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Edited by Enrico Colombatto
Chapter 18: On Intellectual Property Rights: Patents versus Free and Open Development
18 On intellectual property rights: patents versus free and open development Alan G. Isaac and Walter G. Park Introduction Intellectual property rights (IPRs) encompass a broad array of legal protections, including patent rights, copyrights, trademark rights, plant breeders’ rights, protection of trade secrets, industrial designs, layout designs for integrated circuits, and geographical indications (regarding the origin of goods and services). These legal protections serve diverse purposes and functions, and the institutions supporting them are also quite distinct. In this chapter we focus on the patent system. Patents are a primary instrument by which commercial ﬁrms secure legal rights to inventions. In the United States, the core economic justiﬁcation of patents is that they improve welfare by stimulating discovery, disclosure and dissemination. However, patent systems generate both economic beneﬁts and costs. In principle, the theoretical effects of patents on innovation depend on the institutional environment and on the nature of technology. Both academics and policy makers are aware of circumstances in which patents can adversely affect innovation. For example, in some situations, the patent system has the potential to create a thicket of fragmented, overlapping property rights which raises the costs of innovation. This chapter explores one alternative to the reliance on patents: ‘free and open’ development. We refer to a system that relies on free and open development as an ‘open innovation’ system. Open innovation systems side-step the patent thicket problem by not asserting patent rights to inventions. Open innovation systems rely on the free sharing and dissemination...
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