Reject patent skepticism –evidence overwhelmingly confirms a weak patent regime locks out new entrants, lowering the diversity of innovation, undermining disclosure, R&D, and follow on innovation

Mainly unjustified concerns hold that a strong IP system—particularly in the form of strong enforcement— hampers competition and innovation. From this perspective, patents are accused of overly protecting established and non-innovative incumbents from the threatening entrance of new, smaller, but more inventive competitors. Interestingly, proposals to weaken the patent system have mainly been supported by long-standing players that aim to maintain their market share and competitive position. This is because a strong IP system encourages new and innovative players to enter the market with confidence: these new entrants, knowing that their IP will be protected, can safely reap the rewards of their innovation. Put differently, although it may look counterintuitive at first glance, it is indeed a weak patent regime that creates the strongest entry barriers to disruptive innovators.187

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187 The weak patent assumption only generates a false impression of fostering smaller and disruptive innovators: the risk is to excessively favour the position of incumbents at the expense of the public interest, which would instead greatly benefit from a dynamic and more diversified innovation ecosystem, capable of effectively prosecuting and defending its IP rights. See Barnett (n 21).

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Additionally, the patent system not only safeguards the proprietary rights of inventors but it also ensures the disclosure of knowledge.188 In this respect, in exchange for the exclusive right over the commercial exploitation of their innovations, patent owners are required to share detailed technical information concerning their novel solutions in the form of patent documents, which make this codified knowledge publicly accessible.189 Ultimately, by building upon this disclosed technical content, patents effectively encourage further progress in scientific research and technology.190 If patent rights are redesigned in such a way that their reward function is excessively weakened, inventors may find it preferable to keep their technologies secret.191 In this respect, the current surge in trade secret enforcement, in particular in the biotechnology and life sciences sectors,192 can be traced back to the recent developments in patent law limiting the patentability requirement of inventions193 and in notable court decisions.194 Consequently, a systematic adoption of trade secrets in place of patents may eventually hinder both knowledge and labour mobility flows, with a chilling effect on technology diffusion and follow-on innovation.195

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193 In particular, the limitations on the patentability of inventions related to the ‘laws of nature’, ‘natural phenomena’ or ‘abstract ideas’ have increased the importance of trade secrets in both the pharmaceutical and biotech industries. See Michael R McGurk and Jia W Lu, ‘Intersection of Patents and Trade Secrets’ (2015) 7 Hastings Science and Technology Law Journal 7, 189.

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Some have assumed that a weak IP system is better for consumers as, absent patent protection, the retail prices of consumer products would be lower. In the same vein, some argue that a weak patent system not only lowers market prices but also increases market competition, ultimately benefiting end-users. However, weak IP protection is also likely to lead to a lack of future innovation and investment in new technologies, thus irreparably harming consumers in the long run. Furthermore, in the case of SEPs, the previously mentioned arguments are invalid as FRAND provides access to all, thus enhancing competition—rather than stifling it—and ensuring at the same time fair and reasonable terms and conditions.196

As with numerous other matters, achieving an optimal outcome requires a well-balanced system. In this respect, industry practitioners have recently warned against the risks of hold-out, magnified by the anti-injunctions advocacy.197 Moreover, denying patent owners their right to access prompt injunctions would result in a devaluation of IPRs, and SEPs in particular.198 That is, without proper and timely enforcement, firms would have no incentives to invest in the R&D needed to compete for global leadership in cutting-edge technologies.199 In addition, the increasingly popular suggestion of differentiating patent protection across technologies—for example, different patent protection durations in the pharmaceuticals vis- a-vis the ICT sector—carries the risk of introducing a significant amount of uncertainty. Such a policy shift may potentially jeopardize the long-standing efforts made to harmonize IPRs.

Furthermore, numerous analysts have emphasized how the recent proposals to exclude, revoke or weaken IP rights will likely reduce the key incentives for the development of strategic technologies.200 Simultaneously, intensifying geopolitical tensions have drawn new attention to IPRs, and several technologies, especially those at the core of many strategic industries, are now being closely monitored. This is the case of the semiconductors and microchips sector, which undoubtedly ranks among the most crucial technological domains in todays economy. Microchips have such a wide range of uses that they have become an integral part of the value chain across various industries, with applications in every sector of electronics.201 Additionally, the semiconductor supply chain—characterized by a high degree of globalization, a limited number of major players, substantial capital investments and complex interdependencies—has given rise to new strategic considerations and security concerns in many countries.202 These concerns have been further exacerbated by the ongoing global microchip shortage.203

In these current challenging times, fostering a close collaboration between policymakers and stakeholders is essential across a multitude of fronts to achieve the proper balance of interests. IPRs stand as no exception to this imperative. As the patent system continues to play a pivotal role in promoting R&D, incentivizing inventors and effectively addressing the pressing global challenges we face today, the scepticism towards patents that has marked the IPR policies of the past recent years should thus be seriously reconsidered.