Chapter 1: Introduction
Patents are a fascinating example of how well-meaning economic policy can go wrong. This book adds to the evidence about the major difficulties with current patent policy. It does this through an in-depth exploration of how inventive something needs to be to gain a patent. The data presented in this book show that no inventiveness is needed for a patent, if inventiveness takes either its normal meaning or the meaning of contributing new knowledge or know-how. Patent policy is economic policy. Its essence is a very simple bargain. Society accepts the harmful effects of patent monopolies in exchange for a higher level of invention, and thus a higher level of economic growth. This simplicity of principle has been extremely hard to put into practice – just how inventive should something be to obtain a patent? Where is the point at which the monopoly and transaction costs of patent systems are fully offset by the benefits of inducing innovation that would not otherwise have occurred? If induced innovations generate new knowledge and knowhow this provides benefits that spill over to the community to offset the costs of the granted monopolies. But how much new knowledge is enough?