Do Patents Perform Like Property?

Intellectual Property and Patents

Article Snapshot


James Bessen and Michael Meurer


Boston University School of Law Working Paper #08-08, 2008


This paper looks at whether patents really support innovation.

Policy Relevance

The evidence showing that patents are needed to encourage innovation is very weak. The pharmaceutical sector is an exception. Other sectors vary widely, and depend on whether patent institutions are effective.

Main Points

  • The history of the Industrial Revolution provides some evidence that patents supported innovation in the United States, but there were problem with patents as well.

  • Comparative studies of property rights across nations show that stronger property rights are associated with economic growth.
  • Comparative studies associate growth weakly with patent rights. But evidence also shows that successful tech firms later lobby for strong patents to protect their rights.

  • Nations that strengthen their patent rights to comply with TRIPS do not show increases in domestic innovation, though foreign inventors may increase patenting.
  • Much innovation does not rely on patenting, and many innovations are not patented. Pharmaceutical products benefit from patents to stop late-comers from simply copying new products developed at great expense, but this sector may be unusual.

  • Whether patents encourage innovation or not varies widely depending on the institutions and the conditions in a specific sector.

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