Hat tip to Steven Landsburg (via Eugene Volokh): Michael Kremer suggests letting the government buy up the patent and put it in the public domain, with an auction system to determine what the fair market value of the patent would be.
Quoth the blog post:
When you design a better mousetrap, we grant you a patent. The next day, the government purchases the patent for a fair market price and puts it in the public domain. The inventor gets his reward, and the rest of us get to buy goods at competitive prices. We pay through the tax system only what the inventor would have extracted from us anyway, and we get the additional benefits of competition: more mousetraps are built, and more inventors can start piggybacking on the idea.
The sticking point is determining that “fair market price”. But Kremer has solved that problem: First we grant the patent. Then we auction the patent to the highest bidder. As soon as the auction ends, the man from the government arrives and flips a coin. If the coin comes up heads, the auction winner completes his purchase; if it comes up tails, the government buys the patent for the amount of the winning bid. Bidders have every incentive to bid judiciously because the coin sometimes comes up heads. But this way, half of all patents end up in the public domain, which is halfway toward solving the problem.
Thus solving the problem once and for all. (I’m not sure if the post is only intended to provoke discussion. Be sure to read the comments if you click through.)