Two years ago, we did a program about a mysterious business in Texas that threatens companies with lawsuits for violating its patents. But the world of patent lawsuits is so secretive, there were basic questions we could not answer. Now we can. And we get a glimpse why people say our patent system may be discouraging, not encouraging, innovation.
NPR did a good job here overall, although the story is told from a naive and skeptical view of the patent system. There were a couple of things hinted at in the story, which I really like. First there is the suggestion (made express in a few places) that license terms ought not to be so private. I agree with this, and Nathan Myhrvold and Mark Lemley even suggested that more public disclosure would be necessary for a thicker market in patent rights to develop. Historically, corporate charters and patents have the same origin. Corporate charters that have a wide public impact are subject to also sorts of reporting requirements now (SOX, SEC, etc.). Why shouldn't patents that have such a wide public impact be subject to the same disclosure requirements? It's no answer to say that this would put licensors at a competitive disadvantage so long as the same rules applied to everybody. Too bad IV isn't leading in this regard instead of getting dragged kicking and screaming into more transparency.
Second, there is the suggestion (again made express in a few places, especially in description of the cotton gin) that patents enable dissemination of knowledge in ways beyond simply public disclosure of their specification. Critics of the patent system are after a red herring when they focus attention on the dubious quality of specifications as enabling. The social value of a specification is primarily found in what it provides as evidence of what was known by inventors (and their employer) as of a certain point in time. This aspect of the social value of patents is best understood within the asset partition theory framework advanced by Paul G. Heald (within the larger theory presented by Hansmann and Kraakman).
See also the official public response from IV here.