Of Patents and Property

Do patents behave substantially like property rights in tangible assets, in that they encourage development and innovation? This article notes that historical evidence, cross-country evidence, economic experiments, and estimates of net benefits all indicate that general property rights institutions have a substantial direct effect on economic growth. Conversely, with a few important exceptions like chemicals and pharmaceuticals, empirical evidence indicates that intellectual property rights have at best only a weak and indirect effect on economic growth. Further, it appears that for public firms in most industries today, patents may actually discourage investment in innovation for fear of winding up on the losing side of a patent fight, and routine injunctive relief from patent protection may contribute to this problem.