The Competitive Advantage of Weak Patents

56 Pages Posted: 22 Dec 2012 Last revised: 23 Nov 2013

William Hubbard

University of Baltimore - School of Law

Date Written: February 21, 2013

Abstract

Does U.S. patent law increase the competitiveness of U.S. firms in global markets? This Article argues that, contrary to the beliefs of many U.S. lawmakers, U.S. patent law currently undermines the ability of U.S. firms to compete in global markets because strong U.S. patent rights actually weaken an overlooked but critical determinant of U.S. competitiveness: rivalry among U.S. firms. Intense domestic rivalry drives firms to improve relentlessly, spawns related and supporting domestic industries, and encourages the domestic development of advanced factors of production — like specialized labor forces. U.S. patents restrict rivalry among foreign firms less because U.S. patents have little extraterritorial effect. Moreover, due to legal and economic differences between the United States and other countries, foreign patents do not equilibrate competitive conditions abroad. Consequently, for U.S. firms to benefit from the same competitive environment as foreign firms, U.S. patents should be weakened. Such changes, however, also threaten to reduce U.S. competitiveness because U.S. patents promote the development of new inventions that help U.S. firms compete in global markets. This Article thus exposes a deep tension in U.S. economic policy. Unfortunately, lawmakers have failed to recognize this tradeoff and, as a result, have adopted excessively strong patent protections that undermine U.S. competitiveness. This Article addresses this problem by proposing balanced reforms that will selectively weaken U.S. patent protection to increase U.S. competitive advantage.

Keywords: patent, intellectual property, competitiveness, competitive advantage, globalization, harmonization, rivalry, patent reform, protectionism, IP, IPR, invention, innovation

JEL Classification: O3, O30, O31, O32, O33, O34, K33, K39

Suggested Citation

Hubbard, William, The Competitive Advantage of Weak Patents (February 21, 2013). 54 Boston College Law Review 1909 (2013); University of Baltimore School of Law Legal Studies Research Paper No. 2013-13. Available at SSRN: https://ssrn.com/abstract=2192611 or http://dx.doi.org/10.2139/ssrn.2192611

William Hubbard (Contact Author)

University of Baltimore - School of Law ( email )

1420 N. Charles Street
Baltimore, MD 21218
United States

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