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Joff Wild from Intellectual Asset Management comments on a recent criticism of patents and their role in R&D spending found in a new book by notable researchers Jim Bessen-Mark Meurer: Bessen and Meurer take a look at the relationship between patenting and R&D investment, and come to the conclusion that: “Patents applied to small molecule drugs do seem to work like property; they deliver wealth to drug pioneers and encourage R&D. For most other technologies it's hard to find evidence that patents work as property. Similarly, over time and across countries and industries, patents sometimes deliver wealth and encourage R&D, but there's no evidence that this is generally true.” Essentially, they say, there is no evidence that patents lead to greater spending on R&D; in fact, the opposite could be true – that the existence of strong patent rights leads to less expenditure on R&D.
...when you think about it, it’s not really a huge surprise. Patents mark out territory and give companies the right to exclude competitors. But they also allow companies to know what their rivals are doing. If you know, for example, that one company has established a strong patent position in a particular area of technology, it makes little sense to spend a lot of money in that area. However, it does make sense to spend money in areas where there is a low concentration of patents. In this way, the existence of patents allows companies to hone their R&D and get more bang for their buck from what they do, meaning they do not have to spend as much on R&D to get effective returns...
Of course, there is no absolute proof that one thing follows on from the other; it could well be that there are reasons why what I am suggesting is wrong. But it would be good to know whether anyone has actually done some work on this. Maybe it is something that Bessen and Meurer look at in their book and will discuss in another PatentlyO article. If they haven’t and don’t, they should. Wild's argument that patents may decrease duplicative innovating activity is well supported in the patent literature. I'd be interested to see a Bessen-Meurer reply based on their empirical research (admittedly, I haven't looked at their book, which may address the topic).
Granted, the issue of R&D spending and patents is often confusing. The Free Culture-Software Movements would argue that R&D spending is not necessary for innovation, thus there is no need to have patents help innovators recoup investments and deter free-riding. On the other hand, some economic research criticizes patents for not increasing R&D investment. Taking as a baseline the Free Culture-Software Movements' view that R&D spending is not essential for innovation, the economic argument that patents are not important because they do not encourage R&D spending becomes moot. I'd enjoy seeing a debate between the Free Culture-Software Movements and Bessen-Meurer on this subject.
posted by Noel Le @ 7:31 AM | Patents
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