Patent

:This article relates to the intellectual property right. A land grant is also called a patent.

Economic rationale and criticisms

There are two primary justifications for granting patents. First, in accordance with the original definition of the term "patent," it is argued that awarding patents facilitates and encourages disclosure of innovations into the public domain for the common good. Without patent protection, an inventor may prefer to keep her invention a secret. Disclosure of an invention allows other inventors to improve upon it and patent their improvements. Furthermore, when a patent's term has expired, the public record insures that the patentee's idea is not lost to mankind.

Related Topics:
Innovation - Public domain - Common good

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Second, it is broadly believed that patent protection incentivizes economically-efficient research and development (R&D). Many corporations have annual R&D budgets of hundreds of millions or even billions of dollars. In a society without patents, it is conceivable that each corporation would lower or eliminate R&D spending, because each could reap what another had sown. This second justification closely parallels fundamental arguments underlying traditional property rights--who would build a house if another could freely occupy it?

Related Topics:
Research and development - Corporation - Property

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

However, there are compelling arguments in opposition to patent rights. Most fundamentally, granting a patent confers a monopoly of sorts upon an owner, because he may legally exclude competitors from using or exploiting the invention (though strictly speaking, the word "monopoly" requires that there is no viable alternative in the marketplace). In this way, patent rights differ from traditional property rights--building a house does not prevent one's neighbor from building a house, but patenting an invention bars anyone in the country of filing from producing the invention for the term of the patent. Indeed, patents have historically been granted by sovereigns to non-inventing parties in favor merely so they could profit from monopoly power. The stifling of competition due to patent rights may result in higher prices, lower quality, and shortages--characteristic problems with monopolies.

Related Topics:
Monopoly - Marketplace

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

A more subtle problem with patent rights was put forth by law professors Michael Heller and Rebecca Eisenberg in a 1998 Science article. Building from Heller's theory of the tragedy of the anticommons, the professors postulated that useful innovations that build on earlier patented inventions can be inhibited by the high transaction costs from negotiating with the earlier patentees. According to Heller and Eisenberg, intellectual property rights may become so widely fragmented that, effectively, no one can take advantage of them. As one potential example, the professors identify therapeutic proteins and genetic diagnostic tests that would require the use of numerous patented gene fragments. In analogy to traditional property rights, it would be as if six different parties owned a house's two bedrooms, living room, kitchen, dining room, and bathroom--the utility of the house would be wasted until the parties could negotiate an arrangement in which one party owned the entirety.

Related Topics:
Michael Heller - Rebecca Eisenberg - Tragedy of the anticommons - Transaction cost

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Because of the difficulty in balancing the benefits and drawbacks of patent grants, there is ongoing debate over the extent to which patent protection should be conferred. This controversy is manifested in the ways different jurisdictions decide whether to grant patents. But recent years have seen a global embrace and augmentation of patent protection, as evidenced by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

Related Topics:
Jurisdiction - WTO - TRIPs

~ ~ ~ ~ ~ ~ ~ ~ ~ ~