Patent System, Globalization, and Knowledge Economy

Patents for inventions are at the crossroad of law, technology and economics, with the Patent System resting on two fundamental assumptions: one, that technical progress is desirable and that disclosure is preferable to secrecy; two, that a competitive market economy is in the public interest, but that inventions need to be temporarily sheltered from competition by the grant of exclusive Intellectual Property rights. The Patent System is as solid as the assumptions on which it rests, and it will stay effective in its purpose only if it will keep on adjusting to change in the technical, economic, social, and political sphere. Today adjusting to change means adjusting to Globalization and to the Knowledge Economy, and fitting in the new and ever changing environment that is taking shape. In an attempt to clarify the relationships of the Patent System with the present economic landscape, this essay sketches out the reasons why patents have entered the domain of policy making and the specific areas in which adjustments appear necessary. The critical notions of economics in relation to technological change and patents are briefly analyzed, together with their implications for policy makers. The underlying aim is to provide a basis for research and discussion for economists, with a view to generate, evaluate, and select options for decision making.