11 - Do Stronger Patents Induce More Local Innovation?

Summary

ABSTRACT

One of the central arguments advanced by proponents of stronger intellectual property rights (IPRs) systems is that strengthening such systems induces higher levels of innovation by domestic firms. This article reviews several empirical studies undertaken by economists to assess the validity of this claim. Most studies fail to find evidence of a strong positive response by domestic innovators that could be reasonably ascribed to the effects of stronger IPRs. The benefits of stronger IPRs – to the extent that they exist at all – are more likely to come instead from an acceleration in the domestic deployment of advanced technology by the affiliates of foreign firms.

Introduction

Many contributors to this volume have noted the global trend towards strengthened intellectual property rights. Since strengthening its own patent system in the 1980s, through the establishment of the Federal Circuit Court of Appeals and through broadening the definition of what is patentable, the United States has been active in attempting to convince other nations to adopt stronger intellectual property rights (IPRs), and America's long campaign has achieved considerable success. Over the course of the 1980s and early 1990s, several nations were persuaded to enter into bilateral agreements with the United States. These agreements involved unilateral strengthening of the trading partners' intellectual property (IP) systems. Eventually, the United States was successful in its bid to incorporate the Agreement on Trade-Related Intellectual Property Rights (TRIPS) into the charter of the World Trade Organization (WTO).