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Copyright © The Authors 2007. Published by Oxford University Press.
Patents and patent policy
* University of California at Berkeley and University of Maastricht, e-mail: bhhall{at}econ.berkeley.edu
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Abstract |
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A patent is the legal right of an inventor to exclude others from making or using a particular invention. This right is sometimes termed an ‘intellectual property right’ and is viewed as an incentive for innovation. This article surveys the evidence on patent effectiveness in encouraging innovation and reviews the current controversies in patent policy.
Key Words: patents • intellectual property • incentives
I am grateful to two anonymous referees for helpful comments.
1 For the UK, see Gowers (2006). For the USA, see Federal Trade Commission (FTC, 2003); National Academies' Board on Science, Technology, and Economic Policy (2004); the Reply to the National Academies Report by the American Intellectual Property Law Association (2004); Maskus (2006). Elsewhere, see Commission on Intellectual Property Rights (2002); Japanese Government (2004); Danish Board of Technology (2005); and IBM (2006). For a set of papers reporting recent economic research on patents, see OECD (2003).
2 For example, in February 2007, US Congressman Henry Waxman called on Novartis not to challenge India's denial of a patent on a new cancer drug, Glivec, as a violation of TRIPS (MIP News, 19 February 2007, available at http://www.managingip.com/default.asp?page=8)
3 For an excellent contemporary survey of the impact of changes in IPR systems on management and strategy, see Ziedonis (2007).
4 Ladas and Parry (2003). See also the EPO and USPTO websites (EPO, 2007a, and USPTO, 2007).
5 Users of this procedure are stopped from raising any issues of validity that might have been raised in re-examination in subsequent litigation. In practice, fewer than 1 per cent of US patents are re-examined, and almost half of those re-exams are requested by the patent-holder or the USPTO itself (Graham et al., 2003).
6 See Farrell and Shapiro (2007) for detailed models of this process.
7 This is not to say that these effects have gone completely unrecognized in the past. Consider the following quotation from a sugar manufacturer in Great Britain during the nineteenth century: ‘In the manufacture with which I am connected—the sugar trade—there are somewhere like 300 or 400 patents. Now, how are we to know all these 400 patents? How are we to manage continually, in the natural process of making improvements in manufacture, to know which of these patents we are at any time conflicting with? So far as I know, we are not violating any patent; but really, if we are to be exceedingly earnest in the question, probably we would require to have a highly paid clerk in London continually analysing the various patents; and every year, by the multiplication of patents, this difficulty is becoming more formidable.’ (R. A. Macfie, quoted in ‘Is the Granting of Patents for Inventions Conducive to the Interests of Trade?’, Transactions of the National Association for the Promotion of Social Science (George W. Hastings, ed., 1865, p. 666).)
8 Grabowski and Vernon (1994), Hall et al. (2005), and Harhoff et al. (1999) provide evidence on the distribution of innovation and patent value.
9 KSR International v Teleflex Inc. (No. 04-1350) 119 Fed. Appx 282, on non-obviousness, and eBay Inc, et al. v. MercExchange, L. L. C. (No. 05-130) 401 F. 3 d 1323, on the four-factor test for injunctions.
12 MIP Weekly News, 15 February 2004 (EPO) and 8 August 2006 (FTC), available at http://www.managingip.com
13 Marrakesh Agreement Establishing the World Trade Organization, Annex 1 C, Agreement on Trade-related Aspects of Intellectual Property Rights, 15 April 1994, 33 I.L.M. (1994) 81.
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