The Overwhelming Empirical Case Against Patent and Copyright

by Stephan Kinsella on October 23, 2012

This is included as ch. 31 of Stephan Kinsella, ed., The Anti-IP Reader: Free Market Critiques of Intellectual Property (Papinian Press, 2023).

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Below I collect a large number of quotes and citations related to the empirical case against patent and copyright; updated here from time to time. This was initially drawn from a draft paper, now published as “Law and Intellectual Property in a Stateless Society” in Legal Foundations of a Free Society (2023) (see Part III.A, “Utilitarianism”), but it has been expanded and is occasionally updated.

For a summary of some select quotes, see KOL364 | Soho Forum Debate vs. Richard Epstein: Patent and Copyright Law Should Be Abolished; for a timeline showing key quotes and studies on the empirical case against IP, see Tabarrok, Cowen, and Douglass North on Patents.

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But even if we assume that the IP system does stimulate some additional, valuable innovation, no one has established that the value of the purported gains is greater than the costs.¹ If you ask advocates of IP how they know there is a net gain, you get silence (this is especially true of patent attorneys). They cannot point to any study to support their utilitarian contention; they usually just point to Article 1, Section 8 of the Constitution (if they are even aware of this), as if the backroom dealings of politicians two centuries ago are some sort of empirical evidence in favor of state grants of monopoly privilege.

In fact, as far as I’ve been able to tell, every study that attempts to tally the costs and benefits of copyright or patent law concludes either that these schemes cost more than they are worth, or that they actually reduce innovation, or that the research is inconclusive. There are no studies unambiguously showing a net societal gain. (Yet Another Study Finds Patents Do Not Encourage Innovation.) There are only repetitions of state propaganda.

There are some ridiculous claims, such as this one: USPTO/Commerce Dept. Distortions: “IP Contributes $5 Trillion and 40 Million Jobs to Economy”, which simply claims, with no basis, that IP should get the credit for the productivity of industries that use IP.

Another example of such dishonest “research” is Ian Hargreaves, “Digital opportunity: review of intellectual property and growth” (2011), which is laughably described as “An independent report by Professor Ian Hargreaves” even though it’s not clear who the publisher or sponsor is. It makes ridiculous programmatic statements such as:

Research has established that patents encourage innovation in non-sequential fields where upfront costs are high, such as drug development.12,13,14,15,16

The references cited are:

12. Levin RC, Klevorick AK, Nelson RR, and Winter SG, 1987, Appropriating the returns from industrial research and development, Brookings Papers on Economic Activity 1987(3), 783–831

13 Cohen WM, Nelson RR, and Walsh J, 2000, Protecting Their Intellectual Assets:Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not).” NBER Working Paper No. 7552

14 Cohen WM, Goto A, Nagata A, Nelson RR, and Walsh JP, 2002, R&D spillovers, patents and the incentives to innovate in Japan and the United States, Research Policy 31, 1349-1367

15 Arora A, Fosfuri A and Gambardella A, 2001, Markets for Technology: The Economics of Innovation and Corporate Strategy. Cambridge, MA: MIT Press

16 Bessen J and Meurer M, 2008, Patent Failure, Princeton, Princeton University Press

No one but a sadist has time to pore through all of this and, citing Brandolini’s Law, according to which it takes “The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it,” it’s not worth doing. But it is worth mentioning briefly that their last two references are Bessen & Meurer, trotted out to support the contention that “patents encourage innovation”; yet B&M elsewhere write, as reported in this very post:

“it seems unlikely that patents today are an effective policy instrument to encourage innovation overall” (p. 216). To the contrary, it seems clear that nowadays “patents place a drag on innovation” (p. 146). In short, “the patent system fails on its own terms” (p. 145).⁹ See also p. 5: “Overall, the performance of the [U.S] patent system has rapidly deteriorated in recent years. By the late 1990s, the costs that patents imposed on public firms outweighed the benefits. This provides clear empirical evidence that the patent system is broken. . . . [O]ur analysis has relevance to innovation in other countries.”

And let’s take at random yet another one of the “studies” they cite to bolster their claim that “patents encourage innovation”: Richard C. Levin, Alvin K. Klevorick, Richard R. Nelson & Sidney G. Winter, “Appropriating the Returns from Industrial Research and Development” (Brookings Papers on Economic Activity, 1987, No. 3). This paper opens with this breathless statement:

To have the incentive to undertake research and development, a firm must be able to appropriate returns sufficient to make the investment worthwhile. The benefits consumers derive from an innovation, however, are increased if competitors can imitate and improve on the innovation to ensure its availability on favorable terms. Patent law seeks to resolve this tension between incentives for innovation and widespread diffusion of benefits.

Note that the paper assumes that one legitimate purpose of law is to incentivize R&D; it also assumes that patent law does increase R&D; and it thus assumes there is a “tension” between the desire to have competition and the need to have the law “incentivize” R&D by means of a patent system. There is no reason to think that the purpose of law is to incentivize R&D nor that a patent system accomplishes this illiberal goal. And there is certainly no reason to believe that the benefits of such a patent system (if there are any, which I deny) are greater than the costs of such a system, and this paper does not even attempt to show that this is the case. And yet it is trotted out as evidence of the superficial contention that “patents encourage innovation.” Even these authors acknowledge: “Evidence on the nature and strength of conditions for appropriability and on the working of the patent system is, however, scattered and unsystematic.” (p. 784) Oh, you don’t say! The authors write that “Previous investigations of the system suggest that patents do not always work in practice as they do in theory,” because “appropriability is not perfect.” (p. 784). All this paper proposes to investigate is whether and to what degree there is “appropriability” of the patent system. None of this is designed to show that there are net benefits to the patent system, what its costs are, or what they are relative to the alleged benefits—or even whether there are any benefits.²

