For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Tuesday, 27 July 2010

Do poor people like different patents to rich people?

That is the question - simplified - posed by a new paper by the economist Christian Kiedaisch of the ETH Zurich. The paper examines distributional implications of different patent policies. The proposed mechanism is that an increase in patent length increases the share of monopolized industries so that relatively more goods are sold at a markup. However, markups decrease in the share of monopolized industries and the rich benefit more from this effect than the poor as they consume a larger share of patented goods than the poor. While both the rich and the poor benefit in a similar way from an increase in the rate of growth, the poor loose more in terms of current consumption than the rich if patent length increases and because of that, they prefer shorter patents.

The author then examines the preference for another quality of patents which he terms "patent breadth", roughly capturing the deterrent effect of patents on entry into the market (scope of protection and ease of enforcement). He concludes that an increase in patent breadth increases innovation incentives so that a given rate of growth can be attained with long and narrow or short and broad patents (lawyers' toenails tend to curl when the scope of protection of a patent is thus simplified...). If the relative per capita labour income of the poor is not too large, they prefer short and broad patents while the rich prefer long and narrow patents. If, on the other hand, the poor are so poor that they can only afford to consume nonpatented goods, they are in favour of stronger patent protection which leads to a larger rate of growth.

As you can imagine, the whole thing is a lot more technical and complicated than this short post, so read the paper if your curiosity has been piqued.

The image is a creative-commons licensed photo of a street scene in Haiti by Michelle Brea- hanging on- . I wonder whether the depicted guy prefers short and broad patents or is in favour of stronger patent protection...

1 comment:

Norman said...

This is one in a series of articles in which economists play with notions of patent length and scope as if those these are policy dials that can be turned at will. This may be true in principle with respect to length, but it is not obviously true with respect to scope. The economists have generally been vague and all over the map in terms of what they mean by patent “scope” or “breadth.” One of the early articles in this line, Klemperer (1990) was the most explicit. He says in effect that scope if related to claims construction, so that a system with a robust doctrine of equivalents has a broader scope that one which does not. I doubt this would be an effective policy instrument. At one level it is simply a matter of construction, which does not limit what a patentee can claim with a properly drafted patent. And it seems doubtful that claim construction can be used to fine tune patent rewards as imagined by the economists. Those articles advocating narrow patents recognize that the patent reward must be large enough to induce innovation, so they imagine that turning down the scope of patents would mean that all patents would get some protection, but all would get less than a system with a broad scope. But systematic adoption of narrowly literal construction is more likely to randomize rewards, resulting in many worthless patents along side many broad one (that were drafted to capture the entire inventive contribution even on a literal interpretation). Moreover, this line of argument ignores the real debate over the notice function of claims.

Other than that Mauer& Scotchmer (2002) consider making patent more like copyright; Gilbert & Shapiro (1990) invoke competition policy and compulsory licensing. Gallini (1992) discussion of legal scope consists of a footnoted reference to the Genentech tPA decision – whatever the merits of that decision on its facts, I cannot see how it generalizes to a doctrine of patent scope applicable to e.g. entirely new pharmaceuticals, or indeed any other type of invention.

In short, I do not think that the economists define patent “scope” in manner that allows any practical legal manipulation of that economic variable. Perhaps it is up to lawyers to engage with economists as much as vice versa. But there is no point asking whether poor people like broad patents or narrow ones until there is some meaningful dialogue as to what legal doctrine can actually accomplish in terms of patent breadth.

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':