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isuma
ABSTRACT Intellectual property rights (IPR) are institutional tools
that allow for the creation of markets to stimulate private initiatives
in intellectual creation. Basically, this amounts to restricting access
to knowledge by granting temporary exclusive rights to new
knowledge and thus enabling the inventor to set a price for its use.
Patents and copyrights are the main intellectual property rights used
to guarantee a degree of exclusivity to knowledge. Creating
monopolies on knowledge lead, however, to serious problems in the
allocation of economic resources. Patents and copyrights create
static distortions in resource allocation due to monopoly pricing and
may encourage socially wasteful expenditures by urging innovators
to invent around the patent. An overview of the economic and
policy issues surrounding intellectual property rights is presented,
with a particular focus on patents and copyrights. The main
economic challenge raised by the patent system is to keep a
balance between the social objective of ensuring efficient use of
knowledge, once it has been produced, and the objective of
providing ideal motivation to the private producer.
RSUM Les droits de proprit intellectuelle sont des outils
institutionnels permettant la cration de marchs en vue de
stimuler des initiatives prives en cration intellectuelle.
Fondamentalement, cela revient restreindre laccs au savoir en
octroyant des droits temporairement exclusifs sur un nouveau
savoir et donc en permettant linventeur dtablir le prix de son
utilisation. Les principaux droits utiliss pour garantir une certaine
exclusivit sur un savoir sont les brevets et les droits dauteur.
Toutefois, la cration de monopoles fonds sur le savoir suscite de
graves problmes dans lallocation des ressources conomiques.
Les brevets et les droits dauteur entranent des distorsions
statiques dans lallocation des ressources en raison de ltablis-
sement de prix de monopole et risquent dencourager un gaspillage
social des dpenses en amenant les innovateurs crer des
inventions tout en contournant les brevets. Le prsent article offre
un aperu des enjeux conomiques et politiques entourant les
droits de proprit intellectuelle, en sattachant plus parti-
culirement aux brevets et aux droits dauteur. Il se poursuit par une
analyse du principal problme conomique soulev par le systme
des brevets, soit ltablissement dun quilibre entre lobjectif social
dassurer une utilisation efcace du savoir, une fois quil a t cr,
et lobjectif consistant offrir une motivation idale aux producteurs
privs. (Traduction www.isuma.net)
BY DOMI NI QUE FORAY
Intellectual Property
and Innovation in the
Knowledge-Based
Economy
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72 Spring Printemps 2002
intellectual property and innovation in the knowledge-based economy
T
wo categories of property rights have become
predominant as regards scientic and technological
knowledge: copyright and patents. Surprisingly,
these two categories have moved closer together over time.
Initially they were far apart, with copyrights covering liter-
ary and artistic property rights and patents covering indus-
trial property rights. But with the development of scientic
and technological knowledge these different rights have
often been applied to useful knowledge that enters the in-
dustrial sphere. The merging of patents and copyrights is
due essentially to the fact that copyright has conquered new
ground. By becoming the right most frequently used by the
information technology and culture and multimedia indus-
tries, copyright has entered the corporate world.
Patents: denitions
The patent, an instrument designed to protect innovators,
ensures them the right to a temporary monopoly on the
commercial exploitation of a device or method. It is a prop-
erty title that is valid in time (duration), in geographic space
(range) and in the world of objects (scope or extent of the
patent). Filing a patent application means dening a set of
claims concerning the concretization or application of an
idea. After an investigation into anteriority and in some
cases a study of patentability, the patent authority may or
may not grant property rights for a particular geographical
area specified in the application. In exchange for patent
rights the inventor has to divulge publicly the technical
details on the new knowledge.
Certain legal limits ensure that not all the knowledge
produced by an economic agent is patented. Patentability of
knowledge depends on conditions of absolute innovative-
ness of the invention, of non-obviousness for an expert, and
of the possibility of industrial application (or utility). Theo-
retically, the condition of non-obviousness (or inventive
activity) is intended to distinguish between that which is
essentially the product of creative human work and that
which is primarily the work of nature. One can patent a new
machine but one cannot patent a fresh water spring even if
one has discovered it. As a result, recurrent debate on the
nature of innovation in certain disciplines such as mathe-
maticsis it an invention or a discovery?has extensive
economic implications. The interpretation of this criterion
is of course at the heart of discussions on the patentability of
genetic creations.
One should note that the protection afforded by a prop-
erty right is neither automatic nor free. The
onus is on the patent owner to iden-
tify the counterfeiter and take
the matter to court, where it
will be assessed and inter-
preted. The effectiveness of
property rights is therefore
inseparable from the cre-
ators capacity to watch
over them. These capac-
ities depend, in turn, on
legal facilities (can someone be sued
73 isuma
intellectual property and innovation in the knowledge-based economy
for counterfeit?), technical capacities (microscopic analysis)
and organizational capacities (information networks).