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And see also Stephen Haber, “Patents and the Wealth of Nations,” 23 Geo. Mason L.Rev. 811 (2016). I haven’t had time to do a more comprehensive critique yet, but a few comments now from my initial quick read of the article. First—it’s interesting that the author admits his work is funded by large corporations which rely heavily upon IP law as part of their business models, though the author strains to argue that his work is not influenced by this: “To ensure academic freedom and independence, both PCI and IP², along with all work associated with them, have only been supported by unrestricted gifts. All such work, including this paper, reflects the independent views of the authors as academics. Some major donors have included Microsoft, Pfizer, and Qualcomm.” Hmm, gee, I wonder why companies that depend on copyright (Microsoft) and patents (the others) would support the work of obviously pro-IP advocacy groups, “Hoover Institution’s Working Group on Intellectual Property, Innovation, and Prosperity (IP²)” and the earlier group that IP² succeeded, “the Hoover Project on Commercializing Innovation (PCI).” I wonder if they would give “unrestricted gifts” to pro-free market groups that point of the harm and dangers caused by IP law? To ask is to answer.

The way pro-IP groups fund and distort “free market” thinkers to support their agendas and business models reminds me, by the way, of the time Cato, another “respectable” “libertarian” groups funded by mainstream donors, and large corporations, had some scholars opposing free trade in the name of patent rights, probably to please pharmaceutical donors. Basically, they opposed drug reimportation (i.e., FREE TRADE) because this might undermine the ability of pharmaceutical and other patent-law dependent donors to extract monopoly prices from Medicare or whatever. Mossoff basically admits this at one point in his response to Sammeroff, when he says that price controls in other countries mean that American pharmaceutical companies can’t make “enough profit” in those other countries to “recoup their costs” (and we all know that the whole purpose of a free market, capitalist system, is to guarantee that people can recoup their costs!! If you can’t “recoup your costs,” then what’s the point of living??). In any case, note that Cato’s pharmaceutical donors include Eli Lilly & Company, Merck & Company and Pfizer, Inc. Hmmm, Pfizer, dependent on pharma patents, donates to both Cato (whose scholars sacrificed their traditional preference for free trade for the ability of patentees to use monopoly patent grant privileges to extract ransom payments from victims of their patent monopoly). Hmmm. Pfizer a donor of Cato, when it turns against free trade and favors pharma patents and opposes drug reimportation. Pfizer, when it funds Moser’s two pro-IP groups to produce pro-IP conclusions. Hmm. Mossoff is at George Mason, funded by the Kochs, who are mainstream-conservative and the occasionally allow the pro-IP Randroids in the door. Hmm. Mossoff gets in yet another debate on IP and promotes the work of Haber … which was funded by Pfizer, and which was published in the journal of Mossoff’s own law school, the Koch-funded George Mason. Hmm. Mossoff starts or joins or co-founds tons of blatantly-pro-IP committees or groups like “Senior Fellow at the Hudson Institute, where he is also Chair of the Forum for Intellectual Property, and he is a Visiting Intellectual Property Fellow at the Heritage Foundation. He was appointed to the Board of Directors of the Center for Intellectual Property Understanding in January 2020. He is a member of the Intellectual Property Rights Policy Committee of ANSI and he has served as Chair and Vice-Chair of the Intellectual Property Committee of the IEEE-USA, on which he remains a member in good standing.” (from his G.Mason faculty listing); and he’s also (according to his online cv) the founder of “Center for the Protection of Intellectual Property, Antonin Scalia Law School, Co-Founder, Director (differing roles), and Senior Scholar, 2012-2019″. I mean look at the name! “”Center for the Protection of Intellectual Property”! wow, what an objective group looking for the truth! And so he worms his way into all these groups to try to push the IP agenda, while trying to cast IP rights as “just property rights” or “natural rights” and then pushing the agenda of a few other scholars who are also subsidized by the same donors, such as this Haber fellow. Whose “credentials” include other obviously blatantly pro-IP groups (see above), also funded by Pfizer, as well as other IP parasites like Microsoft and Qualcomm.

In any case — the support of patents even by some libertarians has led them to oppose reimportation–that is, to oppose free trade–e.g., Cato’s Doug Bandow, Richard Epstein, and Michael Kraus; and, most recently, David Henderson. See various posts collected at Cato on Drug Reimportation; Cato Tugs Stray Back Onto the Reservation; and Other Posts (Dec. 23, 2009).

In any case… Haber’s argument basically appears to be this: we are wealthy because of the specialization of labor, which can only emerge when there are well protected property rights. Fair enough. But then he argues that this be true of “all” or “other” “types” of “property rights,” such as “intellectual property.” This is basically simply question-begging; just because proponents of patent and copyright law defend these monopoly privilege statutes by calling them “intellectual property” does not mean that the reasoning above with respect to classical property rights is analogous. After all, one could find any legal system or institution and label it a “property” right–for example, having a property right in social security payments, or have a property right in other human beings, i.e. chattel slavery–and then simply say that the normal defense of classical property rights must apply to these systems as well!

Haber also erroneously states: patents are “not, as some IP critics maintain, a grant of monopoly. Rather, it is a temporary property right to something that did not exist before that can be sold, licensed, or traded.” This is incorrect, for a number of reasons. First, it is not a property right; calling it a property right does not make it so; it certainly does not justify it. Property rights are not temporary. Second, even if the patent system required the “something” that is patented to be something that “did not exist before,” there is no guarantee that the standards of patent law or the examiners of the patent office will only result in patents for things that “did not exist before”. Examiners are incompetent and even if they were not, they are unable to do a comprehensive search to be sure that the invention is truly novel. Third, in most patent systems, and since Obama’s America Invents Act, the US patent system, the inventor need not be the first to invent the patented invention, but rather, the first to file. And there is no requirement that the invention “did not exist before,” since it may well be already invented but simply kept secret by some previous inventors. Fourth, almost all innovations are incremental and come about only when preceding inventions set the stage and make it possible; and also, when this happens, the invention is usually inevitable and indeed, most patented inventions were being worked on independently at the same time by a number of researchers and innovators, e.g., automobiles, the light bulb, airplanes, and so on–much like Leibniz and Newton came up with the calculus nearly simultaneously yet independently, and much like Menger, Jevons and Walrus with the marginal revolution in economics. And finally, even if a patentee came up with an invention that “did not exist before”, this still does not justify the state granting him an artificial monopoly privilege that protects him from the consequences (namely: emulation and competition) of his decision to make his invention public (usually by selling products embodying the design, which others can then learn from).

