The Patent System at a Crossroads (original) (raw)

The economics of patents: from natural rights to policy instruments

2013

This paper uses latest advances in economic research for examining recent changes in patent regimes aimed at strengthening patent protection, and beyond that, for rethinking the rationale of the patent system. Considering that economic theory does not regard patents as a natural right that should be systematically granted to inventors, but as a policy instrument aimed at fostering innovation and diffusion, three major implications can be drawn from economic theory regarding current policy debates. First, patents may not be the most effective means of protection for inventors to recover R&D investments when imitation is costly and first mover advantages are important. Moreover, they may do more bad than good to innovation if innovation is cumulative and first generation inventions are essential to develop further inventions, especially when patent protection is strong. Patents should not be seen as the solution by default, notably as regards new areas of patentability such as software, business methods and genetic inventions. Second, patentability requirements, such as novelty or non-obviousness, should be sufficiently stringent to avoid the grant of patents for inventions with low social value that increase the social cost of the patent system. Third, rather than the statutory patent life, what matters is the effective life of patents: the broader is a patent the longer is its effective life. Policy instruments affecting patent breadth (e.g. extra fee for independent claims above a certain threshold) and length (e.g. renewal fees) could be used to provide long effective lives to inventions with high social value. Beyond these currently debated issues, economic theory pleads for an in-depth reshuffling of the patent system. If the system were to be radically changed, an optimal patent policy could be based on a multidimensional menu of different degrees of patent protection associated to different patent fees, where stronger protection would correspond to higher fees. Patents could be transformed into self-selection mechanisms whereby patentees reveal the economic characteristics of their inventions, compensate society for the protection they are granted and obtain sufficient incentives to innovate.

Patent Systems as Regulatory Institutions

National patent systems and the international patent rules have evolved in ways that favour transnational corporations and other firms that claim to need patents in order to innovate. The possibility that at least some of the rule changes have been made at the expense of less powerful actors including consumers and developing countries makes it timely to ask such questions as: Why were the changes made in the first place? Why have most attempts to reverse them failed? Has the patent system always been vulnerable to regulatory capture? And is it necessarily the case that if there are winners there must always be losers? This article adopts a case study approach to argue that the search for plausible answers should begin by treating patent systems for analytical purposes as economic institutions whose evolution cannot in most cases adequately be explained in terms of the objective, well-informed and public spirited calculus of judges and policy makers. In doing so, it also suggests that the patent system itself has been fundamentally shaped from a very early stage by interest group pressure. On the other hand, such interest group pressure may not be decisive in determining outcomes, and may not even be present in all cases. Indeed, even in the apparent absence of commercial interest group pressure, institutionalism can probably explain most if not all of the reforms made. Finally, while a reform may substantially benefit one interest group and have considerable implications for the interests of many other people, patent regulation should not be perceived as a zero-sum game.

Patent Institutions: Shifting Interactions Between Legal Actors

2019

This contribution to the Research Handbook on Economics of Intellectual Property Rights (Vol. 1 Theory) addresses interactions between the principal legal institutions of the U.S. patent system. It considers legal, strategic, and normative perspectives on these interactions as they have evolved over the last 35 years. Early centralization of power by the U.S. Court of Appeals for the Federal Circuit, newly created in 1982, established a regime dominated by the appellate court's bright-line rules. More recently, aggressive Supreme Court and Congressional intervention have respectively reinvigorated patent law standards and led to significant devolution of power to inferior tribunals, including newly created tribunals like the USPTO's Patent Trial and Appeals Board. This new era in institutional interaction creates a host of fresh empirical and normative research questions for scholars. The contribution concludes by outlining a research agenda.

Patent "Monopolyphobia": A Means of Extinguishing the Fountainhead

Case Western Reserve law review, 1999

This Article analyzes whether patent property rights confer monopoly power or power overprice, being per se "monopolistic" in the antitrust sense. Courts often assume that patent rights (unlike other exclusive property rights) inherently confer the power to charge supernormal prices. This results in a negative presumption surrounding patent rights, providing the impetus for courts to define narrowly and sometimes stifle the promotion of these rights. The early patent misuse cases (1930-1950) are replete with references to patents as anticompetitive monopolies and illustrate how narrowly viewing the patent right led to an increased likelihood of invalidating this right. The latest battle over the survival of the doctrine of equivalents in Warner-Jenkinson Co. v. Hilton Davis Chemical Co. 1 further substantiates the courts' struggle with defining and properly limiting patent rights. Preliminary statistical analysis also indicates that negative judicial sentiment adversely affects patent filings and negatively impacts economic growth. There is a correlation between the proportion of patents adjudicated not invalid by appellate courts (validity adjudication), patent filings in the Patent and Trademark Office (patents filed) and Gross Domestic Product (GDP). Within a few years following a cycle of judicial hostility, the number of patent applications decreases. Negative judicial sentiment thus adversely affects patent filings (.646 Pearson's, .66 rank correlation). Moreover, there is a strong statistical relationship between patents filed and GDP (.887 Pearson's, .944 rank correlation). These data powerfully suggest that patent rights provide incentives

The Political Economy of the Patent System

In recent years, many reform proposals have been presented in Congress for changing the patent system in the United States. Most of these proposals have been normative in nature and based on overcoming the many perceived shortcomings of the United States Patent and Trademark Office's ("Patent Office") performance. Nonetheless, actual legislative reforms have failed to materialize.