Replace Patents With Prizes To Spur Innovation, Create Savings: R Street

Replace Patents With Prizes To Spur Innovation, Create Savings: R Street

Patents serve a valuable purpose in protecting the rights of inventors. Intellectual property like a patent offers innovators who come up with useful new ideas a “limited monopoly” (that can be exploited for financial gain) as a reward for their valuable contribution to society as a whole.

The patent system has been in place for decades, and has worked relatively well, at least until the last couple of decades. Patents, however, are not fair in a very real sense, and they clearly limit competition.

As R Street’s Derek Kanna points out in a recent policy study: “Even when they work properly, patents limit competition by granting a 20-year legal monopoly.7 De jure legal monopolies are able to use the power of the law to extract excess rents from consumers and other firms. In practice, it is not unusual that multiple teams work simultaneously on similar concepts and make similar or iterative discoveries, but only the team that receives the patent enjoys the windfall. The others typically will be barred from bringing their independent invention to market, rendering the research and development invested in such projects sunk costs.”

What Investors Need To Know When Choosing A Private Equity Manager

investor 1652197064It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More