Stiglitz: US Patent System Fouls Global Innovation

♠ Posted by Emmanuel in at 11/01/2010 12:29:00 AM
If you think that this blog is overwhelmingly negative about America (I surely don't; call it "unvarnished reality"), you'd do wise to consider that Americans themselves are often those who are most negative with America. Today, let's have a look at innovation and innovation policy. While there have been any number of innovations to emanate from the US which have undoubtedly improved the global lot, they're becoming more dubious as of late. Moreover, the patent system that America has in its own way tried to globalize is itself in need of a rethink. In essence, disseminating and preserving rents from knowledge work should not be confined to parochial boundaries in an increasingly interconnected world.

In a new article in the LSE house journal Global Policy, Claude Henry and Joseph Stiglitz explain how a dyfunctional US patent system spells a dysfunctional global system for innovation. Here is the abstract:
We live in a knowledge economy. The production and dissemination of knowledge will be central to solving the problems of climate change and environmental sustainability, reducing global poverty and addressing other global problems. This article asks: do intellectual property rights – with their increasingly global reach –further or hinder the production and dissemination of knowledge? Experience with genetically modified organisms shows that a model markedly different from the current one is more likely to bring wider social benefits, both in the short and the long run. Indeed, the current system may impede both innovation and dissemination. There are reforms in the intellectual property regime, and more broadly in the way we finance, organize and incentivize innovation, that would increase the pace of innovation and its utilization. The spread of the current dysfunctional system owes much to the evolution of intellectual property rights in the US – and the influence of particular special interests there.
And here are the policy implications:
  • A well-functioning patent system requires careful attention to a number of details, including: (1) what can be patented; (2) the breadth of a patent; and (3) the standards of novelty that determine whether an innovation is eligible for a patent. Corporate interests have resulted in a patent system which answers each of these questions in a way that may impede not only the utilization of knowledge, but even innovation.
  • Among the details that matter is the process by which patents are granted. The current system grants too many ‘bad’ patents. Opening the process of examination of patent candidates to all parties that reveal themselves as having private information relevant to a thorough examination (in a process called opposition) should reduce the number of ‘bad’ patents.
  • The patent system is only one part of a society’s innovation system, through which the production of knowledge is financed, incentivized and organized. Too much attention has been focused on IPR (intellectual property rights), and too little on alternatives, e.g. open source systems, publicly financed innovation and prizes.
  • Providing more scope for compulsory licenses – making it easier for countries to issue them – would reduce some of the inefficiencies associated with the current patent system.
America, who loves ya, baby? As with many other things, getting things right in America as far as patents go means getting things right in the rest of the world, too. And therein lies the rub with "fixing what's wrong with America": dynamics in a country of a little over 300 million people affect so many stakeholders abroad.