The patent systems of today - at a crossroad

Abstract: In recent years, the number of patent filings has risen dramatically. This increase is due to several factors, such as, emergence of new technologies, increasing importance of patent portfolios, strategic patenting and pro-patent views among policy makers. The rise in the number of patents has been accompanied by a growing importance of patent licensing and patent lawsuits. Today’s patent systems create obstacles for future innovation and we are standing at a crossroad when it comes to creating future incentives to innovate. This thesis applies the method of law and history, to highlight important stages of the development of patents and to put current events in a historical perspective, and the method of law and economics, to consider how the objectives of patents are compromised and if it is to such an extent that the costs patents impose on society are greater than the benefits.The first patent-like grants are to be found in the 14th and 15th century in England. The historical development of patents has thereafter followed in the steps of technological change and industrial progress, but the develop-ment of patents has not been linear. This means that even though patents have gone towards stronger and broader rights their existence have been contested throughout history. The historical development has also been accompanied by efforts of harmonization, initially on a European level and currently on a global level. From a historical perspective it can be argued that it is not reasonable to enforce current patent standards on developing countries. Many developed countries have benefited from weak patent protection when they were at similar stages of economic development.From an economic perspective patents are suppose to create incentives to invent, induce disclosure and stimulate trading with inventions. The benefits of these objectives are compromised by a number of factors which impose costs on society, namely, monopolistic markets, impeded cumulative innovation, strategic patenting and strategic litigation. This thesis concludes that many of the factors compromising the benefits of patents are products of the current patent environment, or at least worsened by it. The costs of the patent systems would be alleviated if the number of patents of questionable quality was significantly reduced. This could be achieved by raising the inventive step of patents. This thesis also considers whether changes in patent breadth and duration could further lessen the costs without reducing the benefits. It is concluded that if no distinction is made between various products, then patents of medium breadth and medium length is the most favourable option from a cost-benefit perspective. However, if a distinction is made it would be favourable to offer patents with various lengths and breadths, at least theoretically. The cost-benefit perspective is also applied at the issue of global harmonization and it is concluded that whether patent protection should be extended or not depend on the level of economic development in developing countries.