Monday, September 29, 2003

A Stroll Through Patent History

On relative merits of Patent law.

An article in today's NYT A Stroll Through Patent History presents research that shows that countries with weak or absent patent laws, such as Switzerland and Denmark, did as well, or better, than countries with strong ones, like USA or Britain during the Industrial Revolution.The researcher, Petra Moser, is quoted as saying,

We try to force patent laws on developing countries and say, This is best for you," she said. "Then we are surprised when they say they don't want patent laws. But they have a point. Such laws could actually hinder innovation in those countries."

I am not sure what exactly is the contradiction here. It is entirely possible to have plenty of innovations without strong patent law. For thousands of years world functioned just fine without patents. Admittedly, the speed of scientific and technological progress was not always tremendously fast. The crux of what is now patent protection rested on very basic, and reigid, protection of trade secrets. The system did not work as well as patents because it it never encouraged publication of the work, or conferred any legal rights to the innovator. People do not innovate because they can get a patent - they innovate because there is some profit in that - emotional or, preferably, monetary one. Dutch developers of margerine would not have build a successful enterprise if Netherlands prohibited them from profiting by it. As for the French inventor - it is does not seem that being ripped of by the two Dutch invalidated his patent and did not allow him to compete with them in France. Eventually, most countries saw that patents, at least as an idea, are a better way to profit from inventions than trade secrets, not least because they transfer the onus of enforcement from the company itself to the government.

It is conceivable that poorer nations would benefit more by ignoring existing patents and ripping off inventions in which someone else put in R&D money and genius. However, one cannot expect more developed nations ot be happy about this status quo. It will also make it harder for these nations to get the rest of the world to not ignore their own patents, which they will at some point develop. Its worth noting, I think, that Swiss, Dutch, and others did eventually join the patent-abiding world.


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