Re: Patents
Sun, 21 Feb 1999 17:13:53 EST

In a message dated 2/20/99 12:33:30 PM, wrote:

>Lee Daniel Crocker <>
> >Why is India the bad guy for not adopting the silly western idea
> >of patents?
>My emotions tell me your opinion on patents is correct but my mind tells
>me you're wrong. Before a major new drug can come on the market a company
>must shell out close to a billion dollars to pay for the research and
>If they didn't have patent protection for at least a
>few years after that they could never
>recover their investment, other companies would crank out dirt cheap generic
>by the ton. Only a fool would develop a new drug, as a stockholder I would
sell my
>stock in any drug company that was so stupid as to spend any money at all on
>research. I think new drugs are a good thing so I must reluctantly conclude
>patents are too.

These kinds of analyses ignore the costs of patent enforcement and the benefits of incremental improvement. Rigorous enforcement of emerging US patent law would almost end software innovation since every couple lines of code you write will require a patent search.

What happens in industries like (until
recently) fashion and software algorithms is that each new idea is only developed when it is relatively cheap but that most new achievements in turn make other achievements relatively cheap (in particular, incremental improvements).

Twice in the 19th century (Netherlands 1830s to 1850s and Switzerland 1870s to 1890s) patent laws were repealed mostly for ideological reasons (ideas should be free, etc.) In neither case did technological innovation decrease. In Switzerland this coincided with a spectacular increase in chemical industry innovation which resulted in the Swiss chemical and pharmeceutical industries. Once they got large, of course, the new companies lobbied patent laws back in, ostensibly to protect research (in spite of their own impressive achievements without patents) but more plausibly to protect themselves from competition.