Moreover, globalization of markets clearly has a negative af-
fect on these surveillance capacities.
Patent: between exclusion and diffusion of knowledge
The patent provides an obvious and recognized solution to
the economic problem of the intellectual creator. By in-
creasing the expected private returns from an innovation, it
acts as an incentive mechanism to private investments in
knowledge production. The problem is that by imposing
exclusive rights, the patent restricts de facto the use of
knowledge and its exploitation by those who might have
beneted from it had it been free. These situations occur
because the person who has the knowledge is not necessar-
ily in the best position to use it efciently. The more dis-
tributed knowledge is, passing from hand to hand, the
greater the probability of it being exploited effectively. It is
therefore important to nd some balance between the right
to exclusivity and the distribution of knowledge.
A medium for the dissemination of knowledge
Different devices exist for deliberately organizing the circu-
lation of knowledge in a patent system. First, the granting of
a property right is accompanied by public disclosure con-
cerning the protected technique. There is therefore dissem-
ination of knowledge owing to the patent. Albeit partial
(only the codied and explicit dimensions of the new knowl-
edge are described), this dissemination is particularly im-
portant in certain industries. If it is carried out in time,
and in so far as the information thus constituted is avail-
able at a low cost, it allows for a better allocation of re-
sources, reduces the risk of duplication and favours the trad-
ing of information. The case of pharmaceuticals clearly
illustrates the use of patents as a means of information and
co-ordination. Patent databases are a unique medium for
knowledge externalities. Each rm uses them to evaluate its
own strategies and identify opportunities for co-operation or
transactions concerning knowledge. Second, patents create
transferable rights.
Getting a good balance
It is thus important to achieve an appropriate balance be-
tween the exclusion value and the dissemination value. Such
a balance is based on the institutional articulation of ip that
can vary a great deal across countries.
For example, the information disclosure rules matter:
1
The
Japanese system is effective for sending signals and placing a
large amount of information in the public domain, thus
contributing to the essential objective of collective inven-
tion. While the European system tends also to have an effec-
tive signalling function (though less powerful), the U.S.
system, until recently, was not effective in terms of signalling.
Minor institutional differences are important to explain the
disparities of the value of patents as a source of information
and, thus, as a mechanism for efcient coordination. When
information is properly disseminated (as in the Japanese
system) and when the nature of the protection granted is
specified in ways that encourage patentees to make their
innovations available for use by others at reasonably modest
costs (narrow patent as well as weak degree of novelty are
crucial in this way), the patent system becomes a vehicle for
co-ordination in expanding informational spillovers, rather
than for the capture of monopoly rents.
But nding the appropriate balance also depends on the
kind of knowledge considered. And here the cumulative
nature of knowledge has to be recognized as a decisive
parameter: the social cost of exclusion increases as knowl-
edge becomes more cumulative. In this sense it is not possi-
ble to consider and treat in similar terms knowledge as a
consumption good and knowledge as an investment good
likely to spawn new (knowledge) goods. The more cumu-
lative the use, the more social losses will be generated by
stronger IP rights.
WHO OWNS THE KNOWLEDGE ECONOMY?
Unbridled privatization of knowledge bases
Many signs suggest that use of intellectual property is be-
coming increasingly important and that within this general
domain, use of the patent is growing rapidly. The greater in-
tensity of innovation, characteristic of the knowledge-based
economy, and the increase in the propensity to patent (that
is, the elevation of the ratio number of patents/number of
innovations) which indicates the emergence of new research
and innovation management techniques, are the main fac-
tors of this quantitative evolution.
2
A recent article in the
Wall Street Journal cites startling figures for the United
States: 151,024 patents were granted in 1998, correspond-
ing to an increase of 38 percent compared to 1997. But the
evolution is also qualitative. Patents are being registered on
new types of objects such as software (17,000 patents last
year, compared to 1,600 in 1992), genetic creations and
devices for electronic trade over the Internet, and by new
players (universities, researchers in the public sector). This
general trend is also reected in the increase in exclusivity
rights over instruments, research materials and databases.
All this contributes to the unprecedented expansion of the
knowledge market and the proliferation of exclusive rights
on whole areas of intellectual creation.
