Innovation, Competition and Consumer Welfare in Intellectual Property Law

Innovation, Competition and Consumer Welfare in Intellectual Property Law

Gustavo Ghidini

This authoritative book provides a comprehensive critical overview of the basic IP paradigms, such as patents, trademarks and copyrights. Their intersection with competition law and their impacts on the exercise of social welfare are analysed from an evolutionary perspective.

Chapter 2: Patent Protection of Innovations: A Monopoly with Pro-Competitive Antibodies

Gustavo Ghidini

Subjects: law - academic, competition and antitrust law, intellectual property law


1. The Dialectic Physiognomy of Patents Patents on inventions, the historical incentive for technological innovation,1 have long been viewed with suspicion by various economists, and have even been subjected to friendly fire from the classical school, starting with Jean-Baptiste Say.2 Although obviously aware that patents relate to a specific technical solution and not to a type of utility (and consequently not to a field of activity, as in the case of a real monopoly right), the critics were concerned that a system of patents protecting the results of technological research would have far-reaching adverse effects on price levels (which tend to rise under a system of exclusive sales rights) and on the dynamism of economic competition. In synthesis, it was felt that a ‘monopoly over ideas’ would benefit individual inventors and individual companies at the expense of ‘society and industry’ (J.B. Say 1803). It is noteworthy that contemporary authorities such as F.M. Scherer,3 S. Scotchmer4 and others have expressed not dissimilar concerns about the anti-competitive effects generated by a system of patents:5 the more so (as E.H. Chamberlin reminds us6) in relation to the oligopolistic markets in which current innovation processes are typically situated, especially in the ‘network industries’ (S. Salop).7 See sections 1–5 of Chapter 1. See J.B. SAY, A Treatise on Political Economy: Or the Production, Distribution and Consumption of Wealth, 1803, book I, chapter XVII. 3 F.M. SHERER, Innovation and Growth: Schumpeterian Perspectives, Cambridge, MA, 1984. 4 S. SCOTCHMER, Standing on the...

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