This paper is full of absurd arguments, such as “Patentees can either get a royalty equal to some percentage of output, or they can get zero; others have the choice between paying a royalty equal to some percentage of their output or bearing the costs of inventing around a patent. Writing a contract to license the patent therefore makes both parties better off.” So the law gives a patentee an unjust right to control others’ property–in essence, a negative servitude, as I’ve argued here–and he uses this to force others to pay a ransom to him in order to use their own property as they see fit. Yes, given that these victims can be extorted by the patentee, they see it in the interest to pay the ransom. This does not prove that both parties are better off, any more than a wealthy father paying a ransom to his child’s kidnapper is “better off” because of the kidnapping!

Or: “In fact, if someone actually had a technology for which there were no substitutes and which could not be reverse engineered by a third party at a lower cost than the research and development (“R&D”) and other costs already incurred by the inventor, he would not patent it at all! He would instead take advantage of his proprietary knowledge to dominate the market. The result would be a monopoly—but it would have nothing to do with patents.” This implies that monopolies are possible on the free market, which is false (see on this Rothbard in Man, Economy and State; Hoppe in Theory of Socialism and Capitalism; D.T. Armentano’s work on antitrust law, etc.); all the while denying that monopolies arise from patent grants which are clearly grants of monopoly privilege. Hell, the modern patent system comes from the English Statute of Monopolies in 1623! In the most recent Supreme Court decision about patents, the opening line admits this… It is widely recognized by even proponents of patents, by courts, and it’s part of the very history, that it’s a grant of monopoly privilege. See here.

So then Haber continues: “The fact that patents are property rights means that they can serve as the basis for the web of contracts that permits individuals and firms to specialize in what they do best.” It’s not a “fact” that patents “are property rights”; it’s just a conclusion, and a way of trying to claim that patent rights are justified, simply because they exist; so it’s just question-begging.

The author also writes that his paper “examines the economic history of the British patent system during the Industrial Revolution and the phenomenal growth story of the United States, whose constitutionally required patent system found enthusiastic support in the early U.S. judiciary.” But the patent system is not “constitutionally required”. The Constitution authorizes, but does not require, Congress to enact patent law.

Also somewhat amusing is that the author cites and relies on Petra Moser’s paper “How Do Patent Laws Influence Innovation? Evidence from Nineteenth Century World Fairs,” in support of his argument. He writes: “What would have happened in the absence of the British patent system? Would England and Scotland industrialized, and if so, how would that process of industrialization have been different? Obviously, historians cannot go back in time and do a randomized control trial—assigning a patent system to one part of Britain and no patent system to another. The work of economic historian Professor Petra Moser, however, allows us to do the next best thing. Moser looks at the products exhibited at the World Exhibitions of the late nineteenth century and asks whether the presence or absence of patent systems across countries affected the types of industries that emerged. She finds that countries that either lacked patent systems entirely or that had weakly enforced patents tended to focus on a small set of industries that depended on technologies that could not be backward engineered, such as the manufacture of scientific instruments. Those countries lagged Britain and the United States, the two countries with the strongest patent protection, in the development of a broader set of industries, such as machinery, whose technologies could be backward engineered, and thus required patents in order to flourish. The implication is that had Great Britain not had a patent system, the growth of key industries, particularly those that required steam engines and mechanized production, would have been stunted.” (emphasis added)

In other words, he leaves the impression that Moser’s work support his thesis. However, from her own abstract: “This paper introduces a new internationally comparable data set that permits an empirical investigation of the effects of patent law on innovation. The data have been constructed from the catalogues of two 19th century world fairs: the Crystal Palace Exhibition in London, 1851, and the Centennial Exhibition in Philadelphia, 1876. They include innovations that were not patented, as well as those that were, and innovations from countries both with and without patent laws. I find no evidence that patent laws increased levels of innovative activity but strong evidence that patent systems influenced the distribution of innovative activity across industries. Inventors in countries without patent laws concentrated in industries where secrecy was effective relative to patents, e.g., food processing and scientific instruments. These results suggest that introducing strong and effective patent laws in countries without patents may have stronger effects on changing the direction of innovative activity than on raising the number of innovations.” (emphasis added)

In other words, Moser does not believe patents increase innovation on net but merely distort and skew research–a point others have made, such as Plant and Rothbard. See, e.g., Arnold Plant, “The Economic Theory Concerning Patents for Inventions,” p. 43. As Rothbard writes (Man, Economy, and State, pp. 658–59): “It is by no means self-evident that patents encourage an increased absolute quantity of research expenditures. But certainly patents distort the type of research expenditure being conducted. . . . Research expenditures are therefore overstimulated in the early stages before anyone has a patent, and they are unduly restricted in the period after the patent is received. In addition, some inventions are considered patentable, while others are not. The patent system then has the further effect of artificially stimulating research expenditures in the patentable areas, while artificially restricting research in the nonpatentable areas.” See also Milton Friedman on the Distorting Effect of Patents.

Needless to say, arguing that patents distort innovation is not an argument for patents! See also Petra Moser, Patents and Innovation in Economic History (Feb. 2016): “when patent rights have been too broad or strong, they have actually discouraged innovation”. So Moser apparently believes stronger patents discourage innovation (the opposite of Haber’s claim that “the weight of the evidence supports the claim of a positive causal relationship between the strength of patent rights and innovation— and thus, economic growth”), and that patents change the direction of innovation, i.e. they skew and distort innovation.

