Blog author: kschmiesing
by on Tuesday, September 9, 2008

As I’ve said before, some of the most interesting debates are those that break down along atypical lines: for example, by splitting dedicated limited government advocates rather than pitting them against statists. Back in 2001, the Journal of Markets & Morality conducted a controversy between two libertarian-leaning economists, Julio Cole and Paul Cleveland, concerning copyright and patent law.

Last year, we published a Christian Social Thought Series volume on intellectual property rights by David Carey that didn’t come down squarely on one side or the other, recognizing both the important role of incentives to innovation but also the obligation to limit property rights when the common good demands.

The issue hasn’t been settled yet, but now comes an important new data point from Princeton University Press: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, by James Bessen and Michael J. Meurer. (HT: The aforementioned Julio Cole of Universidad Francisco Marroquín, Guatemala.)

This study shifts the terms of the debate by marshalling empirical evidence to show that one of the chief arguments in defense of patent restrictions—the innovation incentive—does not hold water. In an era of big business and big litigation, the ideal of the eccentric inventor making his living by patenting his creations appears to be antiquated. Specifically, what Bessen and Meurer demonstrate is that the costs for businesses to defend themselves againt patent infringement suits now far outweigh the benefits reaped by owning patents ($12 billion to $3 billion in 1999). In other words, patents are no longer an incentive to invention so much as a legal tool with which to damage one’s competitors.

[A caveat: This finding excludes chemical and pharmaceutical companies.]