Only the counterplan fosters incremental innovation that supports SMEs

3.2 Preventing Free Riding and Promoting SMEs The nature of inventive efforts has evolved from technological breakthroughs to a greater focus on inventions that are incremental in nature; broadening patent protection to encompass such incremental innovations can be an accepted patent policy under certain circumstances, especially in encouraging follow-on inventors to secure rights on their cumulative improvements.29 A corollary factor is that in some countries, more innovations, both of the breakthrough and incremental varieties, emanate from local small and medium sized enterprises (SMEs) than from larger multinational conglomerates. Such inventions tend to have a lower standard of inventiveness, are prime candidates for free riding activities by competitors and deserve new hybrid intellectual property rights.

It is argued that sui generis regimes have historically improved the legal environment for incremental innovation, and consequently are good for the national economy. A related reason why utility models may be good for SMEs is that the cost factor may inhibit them from using the patent system as much as they would desire.

Should a new property right be the answer to help SMEs? Why should low cost and incremental innovative activities be rewarded with a monopoly right? A forceful objection to inventions which do not entail high transaction or R&D costs is made by Kitch, who states:

Low-cost inventions sufficiently rewarded by the innovator’s head start should not be patentable. Since these innovations would exist anyway, I reasoned, there is no reason to pay the cost of the patent monopoly. The courts should use the non-obviousness test, I wrote, ‘to evaluate the magnitude of the costs involved in a given innovation.’30

Perhaps the rationalisation argument can be made again on the basis of differentiated patent policy, namely, that certain types of product sectors do require utility model protection as they are more concerned with incremental or improvement innovation. For example, the European Commission argued for the introduction of a pan-EU utility model law as it felt there was a need for a rapid and cheap protective regime for minor innovations in the following industries: toy manufacturing, clock and watchmaking, optics, microtechnol- ogy and micromechanics. A more recent 2015 study acknowledges this view. The picture in the wider public has therefore emerged of the utility model being an IP tool for the ‘small inventor and his/her small inventions’.3

Cost benefit analysis of the semiconductor case study proves the innovation net benefit

Rose 12 [Simone A., Professor of Law, Wake Forest University, writes and publishes in the area of intellectual property (IP), “Semiconductor Chips, Genes, and Stem Cells: New Wine for New Bottles?,” American Journal of Law & Medicine, 38 (2012): 113-157, pg. Cambridge Journals Digital Archive, ALB]

3. The SCPA’s Benefits Outweighed Its Overall Costs A host of scholars concede that attempting to predict accurately that a proposed statute’s benefits outweigh its costs is, at best, an imprecise science.181 Kastenmeier and Remington nevertheless conducted a cost-benefit analysis of the SCPA that began by acknowledging that any grant of exclusive or monopoly rights creates the opportunity for monopolistic pricing and other exclusionary practices. They posit that despite the limited exclusive rights granted under the SCPA, registered owners of early generation mask works would continue competitive “learning curve” pricing in order to effectively compete on both the domestic and global semiconductor chip markets.182 Thus, consumers would gain the benefit of access to these products without suffering the cost of monopolistic pricing.183 They and others further note that the relatively low cost of implementing the registration process and the lack of opposition to the SCPA provided additional evidence of the relatively low costs to society. Thus, the combined costs of the SCPA failed to outweigh the overwhelming benefits of preventing chip piracy (which was rampant at the time), stimulating technological innovation and contributing to the overall growth of the U.S. economy by providing a boost to the semiconductor industry.184