As CTO at NMS, I run our patent program and I provide technical support for our legal department and our business units when patent issues arise. Since I've been doing this from our start, I've seen more than enough to know that the patent system is broken, globally. Certainly the bulk of what I've seen has little to do with the original purpose of patents namely "to promote the progress of science and the useful arts" or "encourage innovation, which assures that the quality of human life is continuously enhanced."
While I don't have a set of recommendations, I did recently stumbled on this paper by Professor Beth Noveck of the New York Law School which I found very interesting. It proposes a way to leverage communities and the Internet, to address at least one part of the problem - patents that never should have been granted in the first place. If you are interested in patents, at least read the abstract.
Of course this is an academic proposal for now. Actually getting something like this enacted in the US or any country is a much bigger task and then there is World Intellectual Property Organization and the associated international Patent Cooperation Treaty, so this may remain stuck as an academic exercise. However, there is a Peer to Patent advocacy website and a wiki and an approach like this would certainly be a good start.