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Should We Abolish Patents?

Just over a year ago Jordan Weissman wrote a compelling piece in The Atlantic questioning whether we should abolish patents (yes, all of them). The current system, he said, is a mess characterised by expensive litigation, lawyers, patent trolls, and defensive patent strategies. He cites work done by Michele Boldrin and David Levine (Professors at Washington University, St. Louis) who have argued that whilst limited patent protection may mildly increase innovation, complex and strong patent systems act to retard innovation through many negative side-effects. Patent systems become stronger and more complex over time propelled by vested interests, with political impetus for stronger patent protection often coming from older and more stagnant companies and industries, rather than from new and innovative ones. Furthermore, they suggest that there is no virtually no statistical evidence that rising patent applications serve to actually make economies more productive, and eliminating patents altogether would have fewer negative impacts than most of us assume.

It's a refreshingly controversial point of view. And one that perhaps has some substance, particularly when you consider that most important innovations are not actually patented. A study by the School of Economics and Management at the Technical University of Lisbon analysed the recipients of the "R & D 100 Awards", a competition organized by the journal Research and Development, which each year since 1963 has awarded prizes to "the 100 most technologically significant new products available for sale or licensing" in the world (effectively a list of the most important technological breakthrough innovations over 3 decades). They concluded that only around 10% of these 'important' innovations were actually patented. In most cases, the companies that had innovated had relied on trade secrecy, lead times and speed to market or other strategies rather than the patent system.

If modern competitive advantage comes increasingly from organisational cultures, agility and talent, and if the patent system is actually proving to be a hindrance to the rate of innovation, perhaps it really is time to not only think about overhauling the patent system but to also consider these more radical arguments more seriously.

Photo Credit: Alexandre Dulaunoy via Compfight cc

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