Less is More?
A pair of studies on the effect of software patents on innovation and?competition in the marketplace. Both studies take a negative view on the effect of software patents.?
Fundamentally, this should come as no surprise to economists. While the pro-intellectual property rights side of the argument sees intellectual property rights as being equivalent to all other property rights (tangibility and duplicability characteristics?notwithstanding)?and?consists?mostly of legal professionals and law scholars, economists see it differently. What economists see in this debate are market-distorting monopoly rights. Everyone who ever took a first-year economics course is trained to think that monopolies cause inefficiency and should be?avoided, or at least limited as much as possible. In the case of the IP debate, a rat by any other name, still smells as strong.?
Lately however, legal scholars in the EU have begun to see the IP issue in the same skeptical light that most economists see it in. This is due largely to the role that patents have in?emerging?anti-competitive behavior in the I.T. industry. The list of emerging anti-competitive crimes includes?frivolous?patents, patent trolling, use of patents as competitive-entry barriers, and patent-based M&A. While many of these actions are not yet illegal in most first-world countries, the growing chorus of voices on this issue in both the EU and Switzerland may soon change that.?
Madrid-Based EU Study
This study finds that software patents have the effect of reducing competition, encouraging obvious and?frivolous patents, fostering the emergence of?artificial entry barriers, and the replacement of both education and R&D-based competition with litigation-based competition and patent-portfolio-based competition ?(patent trolling). The study also finds that software patents favor a smaller number of large, rigid companies (oligopolistic firms), who channel resources into claiming patents rather than R&D.?In short, the growth of software patents has been harmful to the software industry in general and to the European software industry in particular.?
Boston Law and Federal Reserve Study
On the other side of the Atlantic, an empirical look at the effects of software patents in the US in the wake of recent legal changes. Whereas during the 1970s, federal court decisions typically described computer programs as mathematical algorithms, which are unpatentable subject matter under U.S. law, court decisions in the 1980s and 1990s lowered the standards, allowing software to be patentable.?
The study finds a disconnect between software patent propensity of software patents and R&D investments or productivity growth. ?Furthermore, the study finds that software patent acquisition acts as a substitute for firm-level R&D.?In short, legal changes in the US software patent system has failed to incentivize R&D in the software sector, as classical theory has established. Rather, legal changes has encouraged more strategic patenting and less innovation.?
http://jungla.dit.upm.es/~joaquin/report_en.pdf? ? (Madrid-based EU Study)http://www.researchoninnovation.org/swpat.pdf? (Boston Law + Federal Reserve Study)
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Source: http://commissionideas.blogspot.com/2012/02/software-patents-vs-competitiveness.html
knowshon moreno dennis hopper florida state ted kennedy warren zevon caroline kennedy caroline kennedy
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