3
Explanations
This trend is partly driven by three types of institutional
changes that are resulting in a privatization of knowledge
that used to be a public good!
powerful commitments to basic research by private rms
in certain sectors (this is, for instance, the case in the
genomics area where we can observe the emergence of a
new generation of firms that are highly specialized in
fundamental research and are, therefore, in direct compe-
tition with the public research institutions);
changes in the behaviour of open science institutions
which are increasingly oriented toward the promotion
of their commercial interests;
4
privatization of governmental civilian agencies which
become major players in the contractual research market.
5
74 Spring Printemps 2002
intellectual property and innovation in the knowledge-based economy
This evolution is to a large extent determined by how
patent ofces and courts in the United States and Europe
interpret the three basic patentability criteria. Courts and
patent offices have always played a role of regulation,
blocking or slowing down private appropriation in certain
elds. For example, the patentability criteria of industrial
application (utility) was a very effective basis for block-
ing the patenting of the rst genetic inventions in the late
1980s. Nowadays, patentability criteria are being applied in
such a way as to allow most research results to be
patentable. This increasing ability to patent fundamental
knowledge, research tools and databases is part and parcel
of a broader movement toward strengthening iprs.
From one IP conception to another
This trend does not necessarily lead to an excess of privati-
zation of knowledge. Far from it. In many cases the estab-
lishment of intellectual property rights strengthens private
incentives, allows the commitment of substantial private
resources and thereby improves the conditions of commer-
cialization of inventions. Moreover, the establishment of
private rights does not totally prevent the diffusion of
knowledge, even if it does limit it. Finally, a large propor-
tion of private knowledge is disseminated outside the mar-
ket system, either within consortiums or by means of net-
works of trading and sharing of knowledge, the foundation
of the unintentional spillovers discussed earlier on.
There is, however, cause for concern when all these
evolutions seem to be in the same direction, strengthening
iprs.
6
Traditionally, iprs were considered one of the incen-
tive structures society employed to elicit innovative effort.
They co-existed with other incentive structures, each of
which has costs and benets as well as a degree of comple-
mentarity. We seem to be moving toward a new view, in
which iprs are the only means to commodify the intangible
capital represented by knowledge and should therefore be a
common currency or ruler for measuring the output of
activities devoted to knowledge generation and the basis
for markets in knowledge exchange.
Implications: higher transaction costs
and potential blockages
A rst range of implications involves various phenomena,
which can be grouped, for the sake of convenience, under
the heading of transaction costs increases. First, sub-
stantial ipr-related transaction costs may increase to such
an extent that the result can be the blockage of knowledge
exploitation and accumulation. We might characterize this
as an excess of privatization. Second, efforts and costs
devoted to sorting out conicting and overlapping claims to
ipr will increase as will uncertainty about the nature and
extent of legal liability in using knowledge inputs.
Patent scope and anti-commons
We have an excess of privatization when private property
rights block the exploitation of the knowledge that these
rights are in fact meant to improve. We have identied two
such situations. First, initial patents that are too broad and
reward the pioneer inventor too generously, block possi-
bilities for subsequent research by others and thus reduce
the diversity of innovators in a eld and the probability of
cumulative developments.
7
Second, an excess of privatiza-
tion relates to excessive fragmentation of the knowledge
base, linked to intellectual property rights on parcels and
fragments of knowledge that do not correspond to an in-
dustrial application. This situation is described by the con-
cept of an anti-commons regime and illustrated with the
case of biotechnology: when private rights are granted to
fragments of a gene, before the corresponding product is
identied, nobody is in a position to group the rights (i.e.,
to have all the licences) and the product is not developed.
8
Basically, these problems stem from the fact that patents
and innovations are two different realities that do not coin-
cide. In some cases a single patent covers many innovations
(especially when the eld is too large or when the patent
protects generic knowledge). In other cases, a single inno-
vation is covered by many patents. This case is the anti-
commons regime.
By staking a set of claims, inventors delimit the territory
they want to have recognized as their property (the same
principle as fencing off a eld). If the eld more than covers
the territory of the innovation, subsequent innovations by
other inventors, based on the rst one, will be blocked. But
if the eld is too narrow, the pioneers efforts may not be
rewarded at their full value. Note that a large eld is not a
major problem in the case of a discrete innovation. The
metaphor of minerals prospection is useful here. In a given
territory where there is only one deposit surrounded by
nothing else, whether the prospector closes off the territory
very close to the deposit or far from it, creating a vast eld,
makes no difference since the additional space appropri-
ated is of no value.
The problem is different in the case of interdependent
and cumulative innovations. If an initial patent is too broad,
it blocks possibilities for subsequent research by others. It
thus reduces the diversity of innovative agents in the
domain and the probability of cumulative developments
taking place. A case in point is breast cancer genetics where
F I GUR E 1
The distinction between private and anti-commons property
12
1
A
2
B
3 2 3
C
1
A
B
C
Anti-commons property Private property
75 isuma
intellectual property and innovation in the knowledge-based economy
patents owned by private companies protect all reproduc-
tion and use of the sequence and related products, includ-
ing diagnosis, irrespective of the technique used. Very broad
patents are a real problem in the life sciences, for example
in genomics, as a number of recent studies suggest.
