Competition constrains price increases from patents

Answer: An accurate answer to this question must distinguish the static situation where one simply compares the prices of consumer products where they are protected by patents versus the prices of the same consumer products where they are not protected by patents. Of course, it is possible that stripping patent protection from already-invented products would reduce the price of those products. Stripping patent protection would allow copiers to sell the same product without charging a price that includes any effort to recoup the cost of developing the product—the copiers, by definition, did not develop the product. Likewise, adding patent protection to already-invented products might increase the price of those products. Adding patent protection would not allow copiers to sell the same product without charging a price that includes any effort to recoup the cost of developing the product. All of this, however, is dependent upon the level of competition in the market for the relevant products, and in most instances noninfringing products constrain the pricing of patented products. Anyway, this is not what I understand the proposed reforms seek to do. They do not seek to strip patent protection from already-invented products or add patent protection to already-invented products. Rather, the proposed reforms seek to return patent eligibility to its historical focus on practical utility. It also is unclear whether the proposed reforms would be given retroactive application. (One possibility, however, is restoring the historical scope of patent eligibility prior to the Supreme Court’s decision in Mayo and applying this scope to already-issued patents. This would not strip patent protection from already-invented products or add patent protection to already-invented products, but instead for some already-invented products provide certainty that patents covering them meet the requirement of patent eligibility.)

The reality, moreover, is that the patent system operates in a dynamic situation; the patent system is built upon the idea that it spurs the creation of new products. As a result, to answer the question accurately one needs to compare the price of a first set of consumer products developed without the proposed reforms with the price of a second set of consumer products developed with the proposed reforms.

It is unlikely that the proposed reforms will increase the prices of consumer products already on the market. Those products will experience new competition from new products created on the basis of increased research and development. These new products will include enhanced features or will be produced more efficiently given new manufacturing technologies. Thus, existing products will face competition driving the cost of these products down.