Another Nobel Laureate Points Out How The Patent System Holds Back Innovation

from the the-economics-are-clear... dept

It always amuses us when supporters of the patent system attack our views on patents as being somehow uninformed. Over the years, we've pointed to plenty of rather detailed research on how the patent system tends to hold back innovation -- and how there's no correlation between stronger patent systems and innovation. Usually, when we point this out, the response is to insult us, rather than respond to the research. Fortunately, though, those doing this kind of research keep getting plenty of validation for their work. We've already pointed out that at least one Nobel Laureate in Economics, Joe Stiglitz, has been speaking out on how patents harm innovation. Now comes the news that one of the latest economics Nobel winners has also done research in the space. Evan R.S. writes in to point out that the NY Times article on the winners notes that Nobel winner Eric S. Maskin recent research is on how patents can hold back innovation. The good folks over at Against Monopoly (who include some economists who have been leading the charge in studying this topic) point us to Maskin's paper on this topic. The paper argues that patents tend to harm innovation in high tech fields, mainly because so much innovation is sequential and complementary -- at which point handing out monopolies is guaranteed to slow down the innovation process, because the innovation gets more expensive (need to license any time you do anything), more limiting (because you have to get approval before innovating) and much more time consuming (especially if you have to keep going to court). This isn't a new idea or even new research -- but it's yet another reminder that the economic research continually shows how patents will often hold back innovation, rather than help it.

Filed Under: economics, nobel laureates, patents

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  1. identicon
    NE Economist, 18 Oct 2007 @ 9:54pm

    Innovation's Greed

    There is a lot to be said about patent laws hindering innovation. Most of the articles, papers and research being done on this subject also hits on the topic of rewarding the innovator.

    In a society that has always been very possessive (cite America's founding documents) it is no surprise that we value the inherent title to our creations (even God wants his children to acknowledge he created them). To validate this concept and give it a system to follow for parity across the board we have given ourselves this wondrous dam we called patent law. Although, without these laws binding society to the terms of the innovator it is argued that man would be much less inclined to advance in any sector. By protecting the innovator to the point of profit after excessive time spent "at the drawing board" society encourages innovation with the profit incentive.

    This is not to say that I so much consider our system flawless, but it is not without merit. I believe this was the idea touched upon when mentioning your preference for patent laws to be "extremely handicapped." My only challenge: put yourself in the innovator's role, what motive do you have in this society to cause a breakthrough if someone can stand on your shoulders and make something better?

    NE Economist

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