Of Patents and Property


As long-suffering readers of this blog will have noticed, one of my favourite hobby-horses is that the whole idea of "intellectual property” is a trick, designed to plug into the warm and fuzzy feeling most people have about the idea of property, and aiming to cover up the fact that what we are really dealing with here are intellectual monopolies – of which few people are fans.

I have argued this in various ways in various posts, but a one powerful counter-argument is that I am not actually qualified to talk about any of this stuff, since I am neither a lawyer nor an economist. That makes the appearance earlier this year of the book Patent Failure by one of each, important, since their essential arguments are buttressed by expertise on both sides. You can read sample chapters from their book, including the introduction, offering the argument in brief, and the crucially important (to me, anyway) one about software patents.

In addition, these authors have now published a separate paper, called “Do Patents Perform Like Property?”, which draws on chapter 4 of their earlier work. As its title suggests, it addresses precisely the issue of whether patents can be usefully considered as property.

Here's the basic conclusion:

The historical evidence, the cross-country evidence, the evidence from economic experiments and estimates of the net benefits of patents all point to a marked difference between the economic importance of general property rights and the economic importance of patents or intellectual property rights more generally. With the cross-country studies in particular, the quality of general property rights institutions has a substantial direct effect on economic growth. Using the same methodology and in the same studies, intellectual property rights have at best only a weak and indirect effect on economic growth.


In any case, the empirical economic evidence strongly rejects simplistic arguments that patents universally spur innovation and economic growth. The direct comparison of estimated net incentives suggests that for public firms in most industries today, patents may actually discourage investment in innovation.

Let's hope the EPO's Enlarged Board of Appeal comes to the same conclusions.

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