Patents and Patent Policy - Hall

Oxford Review of Economic Policy, Volume 23, Number 4, 2007, pp.568–587

Patents and patent policy

Bronwyn H. Hall∗

Abstract A patent is the legal right of an inventor to exclude others from making or using a particular invention. This right is sometimes termed an ‘intellectual property right’ and is viewed as an incentive for innovation. This article surveys the evidence on patent effectiveness in encouraging innovation and reviews the current controversies in patent policy. Key words: patents, intellectual property, incentives JEL classification: K11, L4, O34

I. Introduction

An inevitable consequence of the growth of the ‘knowledge’ or ‘information’ economy is the increased importance of instruments designed to protect the property rights associated with these intangibles. Chief among the formal means of such protection is the patent, defined as the legal right of an inventor to exclude others from making or using a particular invention. This right is customarily limited in time, to 20 years from the date of application submission in most countries. The principle behind the modern patent is that an inventor is allowed a limited amount of time to exclude others from supplying or using an invention in order to encourage inventive activity by preventing immediate imitation. In return, the inventor is required to make the description and implementation of the invention public rather than keeping it secret, allowing others to build more easily on the knowledge contained in his invention. Given the increased salience of intellectual property rights (IPR) broadly and especially of patents to firms competing in the knowledge economy, it is perhaps not surprising

of California at Berkeley and University of Maastricht, e-mail: bhhall@econ.berkeley.edu I am grateful to two anonymous referees for helpful comments. doi: 10.1093/icb/grm037  The Author 2007. Published by Oxford University Press. For permissions please e-mail: journals.permissions@oxfordjournals.org...