The patent system is intended to protect inventors while also allowing new inventions to be used freely. In the past few hundred years, patents have existed and are seen as a very important means of protection to protect the money invested by inventors in the R&D process. If the inventor has something to invent, there will inevitably require a lot of investment, including time, money, and other efforts. In order for the invention to be successful, the inventor is to be rewarded, and the way to get a return is to commercialize the invention and sell the product according to the invention. But the difficulty is how to prevent others from copying once you have an invention. If counterfeiting occurs, the inventor will not be able to obtain a good economic return, and will not be able to compensate for the cost of R&D investment, and more people will profit from counterfeiting inventions in the future. Under such circumstances, the inventor will have concerns about whether it is worth investing time and effort to invent. The emergence of this situation is not good for society, because it will significantly reduce social innovation.
The role of the patent 01
The main function of a patent is to give its inventors exclusive rights to sell related products, that is, others cannot counterfeit or imitate inventions, that is, the patent protects the inventor from being counterfeited by others, thereby helping the inventor to recover the investment. It is generally believed that monopoly is not good, because in the monopoly state, the inventor can charge the user a high fee, which may be very beneficial to the monopolist, but it is not good for the whole society. In addition, the implementation of the patent system has economic reasons. Throughout the world, we can see many very innovative industries, such as software industry, computer industry, semiconductor industry, etc. These industries have very weak patent protection in history, so there are many counterfeiting and imitation. Of course, these Industry profits are also high.
Although none of the above industries have high patent protection, they are very successful. The reason is that, from a certain perspective, if there is stricter patent protection, these industries should become better or should produce more inventions. But in fact there is a kind of reverse thinking. For example, in the software industry, the proposal to promote and use patents is not always recognized because there are natural testing processes in the software industry. Software industry patents have been in use for many years, but no one can ensure that enforcement is ordered by the court. In the late 1980s and early 1990s, US courts issued a series of very clear orders requiring software to be implemented in accordance with patent regulations. Later, the US software industry appeared more and more patents, but what is interesting is that the software industry has not continued to increase investment in innovation. The industry does have inventions and creations, but the frequency and density of inventions have not reached the expected levels.
After the implementation of the patent system, there are some interesting examples in the pharmaceutical industry, especially in the Italian pharmaceutical industry. When it comes to the pharmaceutical industry, pharmaceutical plants are often the best example. Patents in the pharmaceutical industry are necessary, at least in some countries. The investment in research and development of a new drug is enormous, and pharmaceutical companies need to invest huge sums of money to launch new drugs in the market. The Italian pharmaceutical industry is the opposite. Prior to 1978, there were laws in Italy that prohibited new drugs from being patented. Even so, it does not prevent the Italian pharmaceutical industry from prospering. At that time, Italy was the fifth largest drug producer in the world, and the profits of pharmaceutical companies were very good. But by 1978, Italy had changed course, and the Supreme Court ruled that the pharmaceutical industry would be allowed to implement a patent system. After that, Italian pharmaceutical companies began to wrestle with patent issues, just like the US software industry at the time. Despite this, the investment in new drug research and development in Italy has not increased significantly since then, and the scale and level of new drug growth have not increased too much. Experiments in the software and pharmaceutical industries have brought new questions. Is there a problem with traditional theory? A very short answer is: traditional theory does have problems.
02 patents hinder innovation
Standard theory is sometimes feasible, but standard theory is not all-encompassing. In fact, in some cases, patents do not encourage innovation, but hurt. There are two characteristics in the industry that can make patents harmful.
1) Innovation is sequential. The software industry is a good example. That is to say, when an industry or a company is developing, the major inventions are not a one-step process, but a step-by-step process. Each step is very small, but it is a major invention.
2) The complementary efforts of research and development. The research efforts of different innovators are complementary, that is, they have their own ideas for the same product or invention, and each of them researches and combines different efforts to form an invention.
The combination of the above two features can refute the traditional patent theory or provide another idea. If the invention is in the form of a sequence, the inventor owns a patent, and other companies that wish to do more research and development in technology are It is unfavorable. Because of the complementarity of patent research and development, other companies may have very valuable ideas and know how to go further in technology, but after being restricted by patents, there is no way to do so. The owner of the invention patent can prevent others from going further, and the result is that more innovative inventions are delayed. This is a basic argument that patents sometimes delay the pace of innovation and even harm society, because patent owners sometimes hinder or prevent other companies from doing more innovation.
03 Imitation and patent transfer
When it comes to standards, counterfeiting is generally prohibited because it steals the inventor’s efforts. However, not all counterfeiting is harmful, and some imitations may eventually lead to product improvements. In this case, the inventor himself can also get results, not all inventors will be harmed by counterfeiting. In some cases, inventors will benefit from some imitations of other companies, which will allow them to take their products to the next level.
If you want to protect patents, you need to adopt another reverse theory or a reverse view, and establish a method or way in the patent system to enable the company to improve, so in some cases, there is no need to choose to block the latecomers or Innovations made by other companies. If a company owns a patent, it will be authorized to the company or individual who wants to continue to improve its technology; if authorized, it can charge a certain fee, so that the company’s investment and return can be guaranteed.
Some people say that the patent owner is a monopolist, and the monopolist generally sets a high price. How much transfer fee or license fee should be collected is a noteworthy issue, and sometimes the fees charged are so high that technical improvers cannot afford it. If the patent owner knows the price that the improver is willing to pay, he or she can set the level of charge that the other party can afford. When the improver pays the fee to the patent owner, the improvement work can be promoted. But in reality, the patent owner does not know how much the other party is willing to pay. In other words, the patent owner does not know the cost of the other party. Therefore, the transfer fee or license fee should be a balanced price between the willingness to pay the high price and the willingness to pay the low price. Otherwise the transfer fee is likely to be considered too high by some improvers and not willing to pay. From this perspective, social benefits may be reduced and patent development is delayed.
In such a world of serial and complementary innovation, protecting patents is not necessarily a protection innovation, and it may not necessarily be necessary to protect such inventions. If innovation is sequential and complementary, then the patentee, the inventor, may hinder later inventors. In fact, patents may inhibit further innovation and have a detrimental effect. From the analysis of the pharmaceutical and software industries, it can be concluded that these two industries may develop better without patent protection. Therefore, patent protection does not necessarily have absolute benefits.