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Time to Abolish Patents?

| Feb 5, 2013 | Analysis

Despite a surge in the number of patents issued and an increase in patent rights in recent years, innovation and spending on research and development has surprisingly not increased in proportion.

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Prompted by this “patent puzzle,” two economists have proposed in a working paper to abolish the current patent system.

Michele Boldrin and David K. Levine, both at Washington University in St. Louis, argue that the “main drivers of innovation” are “competition and first-mover advantage” – not patents. Moreover, they suggest that innovation is actually inhibited by strong patent protection.

Boldrin and Levine assert that patent litigation these days tends to arise from “dying” companies that have amassed a large number of patents and exert their patent rights against more innovative competitors who have the edge in the market.  In other words, companies turn to patent protection only after their own pace of innovation has slowed. The result, according to Boldrin and Levine, is that “failing monopolists” seek to use the patent system “to inhibit competition by blocking innovation.”

The complicated nature of devices today results in inventions that are a combination of many patented technologies. Therefore, a single patent holder may be able to “hold-up” the entire invention and slow the progress of innovation.

Of course, not everyone agrees with Boldrin and Levine. For example, some patent practitioners emphasize the importance of patents to protect a unique type of property, one which is intangible and can be quite valuable. They argue that without a patent system inventors are “left to the harsh law of the jungle where property of any type…can be taken with impunity.”

But Boldrin and Levine point instead to an “arms race” of companies spending billions on “defensive patent portfolios,” with the sole purpose of protecting themselves from future lawsuits. For example, Google recently purchased Motorola Mobility in order to enlarge their patent portfolio and defend themselves in lawsuits against competitors like Apple.

Although Boldrin and Levine favor the wholesale abolition of the patent system, they also put forward a number of “small reforms” that they believe could still improve the system, including:

  • Reversing the trend toward strengthening patent rights
  • Using “anti-trust and competition policies” to encourage innovation
  • Individualizing patent-term duration by industry
  • Awarding patents only when there is sufficient evidence that the investment made in the innovation cannot be recouped
  • Requiring any innovations arising out of federally funded research to be part of the public domain

Overall, Boldrin and Levine believe that future policy should be geared toward “decreasing” patent strength — until the patent system is abolished altogether.



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