The Economics of Patent Enforcement and Its Reception in Asia

Abstract:     
In an ever more knowledge-based economy, patent protection has gained an unprecedented importance in industrial policies worldwide. In particular, in emerging Asian economies the drive towards enhanced patent protection has clearly become visible. However, in these economies, the enhancement of patent protection has not only translated into the adoption and implementation of the substantive patent standards contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and beyond. It has also translated into an enhanced focus on law enforcement.

This enhanced focus on enforcement has, inter alia, been due to the fact that the economic analysis of law has extensively shown in the 1980s and 1990s that economic development through foreign direct investment (FDI) and technology transfer (TT) hinges substantially on the strength of the intellectual property (IP) enforcement environment. Through these findings in the area of FDI and TT, the economic analysis of law has begun to influence patent policy decisions in Asia and therein, in particular, in emerging economies. However, even prior to these FDI and TT-related findings, the economics of patent law had begun to inform patent policies both in developed and in developing countries. These earlier infusions of economic reasoning in patent policy have been due to an ever-increasing methodological maturity of the economic analysis of law, which allows for ever more economically corroborated policy recommendations.

The observation of these developments warrants a closer look at patent enforcement from the perspective of the economic analysis of the law. Such a closer look will allow for answers to one of the most topical research questions in international patent enforcement scholarship: What is the contribution of the economic analysis of the law to the optimal design of national patent enforcement systems in Asia?

In attempting to answer this question, the book chapter, first, introduces the methodological and economic foundations of the economic analysis of law generally and, more specifically, of patent law. Second, it discusses the state of the economics of patent enforcement along the dimensions of substantive and institutional issues. Third and in following the structure of the larger research project on patent enforcement in Asia as reflected in the entire book, the book chapter analyzes the state of economic analysis of patent enforcement in Asian jurisdictions with civil law traditions and with common law traditions. It closes with a summary and recommendations for future research efforts.

Keywords: Patent law, patent enforcement, economic analysis of the law, Asia

JEL Classification: O34, O53, K00, K42

Accepted Paper Series