Is the U.S. patent system broken? Recently, business leaders, policymakers, and inventors have complained to the media and to Congress that today’s patent system stifles innovation instead of fostering it. James Bessen will discuss a broad range of evidence on the economic performance of the patent system. He finds that patents provide strong incentives for firms in a few industries, but for most firms today, patents actually discourage innovation because they fail to perform as well-defined property rights. This analysis provides a guide to policy reform.