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Patent Systems for Encouraging Innovation: Lessons from Economic Analysis

  • David Encaoua


    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Dominique Guellec

    (OCDE - Organisation de Coopération et de Développement Economiques)

  • Catalina Martínez

    (CSIC - Centro de Investigaciones Biológicas - CSIC - Consejo Superior de Investigaciones Científicas [Spain])

Economic theory views patents as policy instruments aimed at fostering innovation and diffusion. Three major implications are drawn regarding current policy debates. First, patents may not be the most effective means of protection for inventors to recover R&D investments when imitation is costly and first mover advantages are important. Second, patentability requirements, such as novelty or non-obviousness, should be sufficiently stringent to avoid the grant of patents for inventions with low social value that increase the social cost of the patent system. Third, the trade-off between the patent policy instruments of length and breadth could be used to provide sufficient incentives to develop inventions with high social value. Beyond these three implications, economic theory also pleads for a mechanism design approach: an optimal patent system could be based on a menu of different degrees of patent protection where stronger protection would involve higher fees, allowing self-selection by inventors.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00177614.

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Date of creation: Nov 2006
Date of revision:
Publication status: Published in Research Policy, Elsevier, 2006, 35 (9), pp.1423-1440. <10.1016/j.respol.2006.07.004>
Handle: RePEc:hal:cesptp:halshs-00177614
DOI: 10.1016/j.respol.2006.07.004
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