I recently attended a 1 1/2 day conference on patent law held at a law school in the Midwest. The conference panelists included some of the most renowned patent law scholars working in the U.S. today. The conference attendees were a mixture of patent attorneys, law students, and law professors specializing in intellectual property.
Most of the panel discussions focused on what I will call “first-order” debates concerning the relative merits and demerits of various substantive patent law doctrines, usually having to do with matters of claim scope and interpretation. To my surprise and delight, however, there was some (all too brief, in my opinion) discussion of higher-order issues such as whether the patent system as a whole ought to exist at all.
When one of the attendees raised this existential issue during a Q&A session, one of the panelists gave a response that I will paraphrase as follows:
“Of course, the purpose of the patent system is to encourage innovation. Now, there’s general agreement that commercializing innovations is inherently a more risky endeavor than ordinary business. For example, if you want to produce and sell tea, you’ll certainly face business risks. But people have been producing and selling tea for a very long time, and it’s well-known that there’s a market for that product. If you want to commercialize an innovation, however, you have to face all the ordinary risks of operating a business, but you also face the additional risk of not knowing whether your product will even sell. The patent system exists to provide innovators with an extra level of protection in order to offset that extra risk. Some people would argue that the unfettered market automatically optimizes those risks, and so we don’t need a patent system. I’ve written an article that will be coming out soon and in which I argue that this view is not correct. That is, the market does not optimize these risks, and so some kind of patent system is in fact necessary.”
The panelist’s response that I’ve paraphrased above struck me as both unoriginal and uninteresting. Nevertheless, it seems to be the orthodox view. I was wondering, then, what sort of rebuttal one might give to it from an Austrian perspective. Any thoughts?
Aaron Spurling