The Founders only had a hunch that copyrights and patents might “promote the Progress of Science and useful Arts”³ —that the cost of this system would be “worth it.” But they had no serious evidence. A century and a half later there was still none. As early as 1934, Arnold Plant expressed deep skepticism of patents: speaking of the patent system, he wrote:

the science of economics as it stands to-day furnishes no basis of justification for this enormous experiment in the encouragement of a particular activity by enabling monopolistic price control.

And in an exhaustive 1958 study prepared for the U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, economist Fritz Machlup concluded:

No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions. … If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one.⁴

And the empirical case for patents has not been shored up at all in the last fifty years. As George Priest wrote in 1986, “[I]n the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property.”⁵ Similar comments are echoed by other researchers. François Lévêque and Yann Ménière, for example, of the Ecole des mines de Paris (an engineering university), observed in 2004:

The abolition or preservation of intellectual property protection is … not just a purely theoretical question. To decide on it from an economic viewpoint, we must be able to assess all the consequences of protection and determine whether the total favorable effects for society outweigh the total negative effects. Unfortunately, this exercise [an economic analysis of the cost and benefits of intellectual property] is no more within our reach today than it was in Machlup’s day [1950s].⁶

And see also:

“we tend to agree with scholars such as those at NYU School of Law who see “major gaps in our empirical understanding that impede effective policy analysis” and a “need [for] a greater understanding of how law and policy affect innovation and creative production.”⁷

More recently, Boston University Law School Professors (and economists) Michael Meurer and Jim Bessen conclude that on average, the patent system discourages innovation. As they write: “it seems unlikely that patents today are an effective policy instrument to encourage innovation overall” (p. 216). To the contrary, it seems clear that nowadays “patents place a drag on innovation” (p. 146). In short, “the patent system fails on its own terms” (p. 145).⁸ See also p. 5: “Overall, the performance of the [U.S] patent system has rapidly deteriorated in recent years. By the late 1990s, the costs that patents imposed on public firms outweighed the benefits. This provides clear empirical evidence that the patent system is broken. . . . [O]ur analysis has relevance to innovation in other countries.”

And in a more recent paper, economists Boldrin and Levine state:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded – which, as evidence shows, has no correlation with measured productivity. This is at the root of the “patent puzzle”: in spite of the enormeous increase in the number of patents and in the strength of their legal protection we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels of R&D expenditure – in addition to the discussion in this paper, see Lerner [2009] and literature therein. As we shall see, there is strong evidence, instead, that patents have many negative consequences.⁹

Patent systems are often justified by an assumption that innovation will be spurred by the prospect of patent protection, leading to the accrual of greater societal benefits than would be possible under non-patent systems. However, little empirical evidence exists to support this assumption. One way to test the hypothesis that a patent system promotes innovation is experimentally to simulate the behavior of inventors and competitors under conditions approximating patent and non-patent systems. Employing a multi-user interactive simulation of patent and non-patent (commons and open source) systems (“The Patent Game”), this study compares rates of innovation, productivity, and societal utility. … Initial data generated using The Patent Game suggest that a system combining patent and open source protection for inventions (that is, similar to modern patent systems) generates significantly lower rates of innovation (p<0.05), productivity (p<0.001), and societal utility (p<0.002) than does a commons system. These data also indicate that there is no statistical difference in innovation, productivity, or societal utility between a pure patent system and a system combining patent and open source protection.

And:

Plant is not the only responsible economic student of the subject to have raised important questions about the social value of intellectual property rights. Others have proposed systems of government prizes or rewards for creators of valuable intellectual property. A better alternative—given the danger that a rewards system would be hopelessly politicized, with grossly debilitating effects on economic efﬁciency, as well as likely to have misallocative effects similar to those created by enforcing intellectual property rights—might be simply leaving the market for intellectual property to ﬁnd its own way, as it did before there were enforceable rights to such property.

We cannot ignore such fundamental questions, because they bear on many of the issues of intellectual property law that we discuss. But neither can we answer them to our complete satisfaction. The economic case for abolishing intellectual property rights has not been made. But neither economic theory nor empirical evidence enables a ringing endorsement of any complete body of intellectual property law other than trademark law, which protects “property” in only an attenuated sense. We do, however, ﬁnd pretty solid economic support for a degree of trade secrecy protection close to what we have and for a degree of copyright and patent protection as well, but possibly a lesser degree than we have.

Given the emphases of the existing scholarly and popular literature concerned with intellectual property, it may come as a surprise to many readers that the economic arguments that we make for intellectual property protection are not based primarily on a belief that without legal protection the incentives to create such property would be inadequate. That belief cannot be defended conﬁdently on the basis of current knowledge. The concerns we highlight have rather to do with such things as optimal management of existing stocks of intellectual property, congestion externalities, search costs, rent seeking, and transaction costs. —Landes & Posner, The Economic Structure of Intellectual Property Law.

