Bearing the Burden: Small Firms and the Patent System
http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2003_1/macdonald
  peer-reviewed

Macdonald, Stuart
JILT
2003

Abstract:

The popular conception of the patent system is one of mad inventors with ludicrous inventions and equally absurd expectations that the product of their years of pottering in the garden shed will change the world. Precisely the same system is the bulwark of strategy in some of the world's most powerful companies, notoriously in the pharmaceutical industry, but now also in the world's IT industry. Can the one instrument serve such diverse purposes? Certainly those for whom the patent system is of critical strategic importance think so for they frequently declare that it benefits the independent inventor and the small firm. They insist that the patent system encourages the innovation of the weak as well as the strong, and that society is much the richer for this innovation. This article considers just who does benefit from the patent system and then turns to the other side of the coin, the costs of the patent system. Most discussion of the system seems not so much to deny the existence of costs as to ignore them. Yet, the costs would seem to be considerable and their distribution as uneven as that of the benefits. Those who reap most benefits from the patent system are not those who incur most costs, and while benefits are finely focussed, costs are much more widely distributed. The greatest cost of all would seem to be borne by society as a whole in terms of damage done to innovation, which is curious given that the fundamental purpose of the patent system is to encourage innovation for the benefit of society as a whole.