How Much Harm Do Bad Patents Do To The Economy?
Date : 29 Feb 2008 Category : Business
Techdirt
We've been discussing how patents can have a serious economic downside (as was recognized by Thomas Jefferson and James Madison as they designed the patent system). It appears that some researchers are trying to quantify just how much damage bad patents are doing to the economy. Against Monopoly points us to a blog post at Technological Innovation and Intellectual Property that discusses the results of a preliminary study (pdf file) that estimates a loss of $22.5 billion due to bad patents. The researchers admit that the findings are preliminary, but it does create an initial framework by which to look at the negative impact of bad patents on the economy. Among other things, the paper lists out the following ways that bad patents harm the economy:
Cause consumers to absorb monopoly prices over "inventions" that were
already effectively common knowledge
Direct resources away from productive research and instead towards
strategic accumulation of patents already filed over innovations already
deployed
Divert resources to "defensive patenting" or securing offensive "blocking
patents
Direct research away from areas of existing patents that should not have
been granted
Direct resources toward acquiring and enforcing substandard patents and
collecting royalties rather than other more-productive fields of economic
activity.
We've seen all of these in action lately. And, of course, this doesn't even get into how much is thrown away in legal resources to litigate patents and defend infringement claims on patents that should not have been granted. Also, it's worth noting that the TIIP blog post reminds us that the author's own book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk comes out next month.
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