An Economic Review of the Patent System

An Economic Review of the Patent System

The patent system has, from its inception, involved a basic economic inconsistency. In a free-enterprise economy dedicated to competition, we have chosen, not only to tolerate but to encourage, individual limited islands of monopoly in the form of patents. Almost 3 million of these have issued in the course of United States industrial history. This inconsistency has been rationalized in various ways. It is pointed out that the patent monopoly is limited both in scope and time; that this monopoly is more than balanced by the inventive contribution; that patented inventions are not actually monopolistic in fact because they are subject to competing alternatives and substitutes; that such monopoly as does result is unobjectionable because the public is deprived of nothing it had previously possessed; and so on. Such explanations may render the conflict less serious, but they do not resolve it.

Fritz Machlup

Study of the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary


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