Two former Boston University Law School Colleagues occupied New York Times headlines on Sunday in a discussion of the economics of patent law. Michael Meurer and Jim Bessen are both economists and both law professors. Over the past few years, the pair has compiled a tremendous amount of economic data regarding patents and companies who patent.
Meurer & Bessen’s bottom line: On average, the patent system is bad for innovation. They agree innovator firms often profit from their own patents. However, the pair’s data shows that the innovator firms are also the ones most likely to be targeted by other patent holders. (litigation, licensing, etc.) In today’s system, they find, the disincentives created by other people’s patents outweighs the incentives to build your own portfolio. I.e., on average, the patent system discourages innovation. (Patents do a much better job in pharmaceuticals and much worse job in IT.)
Meurer & Bessen do not suggest dismantling the patent system — rather, they believe that a number serious reform measures are needed to shift the balance back to a positive state where patents incentivize innovation.
Their reform proposals call for clear predictable patent boundaries — something that every patent practitioner knows is a serious problem. Unfortunately, the current reform proposals hardly even touch this major issue.
Their book, Do Patents Work?, will be out in 2008 (Princeton). For now, you can find snippits of the research at the following links: