Patents in Practice

The practical usefulness of the patent system with regard to the promotion of economic development has been the object of ongoing debates for a long time. This has been the case in developed as well as developing world. This is, in large part, due to the fact that the patents system constitutes an exception to the market mechanism, which can only be justified, if it fosters sufficient benefits to society, at large. The reason why the system has been controversial is because benefits for a few actors have sometimes been losses for umpteen numbers of actors. Whether or not the patents system appears justifiable depends on the perspective that one adopts.

In general, the patent system has proved a useful economic tool for bigger companies and an indispensable one in the case of industries like the pharmaceutical industry (cited in Cullet 2005). Doubts remain, however, whether the monopoly granted always promotes innovation, a problem which has become more starkly visible since the New Patents Act 2005. Another issue concerns the economic usefulness of the patents system for small economic actors. This appears to be in part because it is mostly companies that can not only bring about inventions but also provide the innovations that lead to a commercial product that mostly benefit from the patents system (McDonald 2002). This has led a few economists to declare that the evidence provided by the existing system, that is under the TRIPS Agreement, would not lead to a recommendation to set it up, if it did not exist today, but that conversely there is not enough evidence to recommend abolishing it altogether¹¹ .

With regard to relations between more and less economically developed countries, the introduction of the patents system in economically weaker countries has been consistently controversial. Further, there are doubts whether patented technologies are always the most appropriate technologies in specific situations. If the need for patented technology is relatively low as might be the case in a number of least developed countries, the rationale for the introduction and strengthening of the patent system is significantly weakened.

Notes and References

¹¹Stuart McDonald 2002.