I’ve spent a lot of time in this blog analysing the distribution of patents both geographically and amongst companies. In this post I’ll briefly look at the value of a patent, firstly from the perspective of the inventor, and then from society’s point of view.
A patent for an invention protects its inventor from being scooped by other inventors by granting a monopoly for the use of the invention for a fixed period of time. Inventors need to pay the bills, so this monopoly provides an opportunity to receive a return on the time, effort and capital expended in producing the invention. The inventor can obtain this return on investment by commercially exploiting the invention themselves, by licensing the use of the invention to others or by selling the patent. Often the costs of producing the invention will have been met by an employer or investor, giving them a share of the patent from the outset.
Granting monopolies is not something we do lightly in free market economies, as we recognise that monopolists are likely to exploit their position by pricing above the market. Indeed, pharmaceutical companies are often heavily criticised for this, reducing availability of the latest drugs to the less well off. However, without the potential for monopolistic profits, the drug companies argue that they would not be prepared to invest in the risky business of drug discovery in the first place. A patent is a social compromise.
But there is another benefit to society that in the long run may be just as important. To be granted the patent, the inventor must publically disclose the workings of their invention as completely as possible. This allows others to improve on the invention, speeding the innovative process, and ensures that the invention will be available to all once the patent expires. Now the inventor must compromise – without disclosure, secrecy may allow the retention of the inventor’s monopoly for a longer period.
Not all inventors will accept the trade-off inherent in a patent. Inventors can always choose to try to exploit their invention by keeping key details secret e.g. the infamous Coca Cola recipe. However, more and more these days, inventors are also releasing their inventions to the public for free e.g. open source software development. In this case the inventor will either need to rely on an alternative business model, or will have to get a day job!
I would suggest that patents serve several additional purposes,
1. An obvious deliverable/output to funders/employer.
2. A bargaining chip for trading access ( aka blackmailing ) between competitors.
3. Priority claims if competitors patent their IP in the same area.
4. Marketing of company’s expertise to people searching that field.
None of the above require the patent to actually be useful, which is surely the case for most patents. As a cynic, I would suggest that the vast majority of NZ research patents fit category 1.
On the global front over the last decade, using patents and copyright to protect IP has been like bring a knife to a gunfight, as enforcement against infringers is inevitably very expensive, with the expense increasing with the IP value ( consider Apotex against Big Pharma ).
Patents will not protect monopoly should governments decide to appropriate the IP, recent pharma examples include Brazil and Thailand with Merck’s AIDs drugs ( eg Efavirenz ), and India’s threat to Novartis’s Gleevec. The USA threatened Bayer with breaking Ciprofloxin patent during a major scare ( anthrax ).