Marshall Phelps wrote an excellent response in Forbes to an anti-patent editorial by The Economist. The article is entitled Do Patents Really Promote Innovation? A Response To The Economist. He provides overwhelming evidence that patents are the driver of new technologies. I and others have shown that the reason the industrial revolution occurred when and where it did was because of the introduction of the first practical patent systems, i.e., property rights for inventions. The article also points out that the most inventive countries are those with the strongest patent systems and these countries also have the greatest technology dispersion. The article also points out that the patent system encourages the dissemination of information about technologies, which has been shown empirically and logically. It is time the anti-patent crowd admit that their position is a matter of faith, not logic an evidence.
I have one beef with the article when it says you cannot prove that patents lead to more inventions and you cannot prove a free market (with patents) leads to economic growth. Both of these have been shown empirically and the causal connection is clear. Property rights ensure that the creator benefits from their creation. People have to work to live and when the product of their work is stolen from them, they cannot be as productive. For more see my book Source of Economic Growth and my talk at Atlas Summit 2015.
The Economist has printed another of their fantasy articles on patents entitled “A question of utility.” Gene Quinn has written a great article showing the numerous inaccuracies in The Economist’s article entitled “What ‘The Economist’ Doesn’t Get about Patents.” The Economist article argues that patents were irrelevant to the industrial revolution. Mr. Quinn shows the fallacy of this statement, but I want to amplify on what he said. The industrial revolution started in England and the United States, which were the two countries with functioning patent systems. The industrial revolution was not about industry but about a continuous invention revolution as the book “The Most Powerful Idea in the World” illustrates. Modern ‘New Growth Economics’ has shown that the only way to increase real per capita incomes, is to increase our level of technology and that means creating new inventions.
My new book Source of Economic Growth tackles these important questions specifically it answers these two questions: 1) What is the source of real per captia increases in wealth? And 2) What was the cause of the industrial revolution? I provide overwhelming evidence that new inventions are the only way to increase real per capita incomes and property rights for inventions, i.e., patents, are the only way to provide a high enough level of inventing to escape the Malthusian Trap and enter the Industrial Revolution.
The Economist in an article entitled The spluttering invention machine repeats a number of lies associated with patent reform. For instance, they repeat the Patent Thicket theory for which there is absolutely no empirical evidence. You would expect that a magazine like the The Economist would at least do a little research on the topic. Here are some of the errors in the article.
This Article repeats the Patent Thicket theory (too many patents inhibit innovation). Every single empirical study has found little or no evidence for the Patent Thicket theory. For instance see R&D, Invention and Economic Growth: An Empirical Analysis, by Professor Hulya Ulku and Ted Buckley, Ph.D., The Myth of the Anticommons, Bio, http://www.bio.org (2007) and Epstien, Richard A., Kuhlik, Bruce N., Is there a Biomedical Anticommons, Regulation, (Summer 2004), pp. 54-58. You would expect an organization like the Economist to do their homework before they repeat these myths.
However, there is plenty of evidence that a lack of a patent system or a weak patent system inhibits innovation and economic growth. For instance, North Korea has no patent system and has absolutely no innovation. Those countries that first adopted a modern patent system have been the most innovative. When the patent system was under attack in the US in the 1970s the US suffered stagflation. For more information see The Source of Economic Growth.
This Article also repeats the myth of low patent quality in the US. By every objective measure the quality of patents has been increasing, including GDP per patent, R&D spending per patents, and number of citations per patent. See Patent Quality Nonsense and The Patent Quality Myth. It is disappointing that the Economist repeats these diatribes against patents without even a cursory check of the facts.
PATENT REFORM: America Invents Act
The main problem with the US patent system is the long pendency time. This is a result of the underfunding (stealing of user fees) of the Patent Office. Suffice it to say that correcting this situation is not the major thrust of this legislation. The main point of this legislation is to weaken the US patent system, by the addition of oppositions and the weakening of the US grace period, so that it easier for large corporations to steal the inventions of startups and independent inventors.
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