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Abstract:
There do not appear to be any cost-benefit assessments of the impact of patent systems, nor any data that can be used to directly assess the economic impact of patent systems. Discussions of patent policy therefore tend to be theoretical, and any evidence used is anecdotal rather than scientifically based. A wider search shows, however, that there is substantial empirical material on the costs and benefits of patent systems published in a very diverse range of journals and working papers. While these do not allow a full assessment of the economic impact of patent systems, they do provide useful evidence on many aspects of the impact of patent systems. This evidence is drawn together in this summary overview. The objective is to assist in a move towards an evidence-based discussion of patents as a central issue in innovation policy.

patent systems, costs and benefits, economic impact

Abstract:
The reach of the patent system has substantially broadened in recent decades. Subject matter extensions (to life forms, software and business methods) were not introduced by parliaments, but by individual judges considering specific cases, often between private parties. The focus in this thesis is whether these changes create a net economic benefit to society. Because of the lack of data on patents, it is not possible to address this question directly. The thesis therefore focuses on a critical aspect of patents: their inventiveness. Patents were designed to increase the quantum of inventions used industrially in a society, thereby increasing employment, income and wealth. To provide an incentive to the inventor, a limited term monopoly was granted. Society therefore benefits if the induced inventions generate benefits greater than the monopoly costs. This depends critically on the inventiveness threshold for patentability. The main contribution of this thesis is a detailed empirical assessment of the inventiveness of patents. This assessment breaks new ground by using the actual claims in the patent specification as the basis for a qualitative assessment against the yardstick of whether there is any new contribution to knowledge. This yardstick is used because a key social benefit from private invention is the spillovers from new knowledge. In addition a low inventive threshold encourages monopoly grants for inventions that would have occurred absent patents, and thus increases social costs without any offsetting benefits. A small universe of 72 recently granted Australian business method patents is assessed on this basis. Of these, one possibly contributes new knowledge, and three others possibly contribute new ideas, but without any associated new knowledge. It is hard to find any contribution in the rest of the dataset. The data suggest that the large majority of currently granted patents produce no benefit to society, and do not meet the normal definition of the concept of 'invention'. The detailed analysis shows the underlying problems to include identifying previous knowledge, an issue already suggested by the literature, but more extensively documented here. The legal judgement rules developed through case law are shown to be very poor yardsticks for implementation of an important economic policy. The narrow legal doctrines result in, for example, the computerisation of well-known methods being judged both novel and inventive. They also allow obvious combinations of old ideas, and trivial variations on old ideas to be granted patent monopolies. Despite the analogous use doctrine, patents are granted for the application of known methods to new areas for which they are well suited. A number of proposals are put forward for reform of patent policy. The underlying theme is that there should be a good chance, and clear evidence, that the patent system enhances national economic well-being. Specific proposals include writing the objective of patent policy into the statute so that judges have clear guidance in their decision-making, limiting the grant of patents to science and technology based inventions, requiring the patent applicant to demonstrate novelty and inventiveness beyond reasonable doubt, setting the inventiveness standard in the context of a balance between benefits and costs, and introducing a defence of independent invention. As the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) mandates no discrimination under patent law between fields of technology, the results of this investigation may be generalisable to other technology fields. They may also be generalisable to the inventiveness standards in other jurisdictions: of the 72 Australian patents, 32 have already received at least one overseas grant (18 if New Zealand is excluded).

Abstract:
Public choice theory provides a parsimonious explanation of changes in public policy, yet there is little systematic data available about the major beneficiaries of patent systems. This paper uses data from the US and Australia to identify those companies which own the largest number of patents from applications made between 1990 and 2001. In both countries the 100 companies owning the most patents own about one-third of all patents owned by organisations. Forty-six companies - many of them household names - are among both the top 100 US patenters and the top 100 Australian patenters. Forty-six companies are on both lists. Among the top 100 US patenters, 43 are US-based. In Australia only one of the top 100 patenters is an Australian company. Major patenters are selective in the technologies they patent in Australia - few semi-conductor companies take out Australian patents, while pharmaceuticals and chemicals have a larger share than in the USA.

Twelve of the 13 companies that played a major role in the development of the TRIPS agenda have been among the top 100 US patenters. However data on the top 10 US patenters from 1969 to 2006 show that since the mid 1980s - the very time when US patent policy was extending to achieve a global reach - overseas companies replaced US companies as the dominant US patenters.

patent ownership, public choice, interest groups