Cooperation, Harmonization and an Institutional Analysis of WIPO and the WTO
Chapter 1: Domestic Patent Law: Autarkic Analysis
This chapter introduces relevant aspects of patent law and its economic analysis, treating a country and its patent laws as a closed system or autarky. It draws heavily from analysis of patent law in the United States, which, as a jurisdiction where the costs and benefits of patent law are largely internalized and result from domestic legislation, comes closest to being an autarky in this sense. Innovation, defined as the introduction of new products and processes, is a principal source of growth in living standards and the evolution of economic structures, particularly within developed countries. The collection of laws and policies that affect innovation is often grouped under the term “innovation policy”. Patent law, which grants terms of exclusion over inventions, is a key innovation policy. Burk and Lemley bluntly state that: “Patent law is our primary policy tool to promote innovation, encourage the development of new technologies, and increase the fund of human knowledge,”1 while Kitch writes: Although understanding of the effects of a patent system may be primitive, the issue is important. Many observers believe that technological innovation is the most important source of the increases in economic productivity that have been observed over time. Understanding those conditions that do and do not promote innovation is important for understanding the long-term effects of economic policies. The patent system has been the one key, pervasive institution in capitalist economies addressed to the problem of creating incentives for innovation.2 Patents promote welfare over the long term by encouraging growth...
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