Chapter 7: Alternative Solutions and a Suggested Solution
1. INTRODUCTION In Chapter 6, the costs of patent systems in relation to standards have been discussed. The costs resulting from uniform patent systems, bargaining breakdown, the special characteristics of a network market such as switching costs and network externalities, and the market power of dominant firms are discussed. It is argued that the way to reduce the social costs of patent systems in relation to standards is to find measures to facilitate efficient bargaining and to restrict the market power of standard owners by ensuring access to the standards at some stages. How then to decrease the costs of patent systems arising from the factors discussed in the previous chapter? That is what is studied in this chapter. Studies on the social costs resulting from patent systems are not new. Numerous studies have been conducted on this subject and a number of patent reforms have been suggested to reduce the social costs of patent systems.1 Amongst those studies, some researches argue for the radical change of patent systems,2 some studies suggest the modification of existing patent laws and 1 There are voluminous researches on patent reform. For instance, Ian Ayres and Paul Klemperer, ‘Limiting Patentees’ Market Power without Reducing Innovation Incentives: The Perverse Benefits of Uncertainty and Non-Injunctive Remedies’, Michigan Law Review 97 (1999); John H. Barton, ‘Reforming the Patent System’, Science 2000; Julie E. Cohen, ‘Patent Scope and Innovation in the Software Industry’, California Law Review 89 (2001); Kingston, ‘Innovation Needs Patents Reform’; Kingston (ed.), Direct Protection...
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