Patent delay sends economic shockwaves.
Mark Schultz and Kevin Madigan '16, Mark F. Schultz is Director of the Intellectual Property and Technology Law Program at the University of Akron School of Law, Kevin Madigan is a lawyer at CPIP at George Mason University’s Antonin Scalia Law School, "The Long Wait for Innovation: The Global Patent Pendency Problem," Center for the Protection of Intellectual Property, 10-31-2016, https://sls.gmu.edu/cpip/wp-content/uploads/sites/31/2016/10/Schultz-Madigan-The-Long-Wait-for-Innovation-The-Global-Patent-Pendency-Problem.pdf, Accessed 7-6-2024 by NT-MP
Delays matter because patents matter. Patents affect decisions about which businesses get investments, which products get launched, whether a business gets off the ground, and other key decisions. Without the security provided by a patent, these things often simply don’t happen.
Here are three ways in which patent backlog hurts a country’s economy
• Delay Hurts Entrepreneurs. Startups are always a risky proposition, so many business decisions are contingent upon the grant of a patent. Recent research by a scholar in this Center’s Thomas Edison Innovation Fellowship, Deepak Hegde, has demonstrated this point. Hegde, along with his co-authors Joan Farre-Mensa and Alexander Ljungqvist produced a study titled “The Bright Side of Patents,”1 which found that delays in obtaining a startup’s first patent impair its performance. Every year of delay reduces the startup’s employment and sales growth over the five years following its eventual approval by 21% and 28%, respectively. Delays also hurt a startup’s ability to innovate, reducing the number and quality of its subsequent patents. Furthermore, for each year of delay, the startup’s chances of going public are reduced by half.
Patent pendency statistics are a strong indicator of how serious a country is about supporting its own entrepreneurs. If the patent system is to support local innovation, then the patent system needs to serve entrepreneurs with speed and efficiency.
• Delay Hurts Consumers by Delaying Access to Products. Patent delay means product delay. Pendency problems deny consumers access to lifesaving drugs and beneficial technology. Research shows that patents make a difference as to whether people can obtain products. Patents matter especially in the case of pharmaceuticals, where companies often must spend significant resources to obtain regulatory approval. Research has shown a link between delayed availability of drugs and weak patent protection. Other research shows a similar link between trade in high tech products and patent rights.
• Delay Hurts Society. Patent delay imposes social costs, including lost jobs, lost products, and lost innovation. A report for the UK Intellectual Property Office estimated that combined losses from each year of backlog in the US Patent and Trademark Office, Japan Patent Office, and the European Patent Office costs the global economy over $10 billion a year.2