Ian Ayres and Gideon Parchomovsky (Yale Law School and University of Pennsylvania Law School) have posted Tradable Patent Rights: A New Approach to Innovation on SSRN. Here is the abstract:
Patent thickets may inefficient retard cumulative innovation. This paper explores two alternative mechanisms that may be used to weed out patent thickets. Both mechanisms are intended to reduce the number of patents in our society. The first mechanism we discuss is price based regulation of patents through a system of increasing renewal fees. The second and more innovative mechanism is quantity based regulation through the establishment of a system of Tradable Patent Rights. The formalization of tradable patent rights would essentially create a secondary market for patent permits in which patent protection will be bought and sold.
And a tiny bit from the section that describes implementation:
At the beginning of am issuance year, the USPTO would auction a predetermined number of licenses covering the various periods of patent life for all patents being issued that year. We imagine that the auction would be a sealed-bid auction, similar to the type used for the Environmental Protection Agency’s annual SO2 (sulfur dioxide) allowance auction.85 For example, at the beginning of 2010, the USPTO would issue a certain number of 2010/5 licenses (granting protection for patents issued in 2010 for years 5 to 8 of the patent’s life), a smaller number of 2010/9 licenses, an even smaller number of 2010/13 licenses and a yet smaller number of 2010/17 licenses. The decreasing supply of licenses for each patent cohort suggests a kind of musical chairs in which some of the potentially enforceable patents will necessarily become unenforceable.
As Ayres & Parchomovsky recognize, the trick is in setting the numbers of patents issued per patent-life period per year! A fascinating & fun paper. Highly recommended.