My friend Don Cohen designed PEIP, an extenstion to IP. PEIP stands for Path Enhanced Internet Protocol.
A somewhat dated but accurate explanation and demo can be seen here:
(Watch the Flash Demo at the bottom of the page that illustrates several scenarios.).
Last I checked, CS3, where Don works, was not successful in convincing Cisco to pay attention to this solution.
The basic idea is to modify routers to use PEIP, enabling routers to provide "Fair Service". In other words, since it is impossible to determine which packets are part of DDOS attacks, the PEIP solution instead assures that all paths routing to a target victim receive equal bandwidth. In this way, an attacker (based on the path, not on the source IP) will only receive a fraction of the bandwidth to the target.