The Founders’ hunch about IP was wrong. Copyright and patent are not necessary for creative or artistic works, invention, and innovation. They do not even encourage it. These monopoly privileges enrich some at the expense of others, distort the market and culture, and impoverish us all.¹⁰ Given the available evidence, anyone who accepts utilitarianism should be opposed to patent and copyright.¹¹

Update: See also:

John Jewkes, David Sawers and Richard Stillerman, The Sources of Invention, 2nd ed. (Palgrave Macmillan, 1969), p. 21: “We do not know whether there is an optimum rate of invention and technical advance or, if such an optimum is accepted as a conceptual device, how it would be defined or determined.”
Jessica Litman, “The Public Domain,” Emory Law Journal 39 (1990): 965, 997–98, characterizing as an “unruly brawl” debate among economists about copyright’s effects and concluding that in general “empirical data are not only unavailable, but are also literally uncollectible.”
Alfred C. Yen, “Restoring the Natural Law: Copyright as Labor and Possession,” Ohio State Law Journal 51 (1990): 517, 542–43: “[T]he empirical information necessary to calculate the effect of copyright law on the actions of authors, potential defendants, and consumers is simply unavailable, and is probably uncollectible.”
Roberto Mazzoleni & Richard Nelson, “Economic Theories about the Benefits and Costs of Patents,” Journal of Economic Issues, vol. 32, issue 4 (1998): 1031–1052 (pdf): “What are the social benefits and costs of awarding patents for inventions? Many economists and patent lawyers seem to think that the answer to this question is simple and settled, at least theoretically. In this paper, we discover that the answer certainly is not simple and currently not well settled. There are a number of different theories that give different answers and only limited knowledge of where these different theories apply.”
Heller, M. A., and R. S. Eisenberg. 1998. “Can Patents Deter Innovation? The Anticommons in Biomedical Research.” Science 280 (5364): 698–701. doi:10.1126/science.280.5364.698.: “… more intellectual property rights may lead paradoxically to fewer useful products for improving human health …. Building on Heller’s theory of anticommons property (3), this article identifies an unintended consequence of biomedical privatization:¹² a proliferation of intellectual property rights upstream may be stifling life-saving innovations further downstream in the course of research and product development.”
Julio H. Cole, “Patents and Copyrights: Do the Benefits Exceed the Costs?”, J. Libertarian Stud. 15, no. 4 (Fall 2001): 79–105:
- “from the very beginning [of the US], there was never any real consensus as to the benefits of adopting a patent system” p. 84
- “there is not much agreement among economic historians as to the importance of patents to the Industrial Revolution. T.S. Ashton thought that patents were unimportant: “It is at least possible that with out the apparatus of the patent system, discovery might have developed quite as rapidly as it did.” Joel Mokyr expresses a similar view: “A patent system may have been a stimulus to invention, but it was clearly not a necessary factor.” p. 86
Michael H. Davis, Patent Politics (2004), p. 343 & n.25:
- - Although patent law claims to separate those advances that innovators would not have made without additional special skill from those that proprietors would have made in any event by rewarding only those distinctive “inventors,” most commentators agree that patent law can only identify those advances innovators would not have made quite as quickly. Much evidence indicates that inventions proceed apace, irrespective of legal rules.25 Other evidence indicates that, regardless of the incentives, many inventions will not arise until the time is right.26
    
    25. See Diamond v. Chakrabarty, 447 U.S. 303, 317 (1980). See also National Wire Bound Box Co. v. Healy, 189 F. 49 (7th Cir. 1911) for this proposition:
    
    An invention is not something that, but for the particular inventor or inventors, would not have been. Inventions come along as the discovery of gas deposits come[s] along-the contribution of some particular person to the world’s knowledge—but if not by that person, then, in the course of time, and usually in a very short time, by some one else. …
    
    26. British science historian James Burke has explored this idea elegantly by tracing the interdependent relationships between diverse technological advances.
Michael H. Davis, Patent Politics (2004), p. 348: “evidence indicates that the patent monopoly actually slows the pace of invention, at least in some industries.”
Michael J. Meurer & Craig Allen Nard, “Patent Policy Adrift in a Sea of Anecdote: A Reply to Lichtman,” 93 Geo. L.J. 2033, 2034 & n.7 (2005), citing Wesley M. Cohen, Richard R. Nelson & John P. Walsh, “Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Firms Patent (Or Not)” (Nat’l Bureau of Econ. Research, Working Paper No. 7552, 2000) as evidence that “patent protection plays a relatively modest incentive role in most industries”). (quoted in Maggie Wittlin, Lisa Larrimore Ouellette & Gregory N. Mandel, “What Causes Polarization on IP Policy?,” UC Davis L. Rev. 52, no. 2 (2018): 1193–1241 [PDF])
Eric E. Johnson, “Intellectual Property and the Incentive Fallacy,” 39 Fla. St. U. L. Rev. 623, 624 (2012): “Without anyone really noticing it, the primary rationale underpinning intellectual property law has become hollow. New strains of thinking in the fields of economics, psychology, and business-management studies now debunk the long-venerated idea that legal authority must provide some artificial inducement to artistic and technological progress.”
Courtesy of Andrew Torrance, mentioned in his 2011 Open Science Summit talk,¹³ a quote from this book: Patents in the Knowledge-Based Economy, Cohen & Merrill, eds. (2003) (Google books):

There are theoretical as well as empirical reasons to question whether patent rights advance innovation in a substantial way in most industries. …The literature on the impact of patents on innovation must be considered emergent. One reason is that the effect of patent policy has many dimensions … and these continue to challenge scholars both theoretically and empirically.

