There has been much discussion about the role and real effect of the patent system on the market of innovation. Recently, innovation is the most important competitive advantage and, as firms fight to be the most innovative one, the mechanisms used to protect inventions are being prosecuted closer.
Patent – the problem with the definition
The idea behind patents in almost all jurisdictions is to balance individual rights against the more general right of the society’s advancement. Basically, patent holders are compensated with 20 years of exclusive rights (that can be prolonged 5 more years given the right circumstances) in exchange for the publication of their innovative idea to the world. The problem however is a little more complicated than that. In most sectors, patents are a waste of money and resources. Why would you invest millions in developing something and trade it only for 20 years of exclusive dealing when you can keep it as an industrial secret? The best kept secret of this kind, the Coca-Cola formula, is a proof of the inefficiency of the patent system which is both too expensive to keep and too harsh on the inventors.
Additionally, patents require a certain level of novelty that leaves some important inventions out. In the Spanish jurisdiction, the legislator observed this problem and introduced a special form of patent called ‘modelo de utilidad’ or utility model (UM herein). UM is a legal creation that protects inventions that are less inventive than those protected by patents, consisting, for example, in giving an object a configuration or structure from which some use or practical advantage arise. The protection offered by this legal tool is similar to that of a patent but with a duration of only 10 years. In this way, the high inventive requirement of patents is overcame and individuals as well as companies are encouraged to further innovate to gain more protection.
Are patents necessary?
Some powerful articles about the necessity of patents in our era have been written. Overall, they leave you thinking that such protection is both unnecessary and ineffective. But, is it? One argument that caught my attention is that that patents did not exist or were not necessary during the Industrial Revolution, so why having them now? First, the fact that certain rights did not exist back then it does not mean they should not exist now (with this logic should we also appeal worker’s rights?). Secondly, the market has changed considerably since the Industrial Revolution. Now, firms are emerged in the race for innovation and it is not an easy or cheap one. Firms have to deal with lengthy and expensive talent recruitment, which is obviously tight to bonus packages to retain talent within the company. Moreover, they need expensive machinery and to conduct expensive trials. None of those things would be done if the results of those expensive process were not protected at a certain extend.
It is true that patents, under certain circumstances, can be an impediment to innovation. However, their abolishment will be an actual stagnation of innovation in general. So, where does that leave us?
I do not pretend to have a proper solution but I do have some suggestions. For instance, the territorial protection of patents is an unnecessary obstacle. Patents cannot be registered unless inventions are worldwide inventive but it can only be protected in the territory where it is registered… that is odd, right?
Moreover, the idea of “patent” is not enough to cover the myriad of innovations there are. I think that there should be differentiated patents and by that I mean patents with different levels of protection, length or entry requirements in order to accommodate everyone’s work, effort, inventiveness and financial costs.