Re: Patents

Michael S. Lorrey (
Mon, 22 Feb 1999 09:41:37 -0500 wrote:

> 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 to 1890s) patent laws were repealed mostly for ideological reasons (ideas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.

You haven't included any information about the capital markets in these countries during this period. The main argument for patents is as security to obtain capital, and to establish a capacity to pay back capital without competetive pressures diluting the firm's ability to do so. At first glance I would venture to say that the reason those countries ended their experiments with no patent laws was because too many of their businesses were either patenting in other countries anyways and were not manufacturing in the patentless countries, or the companies were losing the rights to their own products in countries which kept patent laws, as competitors were patenting their products. The third reason would have been because investors found that the payback on patentless products was not as great as patented ones...

I would also imagine that those countries started seeing a lack of imports of new technology, as companies were afraid of firms in those countries steal their knowledge. If India were a shining light of modernity and industrialization, I might put some credence to the anti-patent argument. But they have not gone anywhere near their potential. Their GDP has stagnated and unemployment is now 1/3 of the population. They are an economic basketcase. China is enough better that they have a useful system, even though to get patent protection it costs a lot of money in bribes... The so called 'pirate software' industry is mostly just a scheme by which large software producers can avoid taxes....

Mike Lorrey