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Study Finds Patent Systems May Not Be an Effective Incentive to Encourage Invention of New Technologies

Thursday, July 02, 2009

Irvine, CA -- A new study published in The Columbia Science and Technology Law Review challenges the traditional view that patents foster innovation, suggesting instead that patents may harm new technology, economic activity, and societal wealth. These results may have important policy implications because many countries count on patent systems to spur new technology and promote economic growth.

To test the hypothesis that patent systems promote technological innovation, Bill Tomlinson of the University of California, and Andrew Torrance of the University of Kansas School of Law, developed an online simulation game of the patent system, PatentSim. Their results suggest that a patent system underperforms a "commons," in which no patent protection is available, on several important measures. Although these surprising results call into question traditional justifications for patent systems, they do align with the increasingly well-supported notion that user and open innovation can succeed where patents may fail.

PatentSim uses an abstract model of the innovation process, a database of potential innovations, and a network over which users may interact with one another to license, assign, buy, infringe and enforce patents. PatentSim allows users to simulate the innovation process in one of three scenarios: a patent system, a "commons" system with no patents, or a system with both patents and open source protection.

"In PatentSim, we found that the patent system did not work to spur innovation," says Tomlinson. "In fact, participants were more likely to innovate when there was no intellectual property protection at all, or when they could open source their innovations and share them with other people."

The researchers measured the efficacy of the patent system based on 1) innovation – the number of unique inventions; 2) productivity – a measure of economic activity; and 3) societal wealth – the ability to generate money.

"Current patent laws are based on assumptions that patents spur technological progress that were considered settled more than a century ago, and that few have questioned since then," says Torrance. "If it turns out that our laws are based upon misinformation and bad assumptions, society may be failing to promote beneficial new technologies that could improve potential quality of life."

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