Do Patents Drive or Hinder Innovation?

Here’s a brief note in response to some of the discussions I’ve seen regarding the merit of patents.

Many of the anti-patent arguments focus on things which probably never should have been patented. But few address the things which only exist because of patents.

In some industries (e.g. software), patents are often seen as a nuisance. What makes biotechnology special is the combination of enormous time and financial costs to develop something new, and the relative ease of reverse-engineering once that new thing has been discovered and proven useful.

Take, for example, the first biotechnology patent: Diamond v. Chakrabarty – Wikipedia (this is the Supreme Court case that determined that you could patent biotechnology inventions).

In a nutshell, a researcher produced bacteria which could be sprayed on oil spills and break down the oil. As part of their decision, the Supreme court considered that without patent protection a competitor could simply cultivate bacteria dispersed on a treated oil spill in public lands, and sell them at a reduced price reflecting their lack of R&D investment. To promote innovation (the purpose of patent laws), it was important to allow inventors to have temporary protection from competition (patents). This decision is credited with enabling the biotechnology industry — and all the novel drugs and other products it has brought.

Extending to drug patents, there are laws both extending patent rights and fostering the rapid entry of generics (see When do Drug Patents Expire?). So rather than a simple question of whether or not patents hinder innovation, it is more important to consider them in the context of how they are used to drive innovation.


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