Intellectual Property Policy Reform
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Intellectual Property Policy Reform

Fostering Innovation and Development

Edited by Christopher Arup and William van Caenegem

This state-of-the-art study argues that reforms to intellectual property (IP) should be based on the ways IP is interacting with new technologies, business models, work patterns and social mores. It identifies emerging IP reform proposals and experiments, indicating first how more rigor and independence can be built into the grant of IP rights so that genuine innovations are recognized. The original contributions then show how IP rights can be utilised, through open source licensing systems and private transfers, to disseminate knowledge. Reforms are recommended. The discussion takes in patents, copyright, trade secrets and relational obligations, considering the design of legislative directives, default principles, administrative practices, contractual terms and licence specifications.
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Chapter 3: What are the Costs and Benefits of Patent Systems?

Hazel V.J. Moir


Hazel V.J. Moir Patent systems are one of the oldest policies to promote innovation. So it is surprising how little factual information is available about their economic costs and benefits. The data that are available seem to be regularly ignored in patent policy discussions (Mazzoleni and Nelson 1998). Macdonald (2004) suggests this imperviousness to fact shows that the idea that innovation will not occur without patents has achieved the status of myth. The objective of this chapter is to set out the range of benefits and costs of a patent system,1 identify those elements most critical to sound patent policy and review the evidence available so far, so as to set an agenda to establish an evidence basis for sound patent policy. A sound patent system is defined as one where social benefits exceed social costs, and the system therefore improves a nation’s economic well-being. I. INTRODUCTION Patent policy is based on a conundrum: designed to increase innovation, it operates by initially suppressing the dissemination of new patented technologies. Balance is therefore central to patent policy. The benefits deriving from any induced higher level of innovation must offset, at least at the level of society, the costs due to the grant of monopoly privileges. As yet, no country appears to have undertaken a cost–benefit analysis of their patent system. The earliest, most comprehensive approach remains Machlup’s 1958 report to the US Congress, but needed data are still missing. The sole economist on the 1984 Australian patent review tabled...

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