IP rights creates rent seeking.
Simcoe 05 – Professor of Strategic Management at the University of Toronto, PhD in Business Administration and M.A. in Economics from the University of California at Berkeley.
Tim Simcoe, “Chapter 8: Open Standards and Intellectual Property Rights,” Open Innovation: Researching a New Paradigm, 09-16-2005, https://people.bu.edu/tsimcoe/documents/published/OpenStandards_IPR.pdf
On the other hand, any administrative process granting potentially valuable property rights will almost certainly create some rent-seeking behavior. Over the last two decades, there has been a notable increase in the number of U.S. patent applications. The majority of these applications have been granted, which has led to an increase in the scope of patentable subject matter and arguably a decline in average patent quality. A number of authors have considered various explanations for this surge in patenting and explored a number of its effects (e.g. Jaffe and Lerner 2005, and works cited therein).
Standards developers face a fundamental challenge with respect to IPRs. While patent proliferation means that more parties now have the right to impose a “tax” on implementation, the shift towards open innovation has created an environment where “taxation” appears to be a more attractive strategy. Increasingly, SSOs and their participants are facing difficult questions about how and when to reveal information about patents; the rights and obligations associated with SSO participation; the precise meaning of SSO policies; and whether the government will play an active role in enforcing them. It is not clear whether the existing framework of self-governance will be adequate to handle these changes.