Innovation in America: The Role of Copyrights, Hearings Before the Subcomm. on Courts, Intellectual Property, and the Internet of the H. Comm. on the Judiciary, 113th Cong. 15 (2013) (statement of the Computer & Communications Industry Association) [See docs here, to-wit: Hearing Record: Hearing Transcript [PDF]] (see my post USPTO/Commerce Dept. Distortions: “IP Contributes $5 Trillion and 40 Million Jobs to Economy“), claiming that the study “actually suggested that IP-intensive industries are having a decreasing impact on the U.S. economy.” (according to Maggie Wittlin, Lisa Larrimore Ouellette & Gregory N. Mandel, “What Causes Polarization on IP Policy“). The CCIA statement states: “the role of copyright in promoting innovation is extremely difficult to quantify. Although encouraging the creation of works is the Constitutional purpose of copyright, economists have few tools to determine how much innovative activity is attributable to copyright as opposed to other factors, such as competition and the desire for reputational benefit. This inability to quantify the true impact of copyright on innovation makes it difficult for policymakers to make an informed decision on the optimal levels of copyright protection.”
Mark A. Lemley, “IP in a World Without Scarcity,” 90 N.Y.U. L. Rev. 460, 507 (2015): “The Internet certainly undermines the logic of IP as an incentive to commercialize works once they are created, but it may also undermine the classic theory of IP as an incentive to create.”
Mark A. Lemley, “Faith-Based Intellectual Property,” 62 UCLA L. Rev. 1328, 1335 (2015): “it is far from clear that IP is doing the world more good than harm.”
Amy Kapczynski, “The Cost of Price: Why and How to Get Beyond Intellectual Property Internalism,” 59 UCLA L. Rev. 970, 977 (2012): “the contemporary field of information economics itself offers no clear endorsement of IP.”
Matt Ridley, How Innovation Works (2020): “the evidence clearly shows that while intellectual property helps a little, it also hinders, and the net effect is to discourage innovation. … there is no evidence that there is less innovation in areas unprotected by patents. Lindsey and Teles list the various organizational innovations that have happened in companies, unpatented, widely copied and yet enthusiastically invented: the multidivisional corporation, the R&D department, the department store, the chain store, franchising, statistical process control, just-in-time inventory management. Likewise none of the following technologies were patented in any effective way: automatic transmission, power steering, ballpoint pens, cellophane, gyrocompasses, jet engines, magnetic recording, safety razors and zippers. … “there is just no evidence from geography and history that patents are helpful, let alone necessary, in encouraging innovation. … “A study by Josh Lerner of 177 cases of strengthened patent policy in sixty countries over more than a century found that ‘these policy changes did not spur innovation’. In Japan another study found that the strengthening of patent protection increased neither research spending nor innovation. In Canada a study found that firms which use the patent process intensively were no more likely to innovate.”
Julie Samuels [holder of the Mark Cuban Chair to Eliminate Stupid Patents at the Electronic Frontier Foundation], “Patent Trolls Hurt Innovation,” POLITICO (Mar. 6, 2013): “we have a consensus in the tech community: The patent system has started to impede, rather than incentivize, innovation.”
Executive Office of the President, Patent Assertion and U.S. Innovation [report prepared by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy]: patent trolls “have had a negative impact on innovation and economic growth.”
Rebecca Tushnet, “Economies of Desire: Fair Use and Marketplace Assumptions,” 51 Wm. & Mary L. Rev. 513, 517-18 (2009): “[w]hat empirical evidence exists does not engender confidence that increases in copyright protection spur creativity.”
Julie E. Cohen, “Copyright as Property in the Post-Industrial Economy: A Research Agenda,” 2011 Wis. L. Rev. 141, 143: “[e]verything we know about creativity and creative processes suggests that copyright plays very little role in motivating creative work.”
Alan J. Devlin, “Patent Law’s Parsimony Principle,” Berkeley Technology L. J. 25, (2011): 1693–1750, p. 1747: “We remain significantly ignorant about innovation, the macroforces that weigh upon it, and the idiosyncratic influences that propel it at the individual level.”
- - Citing Citing Richard S. Whitt & Stephen J. Schultze, “The New Emergent Economics of Innovation and Growth, and What It Means for Communications Policy,” J. Telecomm. & High Tech. L. 7, no. 2 (Spring 2009): 217–315, p. 267 (“Innovation is a much-admired concept, yet in many ways still rather mysterious and elusive.”).
Diane Leenheer Zimmerman, “Copyrights as Incentives: Did We Just Imagine That?” [online] 12 Theoretical Inquiries L. 29, 47 (2011): “The work of scholars who study innovation and creativity, if accurate, renders questionable the assertion that the degree to which people are willing to devote themselves to creative pursuits depends primarily, or even significantly, on the promise of a potential pot of economic rewards.”
Eric Johnson: “Intellectual property law has long been justified on the belief that external incentives are necessary to get people to produce artistic works and technological innovations that are easily copied. This Essay argues that this foundational premise of the economic theory of intellectual property is wrong. Using recent advances in behavioral economics, psychology, and business-management studies, it is now possible to show that there are natural and intrinsic motivations that will cause technology and the arts to flourish even in the absence of externally supplied rewards, such as copyrights and patents.” (see Intellectual Property’s Great Fallacy)
Aarthi S. Anand, “‘Less is More’: New Property Paradigm in the Information Age?“, Duke Law & Tech. Rev. 11, no. 1 (2012): 65–144: “evidence of growth in the commercial software industry without intellectual property protection. Between 1993 and 2010, the software industry in India emerged as the fastest growing in the world, accounting for $76 billion in revenues by 2010. In the same time period, the software industry in India remained unaffected by changes in intellectual property protection for software. By demonstrating industry growth without strong intellectual property protections, the Indian data fills the critical gap in American literature.”

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Heidi L. Williams, How Do Patents Affect Research Investments? (Jan. 2017):

“To summarize, evidence from patent law changes has provided little evidence that stronger patent rights encourage research investments…. The patent system is a widely-used policy lever attempting to better align the private returns to developing new technologies with the social value of those inventions. The past few decades have seen the development of large academic literatures in a variety of fields – including economics, law, and strategy, among others – investigating various aspects of the patent system. However, surprisingly little research has focused on empirically estimating the key parameters needed to evaluate the social costs and social benefits of the patent system. A half-century ago, Penrose (1951) and Machlup (1958) argued that insufficient empirical evidence existed to make a conclusive case either for or against patents. Today, I would argue that given the limitations of the existing literature we still have essentially no credible empirical evidence on the seemingly simple question of whether stronger patent rights – either longer patent terms or broader patent rights – encourage research investments into developing new technologies. While researchers have recently begun to make progress on the more limited question of how patents on existing technologies affect follow-on innovation (Galasso and Schankerman, 2015; Sampat and Williams, 2015), evidence on the overall effects of patents on research investments are needed as one input into optimal patent policy design.

