Is the U.S. patent system the best???
Posted by Stephen M. Nipper at April 18, 2005 06:00 AM
U.S. patent law, at its simplest level is a bargain between the U.S. Government and inventors. The bargain essentially being "you tell everyone else how you did it and we'll give you a limited monopoly to exclude others from doing the same." While Thomas Jefferson and others weren't thrilled with the system...it is the system our founding fathers established.
Blawger and patent attorney N. Stephan Kinsella recently penned a very interesting critique of our patent system in an article entitled "There's No Such Things As a Free Patent." Stephan's article questions whether the costs of the patent system outweigh the gains it provides and mentions some potential alternative systems others have proposed (reward systems, nationalized IP, taxes to fund R&D, copyright-like patent terms, etc.). An interesting read...
UPDATE: For those of you reading via RSS, the comments for this post continue the discussion...
J. Matthew Buchanan 
Stephen M. Nipper 
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Comments
Matt Says:
April 18, 2005 10:03 AM
One compelling argument that it is not broke: we have, and continue to, invent more than other countries.
Unreasonable Man Says:
April 18, 2005 11:14 AM
Interesting article, but I would argue with many of the "costs" the author claims exist in the patent system. Such as the "cost" (in terms of economic waste) of competitors spending money trying to "invent around" a patent to create a competing product. While there may be some economic waste involved (and I do not claim to know too much about economic waste... being that I was a Chemical Engineering major in college), that cost is offset by two factors. 1) The resulting product creates additional competition, which means lower prices for consumers (and aren't lower prices a "gain") 2) many of those "design arounds" may, in fact, lead researchers into new areas of innovation.
But, as I said an interesting read, and definitely something worth considering as proposed patent changes come down the pike.
Stephan Kinsella Says:
April 18, 2005 12:02 PM
A few points. First, let me emphasis that I didn't in that article so much as question whether the costs of the patent system outweigh the gains it provides, as simply point out that IF you advocate patents on the grounds that it has gains, of course it is incumbent on you to consider the costs too. And I also pointed out that patent advocates never seem to consider the costs; or they assume that they are trivial compared to the gains. I didn't really take a position one way or the other on whether the costs are greater than the benefits.
Also, I mentioned "some potential alternative systems others have proposed (reward systems, nationalized IP, taxes to fund R&D..." not to endorse them, but to show that the logic that any system is good if it has gains has no logical stopping point, if you don't take costs also into account. I was just trying to emphasize why it is essential to subtract the costs from the gains.
As to the other comments:
Matt said: "One compelling argument that it is not broke: we have, and continue to, invent more than other countries."
I am not sure if this is true, at least on a per capita basis. And even if it is true, there are many non-patent reasons for this--e.g., innovation probably correlates with wealth and technological advancement, and we are wealthy and technologically advanced country. It would be question-begging to just assert then that we are wealthy and advanced because we have a patent system. So I think the off-the-cuff assertion that we "invent more" is not at all a "compelling" argument in defense of IP. And this is exactly my point: pro-patent types want to just list anecdotal evidence and casual, "received wisdom" in favor of IP's benefits, but not usually seriously, and rarely are costs taken into account.
Unreasonable Man wrote: "Interesting article, but I would argue with many of the "costs" the author claims exist in the patent system. Such as the "cost" (in terms of economic waste) of competitors spending money trying to "invent around" a patent to create a competing product. While there may be some economic waste involved ..., that cost is offset by two factors. 1) The resulting product creates additional competition, which means lower prices for consumers (and aren't lower prices a "gain") 2) many of those "design arounds" may, in fact, lead researchers into new areas of innovation."
Well, these points may need to be taken into account in any serious effort to weight the costs versus the benefits. Surely offsetting a cost should be taken into account, but does it really mean the cost is not a cost? For example: suppose the feds tax every citizen $10,000 a year -- a cost of about $2.7 trillion -- for a special "innovation reward fund," which is used to give $10 million awards to innovators deemed worthy by some government panel. Now, this is clearly a huge cost on the economy (and would almost certainly cause a world-wide depression); but, it would certainly spur innovation. Many people would feverishly work to try to compete for those awards. They might even invent something that would otherwise not have been invented. This would be a gain, or a benefit. It should be subtracted from--offset against--the $2.7 trillion price tag. Maybe it would only be $2.6 trillion. It would still be a huge cost, though. So just because there are some gains from a costly, wasteful program, does not mean the program is not wasteful and overly costly.
In any event, my article's point was not to firmly establish what the costs are--in type or in magnitude. Only that there are costs. My examples were simply examples.