The patent system is broken in many ways. Here is one possible way to start attacking the problem.
Nowadays, patents attempt to provide solutions to two problems: first, a historical, time-stamped record of who invented what when, and second, a granting of a limited economic monopoly on uses of the invention to the patent holder.
I propose separating these concerns. We'll call the two classes of patents a History-class patent, and a Monopoly-class patent.
After inventing something, first one applies for, and is usually fairly easily granted, a History-class patent. The only requirement is that the patent is clearly written, as decided by the patent examiner. The patent is published for anyone to read.
A History-class patent does not grant any economic monopoly. Thus anyone, including multiple firms competing, can develop the patent into a product. To offer incentive to publish History-class patents, the government awards publicly funded prizes, whose prize value depends on the increase in GDP the patent caused. (Thus, the government pays for the public good of information.)
Sometimes, developing a patent into a product is desirable for the greater good, but the initial cost of developing are too high for any firm to touch it. To this end, Monopoly-class patents are awarded to grant a limited-time, perhaps even geographically limited, economic monopoly to an invention to allow monopoly profits to offset initial development costs.
The Monopoly-class patent is granted to a firm likely to successfully develop the product. It may not be the original History-class patent holder, though if it isn't, the History-class patent holder may be appropriated a share of the revenues from the product, depending on how much of the revenue is attributable to the original idea inspiration, and how much is the perspiration of developing, marketing, manufacturing, and selling the final product.
There may be multiple History-class patent holders applicable, and only to a partial extent does the first one granted get priority. If a later History-class patent is more clearly, specifically, and usefully written, then the later patent holder might get more revenue: this discourages overly broad, vaguely written patents nowadays that patent trolls favor.
When a developer applies for a Monopoly-class patent, they must show that: (1) The History-class patent in question has thus far failed to be developed; perhaps a waiting period of a few years, and (2) They can and credibly will try to develop the patent into a product. Almost certainly the application for a Monopoly-class patent will include a business plan.
There will be no more defensive patents or holding a patent for strategic purposes only. Granting a patent requires a promise to attempt to develop it; perhaps in fines or simply an up-front fee for being awarded it or loss in likelihood of ever being awarded a Monopoly-class patent again.
Software patents and stupid business method patents will likely be less of a problem, because they have little if any initial development costs, so will rarely be eligible for Monopoly-class patents. They do remain eligible for prizes for History-class patents.
Update: a problem with chains or connected patents. And update 2: solution
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