Literature/202405081119 in favor of research exemptions

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Patents may create deadweight losses, transaction costs, and fundamental uncertainty. Most scholars agree that the patent system should not be abandoned, but it must be modernized, and the negative effects attenuated.

In exactly the opposite view from 202405081113 Against research exemptions, the argument is that since research is cumulative, licensing would become a nightmare, involving significant transaction costs that do not add anything to society.

Imagine a relevant enabling invention with little commercial value, but providing considerable opportunities downstream. In this perspective, important research projects will not be undertaken at all.

There is concern that patents create an anti-commons over knowledge. If the current system drives innovation from publicly-funded projects (see: innovation led policies, or more generally [[literature/@mazzucato2018|@mazzucato2018]]), and universities are fueling the patent-frenzy, we will end up in a situation of privatization of knowledge (anti-commons), and in a sub-optimal utilization of results.

Policy implications

If the adverse effects of patenting are true, the state should intervene to revert the situation.

The solution should aim at giving incentives to investors to invest, while not limiting knowledge spill-over.

The challenge is that inventive activities are fundamentally uncertain. It is not possible to know which projects will lead to the creation of an invention, which of those will lead to a commercially useful product, and the magnitude of the spill-over is unascertainable.

If the spill-over is large, a grant will be a more appropriate instrument than a patent.


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