Stronger Patents would disrupt markets --- monopoly pricing and follow-on impedance
Osborn et al. 15. Lucas S Osborn, an expert in the area of Intellectual Property Law with a focus on Patent Law. He has authored over a dozen articles on intellectual property law, presented his research on three continents, and been quoted in the Wall Street Journal, Bloomberg News and local publications. Dr. Pearce is the John M. Thompson Chair in Information Technology and Innovation at the Thompson Centre for Engineering Leadership & Innovation. Amberlee Haselhuhn is a Ph.D. Candidate, Materials Science & Engineering, Michigan Technological University (Spring 2015). The Case for Weaker Patents. Saint Johns Law Review, In press. ffhal-02119676f, 2015 (“The Case for Weaker Patents, Available Online at https://hal.science/hal-02119676/document Accessed 7-1-2024, p. 2-3) St. Marks Adam
Regardless of the theory to which one ascribes—the incentive to invent view, the prospect view, or variants thereof—the patent system unfortunately imposes key costs on society. First, by giving an exclusive right to its owner to make, use, sell, and offer to sell the invention, a patent raises the potential for the invention to be sold at a price higher than what it would command in a perfectly competitive market.6 To the extent there are no reasonable substitutes, a patent holder can charge a higher monopoly price for the invention and thus make more profit-per-item sold. The increased price forces some purchasers out of the market for the item, creating a deadweight loss.7 Second, the patent system can also burden society by impeding follow-on technology.8 Technology creation is cumulative; inventors build on the inventions of yesterday to bring forth new inventions.9 Patents can discourage follow-on research by preventing the inventor of an improvement from commercializing it to the extent that it infringes the first patent.10 The longer technology remains patented, the slower will be the cumulative research advances that build upon it. Although there are other costs to the patent system, the harms from monopoly pricing and follow-on impedance represent two of the most prominent. And, in general, the stronger the patent rights, the worse the harms. Thus, the prospect theory’s predilection for stronger patents would increase the patent system’s costs from higher prices and impediments to follow-on inventions