Let's get started. First, let's identify the problems of the current patent system. Most of us here are aware of the problems inherent in the system, so I don't want to go into too many details; we've covered it a million times before, as has the rest of the web. On a point-by-point basis:

• Patents are granted too easily, even on trivial and obvious stuff.
• Patents are granted on ideas instead of actual implementations.
• The system allows for software patents to exist. Software patents are patents on math and language, which ought not to be patentable. Software already enjoys copyright protection.
• Patents are transferable, which leads to patent hoarding and patent trolls.
• Patent protection lasts too long, putting a huge damper on innovation and creating a truly massive collection of still-valid patents you have to take into account.
• Invalidation is too expensive, making it virtually impossible for small companies or individuals to do anything about aggressive large corporations. The result is that large corporations can easily crush small companies and start-ups.

Ideally, we would modernise the patent system with the following four goals in mind:

• Make sure patents do what they're supposed to do: foster innovation and the progress of mankind. Or, as the United States Constitution puts it: "promote the progress of science and useful arts".
• Bring back balance. All else being equal, large corporations should not have an advantage over small companies or individuals just because they have more money.
• Make it possible for the state - i.e., democratically elected body - to intervene in the patent system in case of emergencies. Patents are state-granted monopolies, after all.
• Prevent frivolous lawsuits and excessive filing to reduce the pressure on the courts and patent offices.

I propose the following solutions to achieve these goals:

• Patent applications must be accompanied by a working prototype that must be presented, in person, by the inventor listed on the application, to the patent office. This makes it impossible to file patents on ideas that have not yet been implemented or productised, and will serve to greatly reduce the number of vague and/or bogus applications.
• Software patents will not be granted under any possible circumstance; software is code, code is written, writing is protected by copyright, and that's all the protection it needs. All existing software patents will be declared invalid. This will not be done 'actively' (i.e., there will not be groups of clerks sifting through granted patents), but rather, 'passively'; software patents are simply declared invalid, so if someone brings them to court, they will be tossed out immediately. Within 15 years, the system will be purged of all software patents either by the courts, or simply by patents expiring.
• No gene patents. It's ridiculous I even have to give this its own list entry.
• The patent term should be shortened to 5 years to promote rapid innovation and deter coasting on single inventions. The term could possibly be longer for e.g. the pharmaceutical industry because clinical trials and related regulations lead to far longer development times and higher costs. The gist: patent terms should adapt to the industry they belong to. Some fields evolve faster than others.
• Patents must be productised. If a patent is not productised within 2 years of the grant date, the patent becomes invalid and cannot be filed again. If you can't productise an invention, let someone else take a stab at it. This prevents frivolous filing and ensures the patent directory becomes self-cleansing. In addition, this prevents inventions from being locked away just because its inventor had no idea how to productise it.
• Patents should be non-transferable; in other words, they must be tied to the inventor. They cannot be sold or transferred, or become the property of corporations. This prevents patent hoarding and patent trolling. One alternative person may be listed on the patent application to transfer the patent to in case the inventor dies. If the inventor (and the listed person) dies, the patent becomes invalid.*
• Patents will no longer be assumed to be valid by courts. The aggressor has to argue its case that the patent is valid. If the aggressor can't effectively argue the patent is valid, it will automatically be declared invalid, and the aggressor will have to pay court costs and a hefty fine as a percentage of revenue - even if the defendant can't argue it's invalid. In other words, the burden of proof shifts from defendant to aggressor. This discourages frivolous lawsuits, since the aggressor will think twice before going to court.
• Preliminary injunctions should be a lot harder to obtain. A small bit of functionality should not lead to an outright product ban. Bonds for false preliminary injunctions should cover not just lost income, but also a hefty fine as a percentage of revenue for patent abuse.
• Instead of merely weighing the costs and benefits for patent holders, the courts must also take into account the effect possible rulings will have on consumers, the market, and society in general. If a ruling would have a severe negative affect on consumers, the market, or society, it should not be made. The patent system should serve mankind, not commercial interests.
• In case of emergency, the state should be able to either temporarily or permanently nullify certain patents. In fact, the United States government did effectively this [http://en.wikipedia.org/wiki/The_Wright_brothers_patent_war#The_patent_pool_solution] at the onset of World War I, when two companies had blocked the building of any new aeroplanes due to patent issues. Say an epidemic is causing massive casualties in the developing world, and a company has the patent on a cure but does not have the capacity to produce sufficient quantities of it. The government must be able to declare this patent invalid - either temporarily or permanently - to ensure other companies can produce the cure as well. If forced licensing pools are a better option, this should be possible as well.

• Related to this, if the state determines that certain patents are causing harm to the industry, society, consumers, or innovation, it should be able to declare them invalid. Remember: a patent is a state-granted monopoly.

Just to reiterate: I'm not claiming this is a perfect set of proposals, nor that it addresses all problems inherent in the system. I simply do not have the time, resources, or legal expertise to properly expand all these ideas and create a solid, coherent patent system proposal that is practical, implementable, and workable.

Still, we all have to start somewhere. The system is broken, and even though we cannot fix it [http://www.osnews.com/story/26138/IP_law_undemocratic_totalitarian_and_unethical], we should still continue to think of solutions, if only as a mental exercise.

* Astute readers will have noted there is a major weakness in my plan at this specific point: what happens when an employee who holds a patent moves to a different company? This is a weakness I have not yet been able to address in a sufficiently simple and effective manner. Any help would be welcome.