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 5/10 Good --- meganmcardle.theatlantic.com http://meganmcardle.theatlantic.com/index.xml
Wednesday, May 28, 2008 --- 84 days ago http://meganmcardle.theatlantic.com/archives/2008/05/patents_as_property_part_2.
 [ Tim Lee ] In my last post , I suggested that effective property systems have two important chracteristics: clear boundaries and positive incentives for productive activity. I showed a graph from Bessen and Meurer's Patent Failure suggesting that patents on chemical and pharmaceutical products appear to be behaving as a well-designed property system ought to. Now, the bad news. Here's the same graph for the rest of the patent system: Again, the dashed line is total profits attributed to patents, while the solid line is the cost of patent litigation to potential infringers. As you can see, the situation is very different in non-chemical industries: in the late 1990s, the costs of litigation from non-chemical patents were several times as large as the profits those patents generated for their owners. These statistics, if accurate, are quite extraordinary. If real property worked this way, we'd see $4000/month in litigation costs arising out of trespassing allegations for every $1000/month rental property. Needless to say, there wouldn't be much real estate development in such a legal environment. The obvious response is that we shouldn't be overly concerned with "trespassers" (alleged patent infringers) because they shouldn't have trespassed in the first place. But this is where the point about unclear boundaries come in. What we're seeing here is not that some companies are deliberately infringing on other companies' patents as a ... |
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