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Moir, Hazel V.J. --- "What are the Costs and Benefits of Patent Systems?" [2009] ELECD 435; in Arup, Christopher; van Caenegem, William (eds), "Intellectual Property Policy Reform" (Edward Elgar Publishing, 2009)

Book Title: Intellectual Property Policy Reform

Editor(s): Arup, Christopher; van Caenegem, William

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848441637

Section: Chapter 3

Section Title: What are the Costs and Benefits of Patent Systems?

Author(s): Moir, Hazel V.J.

Number of pages: 26

Extract:

3. What are the costs and benefits of
patent systems?
Hazel V.J. Moir
Patent systems are one of the oldest policies to promote innovation. So it is
surprising how little factual information is available about their economic costs
and benefits. The data that are available seem to be regularly ignored in patent
policy discussions (Mazzoleni and Nelson 1998). Macdonald (2004) suggests
this imperviousness to fact shows that the idea that innovation will not occur
without patents has achieved the status of myth. The objective of this chapter is
to set out the range of benefits and costs of a patent system,1 identify those
elements most critical to sound patent policy and review the evidence available
so far, so as to set an agenda to establish an evidence basis for sound patent
policy. A sound patent system is defined as one where social benefits exceed
social costs, and the system therefore improves a nation's economic well-being.


I. INTRODUCTION
Patent policy is based on a conundrum: designed to increase innovation, it
operates by initially suppressing the dissemination of new patented technolo-
gies. Balance is therefore central to patent policy. The benefits deriving from
any induced higher level of innovation must offset, at least at the level of soci-
ety, the costs due to the grant of monopoly privileges.
As yet, no country appears to have undertaken a cost­benefit analysis of
their patent system. The earliest, most comprehensive approach remains
Machlup's 1958 report to the US Congress, ...