Nearly all of the economic evidence shows that patents tend to do more harm than good. Researchers James Bessen and Michael J. Meurer have gone into a little more detail as to how much damage is done, but I wanted to focus on why the downsides to patents are so often worse than the upsides.
At one level, it goes back to basic fundamental economics. Any given monopoly is going to be bad. There are economic rents associated with a monopoly. It limits the supply available and increases the cost, acting as a deadweight loss to society. That’s absolutely true with patents as well (as much of the research has shown). However, there are a few more reasons why patents tend to be a net negative. First, let’s focus on why the reasons in favor of patents aren’t particularly strong.
The first is that it should act as an incentive to create the product. Yet, as the research has shown, that’s almost never true in practice. More innovation tends to happen with weaker patent laws, and when stronger patent laws are put in place, the pace of innovation decreases. The reason is that real innovation almost never happens because of patents.
Very few people invent stuff “to get a patent,” but because there’s a need in the market and they can help solve it. That’s true with, or without, patents. Furthermore, it’s that need in the market that is the real incentive for innovation. If you can serve a market, there’s a way to make money from that market, and that acts as plenty of incentive.
The fears that an “easily copied” product will damage the original inventor are also wildly overblown. Study after study after study has shown that there is a distinct first mover advantage, and even things that are easily “copied” doesn’t mean that the copycats get success in the market. People put a premium on buying from the original creator.
Furthermore, they often believe (correctly in many cases) that the original creator has a better understanding of the market, and is likely to continue to innovate faster and with better solutions.
Finally, in the worst case scenario, where a copycat is able to do a better job, that’s also not a bad thing, because the societal benefit is still a better product. It’s called competition, and is generally considered a good thing in a market economy.
Photo by USPTO.
Commercial Capital Training
Welcome to Commercial Capital Training Group Own Your Own Finance Business By Completing Our Comprehensive Commercial Loan Broker Training Program Commercial Capital Training Group, LLC 90 State St. Suite #1500 Albany, NY 12207 Commercial Capital Training Group has developed a one-of-a-kind commercial loan broker training program that allows you to own a commercial finance company. With […]
e² Young Engineers
If you love children, you are going to love this business! Our programs teach science, technology, engineering and math to children and we have fun! Background: We are e² Young Engineers Young Engineers enrichment programs combine education + entertainment = edutainment. We created a variety of different programs that can be used to teach science, technology, […]
Open A Boutique
I Will Teach you How to Open a Boutique Have you always wanted to share in the excitement of owning your own clothing, accessory, gift, children’s, maternity, bridal or shoe boutique – either online or brick and mortar? Are you crazy about fashion, motivated and do you want to learn what it takes to get […]
Cell Routes USA
We Are Cell Routes USA & we are taking the world by storm!! Are you aware that today, 99% of people ages 14-80 have a cell phone? And what do you need all the time when you have a cell phone?? Accessories!! Our BOLD, BRIGHT & HIGHLY ACCESSIBLE Displays literally sell the product for you. […]
Owner Financing is a Multi-Billion Dollar Untapped Market and it occurs in about 10% of all home sales in the U.S., and it’s growing in popularity every day. Our company has been in business since 1997 and is one of the largest buyers of Owner Financed Real Estate Notes in the country. We have created […]