly examines both the classical and neoclassical reward function and prospect function theories. Part III defines the innovation market and describes the market dynamics that create disincentives for innovation. These disincentives tend to limit the number of competitors in innovation markets and create conditions which reduce the effectiveness of the reward incentives to the extent that the reward function fails in its entirety. Part IV examines the resulting harms of this failure and identifies how reward function failure affects product markets, which are dependent upon the reward function. Part V discusses why the prospect function does not address the problems related to reward function failure and the reasons that the promotion of innovative rivalry would alleviate some of the problems. Part VI uses the relationship between computer programs to illustrate the shortcomings of the patent system's inability to prevent the problems created by non-competitive innovation. This section also considers how the patent system might be better adjusted to prevent reward function failure. Lastly, Part VI also proposes a series of alternative frameworks for creating a competitively oriented approach to the application of the patent system in the case of computer software platforms.