Petra Moser, Patents and Innovation in Economic History (Feb. 2016): “when patent rights have been too broad or strong, they have actually discouraged innovation”

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[Update: See also Hon. Maureen K. Ohlhausen, “Patent Rights in a Climate of Intellectual Property Rights Skepticism,” Harv. J. L. & Tech., 30, no. 1 (Fall 2016 [pdf]): 1–51, pp. 8–9:

Respected economists Michele Boldrin and David Levine find “no evidence that intellectual monopoly achieves the desired purpose of increasing innovation,” describe IP rights as an “unnecessary evil,” and call for the patent system’s abolition.38 Economist Adam Jaffe and Harvard Business School professor Josh Lerner call the patent system “broken.”39 Law professors Michael Meurer and James Bessen think it “unlikely that patents today are an effective policy instrument to encourage innovation overall.”40 As for encouraging ideas, the Economist wrote that “[t]oday’s patent systems are a rotten way of rewarding them.”41 Indeed, the magazine appeared to embrace the notion that “society as a whole might even be better off with no patents than with the mess that is today’s system.”42 In law professor Thomas Cheng’s view, theory and empirical studies “firmly refute[] the notion that patent protection is necessary for securing innovation.”43 Richard Stallman argues that “patent law should be abolished.”44 The Electronic Frontier Foundation’s view is that the “patent system is broken” and “it’s time to start over.”45

The chorus of criticism goes on. Attorney William Hubbard argues that “patent protection in the United States should be weakened.”46 The Hon. Richard A. Posner sees “serious problems with our patent system.”47 A leading authority on patent law, Mark Lemley, has proclaimed the existence of a “patent crisis.”48 A renowned economist, Carl Shapiro, believes that the “patent system . . . provides excessive rewards to patent holders . . . reduc[ing] economic efficiency by discouraging innovation.”49 Even Google, which secured more than 2,500 patents in 201450, has sometimes poured cold water on the importance of IP rights. Its general counsel, Kent Walker, has opined that a “patent isn’t innovation. It’s the right to block someone else from innovating” and that “patents are not encouraging innovation.”51 Although outright elimination of the patent regime is an outlier view, many commentators believe that society ought to jettison patents in particular fields of invention such as computer software, business methods, and genetics.52 Even some who have defended the status quo have done so reluctantly.53 ]

Brink Lindsey & Steven M. Teles, The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality (2017):

“IN OUR ROGUES’ GALLERY OF case studies, copyright and patent laws are the wolves in sheep’s clothing.

… copyright and patent laws are regulatory responses to what economists call “market failure.” … [This is] a plausible argument with only one problem: the facts on the ground don’t provide much support for it. The market failure theory suggests that vulnerability to copying and imitation creates serious disincentives for would-be artists and inventors, such that only exclusive rights over reproduction and use can create the proper incentives for cultural production and technological innovation. Yet we regularly see robust, ebullient creativity and innovation even where intellectual property protections are absent or increasingly porous. The empirical evidence that intellectual property rights stimulate creative expression and innovation is remarkably weak.

“Even if innovation can sometimes thrive in the absence of patents, it may still be the case that patent protection boosts overall levels of innovative activity and thus stimulates technological progress. After all, the extra returns accruing to inventors because of the temporary patent monopoly can be seen as a subsidy for innovative activity, and when you subsidize something you generally get more of it. Despite what would seem like a powerful incentive, economists have struggled to find evidence of patent law’s positive effects, in either the United States or elsewhere. Josh Lerner undertook an impressively comprehensive survey, examining 177 different changes in patent policy across 60 countries over a 150-year period. His striking finding was that changes to strengthen patent protection didn’t even lead to increased patenting. “This evidence,” he concludes, “suggests that these policy changes did not spur innovation.” Meanwhile, a study of the 1988 Japanese patent law reform found no evidence that this strengthening of intellectual property protection increased either R&D spending or innovative output. A study of Canadian manufacturing found that firms that use the patent process intensively are no more likely to produce innovations than those that don’t. Here in the United States, where patent protections have been broadened and strengthened significantly since the 1980s, one survey of the results led to this muddled conclusion: “Despite the significance of the policy changes and the wide availability of detailed data relating to patenting, robust conclusions regarding the empirical consequences for technological innovation of changes in patent policy are few.7 [7. Adam B. Jaffe, “The U.S. Patent System in Transition: Policy Innovation and the Innovation Process,” Research Policy 29 (2000): pp. 531–77.]

… The evidentiary record on patents is thus mixed. Some findings describe positive effects, yes, but there is no convincing confirmation that patent systems as a whole work as intended. Overall, we find ourselves agreeing with the assessment offered nearly 60 years ago by the economist Fritz Machlup, a pioneer in the study of the emerging information economy. “If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one,” Machlup wrote. “But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it.”

… The copyright and patent laws we have today therefore look more like intellectual monopoly than intellectual property. They do not simply give people their rightful due; on the contrary, they regularly deprive people of their rightful due. If there is a case to be made for the special privileges granted under these laws, it must be based on utilitarian grounds. As we have already seen, that case is surprisingly weak, and utterly incapable of justifying the radical expansion in IP protection that has occurred in recent years. Therefore, it is entirely appropriate to strip IP protection of its sheep’s clothing and to see it for the wolf it is, a major source of economic stagnation and a tool for unjust enrichment.”

Matt Ridley, How Innovation Works: And Why It Flourishes in Freedom (2021), ch. 11, section “When the law stifles innovation: the case of intellectual property”:

“there is no evidence that there is less innovation in areas unprotected by patents. … none of the following technologies were patented in any effective way: automatic transmission, power steering, ballpoint pens, cellophane, gyrocompasses, jet engines, magnetic recording, safety razors and zippers. … All in all, the evidence that patents and copyrights are necessary for innovation, let alone good for it, is weak. There is simply no sign of a ‘market failure’ in innovation waiting to be rectified by intellectual property, while there is ample evidence that patents and copyrights are actively hindering innovation. As Lindsey and Teles put it, the holders of intellectual property are ‘a significant drag on innovation and growth, the very opposite of IP law’s stated purpose’.”

