Quote of the Day: Don’t Just Reform Patents, Get Rid of Them

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In 1958, the Austrian economist Fritz Machlup concluded that the patent system was essentially useless. Half a century later, Michele Boldrin and David Levine say that nothing has changed:

One might hope that if it is indeed worth preserving such a large government intrusion into private activity that during the intervening six decades evidence would emerge that patents do indeed serve the desired purpose of encouraging innovation. Sadly the story of the past six decades is the opposite. In new industries such as biotechnology and software where innovation was thriving in the absence of patents — patents have been introduced. Given this continued extension has there been a substantial increase in innovation in recent years? On the contrary, it is apparent that the recent explosion of patents in the U.S., the E.U. and Japan, has not brought about anything comparable in terms of useful innovations and aggregate productivity.

Boldrin and Levine don’t just go after software patents in this paper. They claim that pretty much all patents are useless, serving more to allow big companies to inhibit competition than to protect small companies with bright ideas. And while they admit that getting rid of patents altogether is pretty unlikely, a couple of their suggestions seem like they could form the basis for some worthwhile reforms:

  • Cross industry variation in the importance of patents suggests we may want to start tailoring patents length and breadth to different sectorial needs. Substantial empirical work needs to be done to implement this properly, even if there already exists a vast legal literature pointing in this direction.
  • Reversing the burden of proof: patents should be allowed only when monopoly power is justified by evidence about fixed costs and actual lack of appropriability. The operational model should be that of “regulated utilities”: patents to be awarded only when strictly needed on economic grounds. This requires reforming the USPO, which is urgently needed in any case.

The full paper is here. Brad Plumer has a very good summary here.

HERE ARE THE FACTS:

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ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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