Dysfunctions of the patent system and their effects on competition
In this paper the authors argue that the contemporary tensions between patents and competition no longer reside in the traditional trade-off between the exclusionary right given to an inventor to encourage innovation, and the welfare loss induced by the market power associated to this right. They rather consider that the three following distortions of the patent system create important conflicts between patents and competition on the product market, the technology market, and the innovation market. The first distortion concerns the existence of dubious or weak patents. Too many patents are granted to applications of bad quality, in terms of the usual patentability criteria. This increases the uncertainty attached to patents, reduces the credibility of the system and calls into question the justification of the patent as a protective mechanism. Second, the configuration of a patent, originally designed in the context of an isolated innovation, is not adapted to the context of sequential or intergenerational innovations, in which an innovation relies on earlier patented inventions. Even though sequential innovation calls for fine delimitations between successive generations of innovators, the strengthening of intellectual property, including the extension of the patentable subject matters opened the door to opportunistic behavior and adversely affected the needed flexibility to favor technological exchanges. Third, the emergence of complex technologies, in which the use of a large number of fragmented patents is necessary to produce a new product, implies the necessity to coordinate the various patent holders' behavior. The potential entrants in these complex technologies are struck by the coordinated behavior of the patent holders, and this is illustrated in different settings such as the pooling of complementary patents and the licensing of essential patents by the members of a Standard Setting Organization. Very often, patents serve to create ambushes or to capture unjustified rents through excessive license fees, which in turn create barriers to entry for new competitors in the innovation market. Two important consequences of these distorsions are derived. On the one hand, the resolution of these conflicts cannot rely exclusively on the application of the antitrust law. Even if these distortions seriously affect competition in the three markets of products, technology and innovation, antitrust rules are unable to resolve the specific effects rose from distortions of the contemporary patent system. On the other hand, the existence of these distortions leads to a very expensive judicial implementation of the patent system. The multiplication of the conflicts due to a strategic use of patents, particularly in the information and communication technology, in biotechnology and medicine raises the question of the adaptation of the legal status of patents to the contemporary technological developments.
|Date of creation:||Oct 2012|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00740716|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deepak Hegde & David C. Mowery & Stuart Graham, 2007. "Pioneers, Submariners, or Thicket-builders: Which Firms Use Continuations in Patenting?," NBER Working Papers 13153, National Bureau of Economic Research, Inc.
- Anne Layne-Farrar & Gerard Llobet, 2012.
"Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts,"
- Anne Layne-Farrar & Gerard Llobet & Jorge Padilla, 2014. "Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 24-49, 03.
- Harhoff, Dietmar & Reitzig, Markus, 2004.
"Determinants of opposition against EPO patent grants--the case of biotechnology and pharmaceuticals,"
International Journal of Industrial Organization,
Elsevier, vol. 22(4), pages 443-480, April.
- Harhoff, Dietmar & Reitzig, Markus, 2002. "Determinants of Opposition Against EPO Patent Grants - The Case of Biotechnology and Pharmaceuticals," CEPR Discussion Papers 3645, C.E.P.R. Discussion Papers.
- Bruno van Pottelsberghe, 2010.
"The quality factor in patent systems,"
- Langinier, Corinne & Marcoul, Phillipe, 2009. "Search of Prior Art and Revelation of Information by Patent Applicants," Working Papers 2009-21, University of Alberta, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:halshs-00740716. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.