Reforms to Make Intellectual Property Less Monopolistic

Reforms to Make Intellectual Property Less Monopolistic

Writing for Project Syndicate, the Brookings Institution’s Zia Qureshi makes the case that while intellectual property (IP) per se is necessary to encourage innovation, our current system is out of balance. Quoting The Captured Economy by Brink Lindsey and Steven Teles, he argues that IP laws today “look more like intellectual monopoly than intellectual property”:

Yet the main features of today’s IP regime were established for a very different economy. Patent rules, for example, reflect the long-held assumption that strong protection provides an essential incentive for businesses to pursue innovation. In fact, recent studies by Petra Moser and Heidi Williams, among others, find little evidence that patents boost innovation. On the contrary, because they lock in incumbents’ advantages and drive up the costs of new technology, such protections are associated with less new or follow-on innovation, weaker diffusion, and increased market concentration. This has contributed to growing monopoly power, slowing productivity growth, and rising inequality in many economies over the past couple of decades.

Patents also invite considerable lobbying and rent-seeking. A majority of patents are used not to produce commercial value, but to create defensive legal thickets that can keep potential competitors at bay. As the system expands, patent trolling and litigation soar. Lawsuits by patent trolls comprise more than three-fifths of all lawsuits for IP infringement in the U.S., and cost the economy an estimated $500 billion in 1990-2010.

Qureshi’s summary highlights the two main problems with the excesses of our current IP regime. On the front-end, patents close off opportunities for follow-on innovation by making it impossible for other inventors to use inventions because they are patented (even if they are low-quality patents).

On the back end, patent trolls who may not even be using the patents they own (called “non-practicing entities”) can sue companies that often inadvertently violate the trolls’ patents tying up resources that could be put to more productive use.

Far from taking a “burn it all down” position, Qureshi’s proposed fixes to the patent system remove the worst excesses while still leaving in place a system designed to incentivize truly novel innovations.

One set of reforms to consider would focus on improving institutional processes, such as by ensuring that the litigation system does not favor patent holders excessively. Other reforms concern the patents themselves, and include shortening patent terms, introducing use-it-or lose-it provisions, and instituting stricter criteria that limit patents to truly meaningful inventions.

The devil’s in the details, but these common-sense measures would go a long way to claw back the overreach of our IP policy without throwing the baby out with the bathwater.

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By |2018-07-16T08:40:22-07:00July 16th, 2018|Blog, Intellectual Property|