Patents are a state-granted property rights, designed to promote innovation and the transfer of knowledge. They grant the holder a time-limited, exclusive right to make, use and sell the patented work, in exchange for the public disclosure of the invention. This, so the theory goes, allows creators to utilise and commercially exploit their invention, whilst disclosing its technical details allows for the effective public dissemination of knowledge.
However, complaints that the patent system is broken and fails to deliver are common. (...)
There are plenty of ways we can tinker with the patent system to make it more robust and less expensive. However, they all assume that patents do actually foster innovation, and are societally beneficial tool.
A number argue that even on a theoretical level this is false; the control rights a patent grant actually hamper innovation instead of promoting it. Patents create an artificial monopoly, which results, as with other monopolies, in higher prices, the misallocation of resources, and welfare loss. Economists Boldrin and Levine advocate the abolition of patents entirely on grounds the that there is no empirical evidence that they increase innovation and productivity, and in fact have negative effects on innovation and growth.
A new paper by Laboratoire d’Economie Appliquee de Grenoble, authored by Brueggemann, Crosetto, Meub and Bizer backs this claim, by offering experimental evidence that patents harm follow-on innovation.