The Case Against Patents

TLDR

Patents lack empirical evidence of boosting innovation or productivity, and while they may improve incentives in the short term, their overall effect on innovation can be negative. The authors propose abolishing patents and replacing them with alternative legislative tools to foster innovation, or, if that is too drastic, recommend partial reforms. Government‑run patent systems tend to worsen their negative effects over time due to political pressures.

Abstract

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented