The Use and Abuse of Patents

Rajesh Jain via Prayatna draws attention to this piece in the NYT about patent laws and 'developing' economies. The 'received wisdom' is that strengthening patent laws would be good for growth, Petra Moser, in her doctoral thesis begs to differ. It's certainly a question that is worth asking.

Petra Moser, now an assistant professor at the Massachusetts Institute of Technology's Sloan School of Management, has come up with some surprising conclusions [in her Ph. D thesis] that are attracting the attention of fellow scholars.
One of Professor Moser's conclusions is that developing countries like India, which is scheduled to come into full compliance with an international patent treaty in 2005, may be better off without strong patent laws.

The conventional wisdom among economists has been that a robust patent system helped transform the United States into an economic powerhouse. And this may be true. But, Professor Moser concludes, what was good for America and Britain in the 19th century is not necessarily good for emerging, largely rural economies in countries like Denmark, the Netherlands and Switzerland.

"In economics, we are taught that patent laws are what create incentives for innovation," she said. "But many of the best innovators in what was the high technology of the day came from some of the smallest countries in Europe, and these nations did not have patent laws."

The purpose of patents is twofold: to protect the inventor and to speed technological progress. Thus, patent laws require that an inventor, in a quid pro quo exchange for the limited monopoly that a patent provides, disclose his methods to others. "Countries without patent laws have much larger shares of their innovations where patenting would have been a bad idea," Professor Moser said.

So what is the lesson for Brazil, China, India and other countries that are being pressed by industrialized nations to create strong patent systems?

"We try to force patent laws on developing countries and say, This is best for you," she said. "Then we are surprised when they say they don't want patent laws. But they have a point. Such laws could actually hinder innovation in those countries."
Source: New York Times
LINK