The case against patents

Thomas Jefferson once said:

Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.


And the debate on patents are more relevant than ever. Big companies suing each other for billions has become commonplace. Collecting patents to fuel an arsenal of defensive legal leverage, tip-toeing the mine field of patents when trying to invent something new, using patents to stifle competition rather than innovate, forging patents alliances that centralizes power and keeps the smaller players off the playing field. The list goes on. And the net value is hardly innovation incentive.

I want to bring to your attention an article that details the economic effects of patents (link to the full article). The abstract reads:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented.

The article is an excellent read and complements the book, “Against Intellectual Monopoly“.

Also check out Johanna Blakley’s neat TED talk on the same: