The economics of the European patent system: IP policy for innovation and competition

The patent system has been faced for more than ten years with an avalanche of patent filings, which puts into question its ability to fulfil its social mission of encouraging innovation and the diffusion of technology. This situation is due to the emergence of new technologies, the adoption of new and more aggressive IP strategies by the business sector, and progressive global harmonization of patent systems. This book aims at providing an analysis of patent systems in general, and the European patent system in particular. Through an emphasis on the historic, strategic, and legal context of patent systems the first part of the book shows how patents progressively have been designed as an incentive mechanism which allows their holder to charge a mark up over the marginal cost through restricted competition. Patents also involve the disclosure of inventions, and hence encourage the diffusion of knowledge. Over the past century patents have gradually become the currency of technology markets. The book demonstrates how the design of patent law and practice can benefit from economic analysis, regarding notably the patent subject matter (what should be patentable or not), the optimal inventive step, the scope of protection, and the duration. The second part of the book is devoted to the European patent system. Patenting procedures in Europe are complex, as national routes exist in parallel with the centralized procedure handled by the European Patent Office, triggering complex strategies by applicants in order to maximize their exclusive rights and reduce competition. The recent development of various filing strategies and their impact on the granting process are examined in the light of factual evidence. The recent explosion of the number and size of patent applications raises the issue of quality maintenance. The book puts forward issues to be addressed by patent policy in Europe: putting quality of patents first, making procedures stricter for applicants, reinforcing the integration of the system at the European level, and inscribing the economic mission of the system in the European Patent Convention so that the case law would integrate economic concerns.