See also Ridley, The Rational Optimist (2010), ch. 8:

“there is little evidence that patents are really what drive inventors to invent. Most innovations are never patented. In the second half of the nineteenth century neither Holland nor Switzerland had a patent system, yet both countries flourished and attracted inventors. And the list of significant twentieth century inventions that were never patented is a long one. It includes automatic transmission, Bakelite, ballpoint pens, cellophane, cyclotrons, gyrocompasses, jet engines, magnetic recording, power steering, safety razors and zippers. By contrast, the Wright brothers effectively grounded the nascent aircraft industry in the United States by enthusiastically defending their 1906 patent on powered flying machines. In 1920, there was a logjam in the manufacture of radios caused by the blocking patents held by four firms (RCA, GE, AT&T and Westing house), which prevented each firm making the best possible radios. …“In the 1990s the US Patent Office flirted with the idea of allowing the patenting of gene fragments, segments of sequenced genes that could be used to find faulty or normal genes. Had this happened, the human genome sequence would have become an impossible landscape in which to innovate.”

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As for studies trying to estimate the optimal patent and copyright terms, see my post Optimal Patent and Copyright Term Length.

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For other compilations of some of this evidence, see:

For some additional relevant posts, see the material collected at Selected Supplementary Material for Against Intellectual Property, and other posts, e.g.:

Update: re the paper “The Bright Side of Patents,” by Joan Farre-Mensa, Deepak Hegde & Alexander Ljungqvist, my tweet:

All this paper purports to show is the patent system has both costs and benefits. Shocker. Hey, guess what, every evil state program has some benefits—someone benefits. That’s why evil state policies and laws exist.

How does the fact that someone benefits show that there are net benefits? It doesn’t even pretend to show this, nor could it as it does not quantify either the costs or benefits it points to (nor could it, ever). (And by the way, I do not accept the conclusion here, that the purported benefits are actual benefits for startups, certainly not net benefits for startups; they are harmed immeasurably by patents of entrenched interests.)

It remains the case that there are no conclusive studies or empirical research showing the patent system has net societal benefits. None. In fact, the evidence we have points the other direction, if anything.

See Boldrin & Levine, Against Intellectual Monopoly; and my post Yet Another Study Finds Patents Do Not Encourage Innovation. [↩]
See, on this, my paper “There’s No Such Thing as a Free Patent“. [↩]
U.S. Const., Art. I, Sec. 8, Cl. 8. For more background on the origins of copyright in America, see references in note 53, supra [ The Stop Online Piracy Act (SOPA), recently defeated by a widespread Internet-based outrage, is a good example of a threat to freedom of expression in the name of copyright law. See Stephan Kinsella, SOPA is the Symptom, Copyright is the Disease: The SOPA Wakeup Call to Abolish Copyright, The Libertarian Standard (Jan. 24, 2012). Regarding the origins of copyright, see Michele Boldrin & David K Levine, Against Intellectual Monopoly (2008), ch. 2, againstmonopoly.org; Eric E. Johnson, “Intellectual Property’s Great Fallacy” (2011) (“The monopolies now understood as copyrights and patents were originally created by royal decree, bestowed as a form of favoritism and control. As the power of the monarchy dwindled, these chartered monopolies were reformed, and essentially by default, they wound up in the hands of authors and inventors.”); Tom W. Bell, Intellectual Privilege: A Libertarian View of Copyright.] [↩]
Fritz Machlup, An Economic Review of the Patent System 79-80 (1958), c4sif.org/resources [↩]
George Priest, “What Economists Can Tell Lawyers About Intellectual Property,” 8 Res. L. & Econ. 19 (1986). [↩]
François Lévêque & Yann Ménière, The Economics of Patents and Copyrights 102 (2004). [↩]
“Innovation Law & Policy Empirical Research Initiative,” NYU L. Engelberg Ctr. on Innovation L. & Policy, quoted in Maggie Wittlin, Lisa Larrimore Ouellette & Gregory N. Mandel, “What Causes Polarization on IP Policy?,” UC Davis L. Rev. 52, no. 2 (2018): 1193–1241, 1209 [PDF]. [↩]
James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008, excerpts available at researchoninnovation.org/dopatentswork/). [↩]
Boldrin and Levine: The Case Against Patents. [↩]
See, e.g., Stephan Kinsella, “Leveraging IP,” Mises Economics Blog (Aug. 1, 2010); and idem, “Milton Friedman on the Distorting Effect of Patents,” C4SIF Blog (July 3, 2011). [↩]
Another problem with the wealth-maximization approach is that it has no logical stopping point. If adding (and increasing) IP protection is a cost worth paying to stimulate additional innovation and creation over what would occur on a free market—that is, if the amount of innovation and creation absent IP law is not enough, then how do we know that we have enough now, under a system of patent and copyright? Maybe the penalties or terms should be increased: impose capital punishment, triple the patent and copyright term. And what if there still is not enough? Why don’t we expropriate taxpayer funds and set up a government award or prize system, like a huge state-run Nobel prize with thousands of winners, to hand out to deserving innovators, so as to incentivize even more innovation? Incredibly, this has been suggested, too—even by Nobel Prize winners and libertarians. See Stephan Kinsella, “$30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution,” Mises Economics Blog (Nov. 23, 2008). [↩]
Sic. It is perverse to refer to the granting of anti-competitive monopoly privileges by the state as “privatization”. [↩]
See KOL101 | The Future (the End?) of Intellectual Property (Open Science Summit, 2011). [↩]