In this article, 2019 Nobel laureate Michael Kremer looks back to history for an example of a patent buyout: a situation in which the government buys the patent for a technology which would be beneficial to the public, and then places it in the public domain.
Kremer suggests a method by which governments today could similarly purchase patents and thus encourage innovation.
Abstract:
In 1839 the French government purchased the Daguerreotype patent and placed it in the public domain. Such patent buyouts could potentially eliminate the monopoly price distortions and incentives for rent-stealing duplicative research created by patents, while increasing incentives for original research. Governments could offer to purchase patents at their estimated private value, as determined in an auction, times a markup equal to the typical ratio of inventions’ social and private value. Most patents purchased would be placed in the public domain, but to induce bidders to reveal their valuations, a few would be sold to the highest bidder.
Citation:
Kremer, Michael R. 1998. “Patent buyouts: A mechanism for encouraging innovation.” Quarterly Journal of Economics 113(4): 1137-1167.