AI Generated Inventions: Implications for the Patent System and Patent Valuation


Last week, Professor Adam Jaffe (Brandeis University, USA & Motu Economic and Policy Research, New Zealand) joined OxFirst for a presentation assessing the implications on the patent system from the rise of inventions created by AI.

The subject is topical; we’ve previously covered Thaler -v- Comptroller, a case to be heard by the UK Supreme Court relating to an AI that generated two inventions and a dispute following the AI being listed as an inventor, and we’ve considered non-human inventions from a patent valuation perspective.

The talk was founded on a dual premise that: (1) AI systems soon will be (or already are) making inventions, and (2) the patent system as it stands is not ready for that. Whilst patent law in most jurisdictions does not make allowances for AI to be an inventor, and that position looks likely to hold, Professor Jaffe suggested it is both unavoidable and undesirable to seek to halt the rise of AI invention machines. A change in the law will likely be required.

It is theorised that AI would be capable of creating inventions at a very low marginal cost and in substantial number. Should those inventions be patentable, either because the law changes to accommodate AI as an inventor or because AI owners exploit the indistinct line between machine-assisted invention and machine-generated invention to list themselves as inventors, patent offices could be flooded with new applications. It is important, therefore, to discuss how AI inventions relate to the fundamental goals of the patent system. A predictable and fair patent system, and one that incentivises innovation are obviously desirable, yet it is on the goal of protecting investments that develop an invention to a marketable product or process that is particularly interesting.

In a previous article considering  AI inventions, OxFirst speculated that AI inventors would lead to ‘invention factories’ – businesses who produce patentable inventionsusing their AI invention machine and sell or license those patents to others who exploit them to bring patents to market as products. We can therefore envisage a scenario with three elements: (1) AI inventors producing many more inventions each year than are currently created, (2) we assume patent offices are able to keep up, and so many more patents are granted on these inventions each year, and (3) those patent owners are unwilling or unable to exploit those patents and bring products to market. In this scenario, a substantial patent marketplace emerges.

This raises important questions for patent valuation. In any market, value is most simply determined by what someone else might pay for a product, and therefore an increase of supply (patents) into that marketplace depresses the value of each individual item given the increase in choice for buyers. Comparative IP valuation methods may need to adjust to account for this if the comparison is based on a different, non-AI generated, patent marketplace. Yet, each potential buyer of patents will have different capacities to exploit different types of patents – a chemical manufacturer has no use for a patent relating to the production of bread, for example. Increase in supply therefore, may not substantially depress value. We must also keep sight of the importance of a patent’s quality to patent valuation. A high-quality patent – by which we mean one with a long term of protection, substantial coverage and strong potential commercial gains when properly exploited – remains a valuable item whether created by a human or AI. Identifying those patents will be crucial for commercial success in an AI invention landscape.

Should a patent marketplace emerge as we have speculated, the demand for effective patent valuation to complement patent-related dealmaking will rise. Moreover, with so many patents potentially on offer, the importance of good patent valuation only grows. The problem for patent valuation therefore may be the same as for the patent offices – volume. The skills, however, remain the same. Patent valuation experts who can identify and understand market outlooks, growth implications and draw valuable insights from the comparative deal landscape to make well-founded, accurate and commercially useful judgements on these patents will be invaluable.

We are very grateful to Professor Jaffe for sharing his ongoing work with us. The question of AI inventions and how they fit into the patent system is an important and fluid issue. This talk demonstrated both the considerable interest in the area, and the need for open-minded thinking about how we might negotiate the problems and opportunities raised by AI inventions to achieve the greatest benefit from them.

The full webinar is available on OxFirst’s YouTube channel:

OxFirst’s discussion article on non-human inventions from a patent valuation perspective: