Author(s)
Source
http://idei.fr/tnit/papers.html, 2008
Summary
This paper looks at how patent law affects inventors’ rewards.
Policy Relevance
Courts can affect innovation by determining if patents are more broad or more narrow.
Main Points
- Some argue that courts should make it easier to show that patents are obvious and invalid, because patents can interfere with other inventors.
- Courts can limit patents getting in the way of other inventors by deciding how broad that patent is, and this can be more important than obviousness. If a patent is very broad, many firms working in that area will require a license from the patent owner.
- Inventors build on others’ ideas (innovation is cumulative). Adjusting how courts see breadth and obviousness determines if follow-on inventions are patentable or not, and whether follow-on inventions infringe the earlier patent.
- In the Semiconductor Chip Protection Act only a large advance is protected and noninfringing, and any smaller advance is infringing and not protected.
- Generally, a new product replaces an original when it is patentable and noninfringing. Licensing is important to avoid infringement, because both inventors profit.
- When patents are hard to get and narrow, firms might invest more in big innovations to get a patent, but firms might use trade secrets more.
- Trade secrets make competition and follow-in inventions hard because inventions are not made public. Firms opting for trade secrets can limit the benefits that would come from reforming the patent system.
- If patents on an early idea are easy to get and broad, consumers tend to pay higher prices, and firms will waste money racing to win the first patent.
- When patents are easy to get and narrow, large advances will be patentable and noninfringing, which encourages firms to invest in significant innovation.