9
After studying numerous cases, Merges and Nelson
suggest that, in a context of interdependent innovations, an
intellectual property policy that allows very broad patents
leads to a number of blockages which have an impact on
the general dynamics of innovation in the sector: In the
cumulative systems technology cases, broad, prospect claim-
ing, pioneer patents, when their holders tried to uphold
them, caused nothing but trouble Nor is there reason to
believe that more narrowly drawn patents would
have damped the incentives of the pioneers and
other early comers to the eld.
10
Another type of situation is called anti-
common to indicate that its consequences
are the exact inverse of the effects of
common resources. It is a situation that
has produced parcels of private prop-
erty rights on indivisible goods,
11
so
that each party, being the owner of a
portion of the indivisible good, has the
right to exclude others from its share
and no one has the effective privilege of
use. The distinction between the private
property regime and the anti-common regime
is represented in the following figure where
goods 1, 2 and 3 are represented by cells, and the
initial property rights of individuals A, B and C are repre-
sented by lines in bold type.
The private property regime structures the material world
vertically because owners A, B and C each own exclusive
rights, 1, 2 and 3 to an entire good (e.g., a piece of land). In
other words, this regime does not prohibit exploitation of
the resource. In the anti-common regime the lines are hori-
zontal since private rights fragment the goods.
Tragedy results from the fact that multiple owners of
parcels or fragments of a good each have the right to
exclude others from their parcel, so that nobody can exploit
the good in its entirety. This property regime thus breaks
down and fragments objects. If too many owners have such
exclusive rights (i.e., if there is too much fragmentation),
there is a chance that the good will be under-utilized.
How does this regime apply in the knowledge economy?
It corresponds to excessive fragmentation of the knowledge
base: in genomics, rights are created on portions of knowl-
edge before the corresponding product is identied (whereas
previously it was the genes corresponding to products that
were patented, e.g., therapeutic proteins, diagnostic tests).
The proliferation of patents on fragments of genes owned
by different agents hugely complicates the co-ordination
required by an agent wanting to develop a product. In
particular, if the acquisition of all necessary licences is too
complicated or expensive, the product will never material-
ize.
13
Certain situations in the domain of icts also pose this
type of problem.
The explosion of litigation costs
There is a persistent policy debate in the United States about
the litigation explosion. The U.S. patent system has seen a
dramatic increase in both litigation and administrating pro-
ceedings over the past decade. Critics have suggested that the
1982 reform of the patent system has led to aggressive ef-
forts by large rms to extract favourable settlements from
smaller concerns.
14
Beyond the direct cost for the economy,
Lerner
15
estimates indirect costs, which correspond to the
distortion of innovative behaviours of small companies. For
example, small companies in biotechnology try to avoid un-
dertaking research in elds with many previous awards by
rival biotechnology companies and they tend to choose less
crowded elds. Moreover, those companies tend
to avoid elds with companies having large
experience in litigation. Such behaviours
introduce new bias in the choice of
r&d projects, which increase a risk
of sub-optimality in the process of
resource allocation among those
various research elds.
Certain national patent systems
have some peculiar features that
prove to be effective in minimiz-
ing that problem. For example,
European and Japanese systems
provide for the possibility of oppos-
ing the application before the rights
have been granted. This is possible on
condition that information concerning the
application is published early enough (within 18 months
of the application). These mechanisms can avoid potential
conict, a source of high legal costs. In the United States,
where publication occurs at a later stage, once the property
rights have been granted, this possibility of pre-empting
conict is not used. Late publication of information creates
legal uncertainty.
The patent-granting culture matters. The fact of being
indulgent with inventors by granting them everything they
apply for (e.g., a patent that includes subsequent develop-
ments, which are not yet dened) creates fragile areas in
the protection of rights and increases the likelihood of
conict. A patent more strictly limited to innovation reduces
the probability of future conict.
The institutional diversity is in danger
The asymmetric fragility of open science
Open science is caught between the constraints of public
budgets (to be related to the increase in scientic research
costs) and growing demands from rms for research ser-
vices (following the restructuring of these rms and the con-
sequent outsourcing of their r&d activities). In this context
we witness increasing commercialization of open science
activities.
16
This represents a real risk of irremediable al-
teration of modes of co-operation and sharing of knowl-
edge. Restricted access to knowledge and the retention of
knowledge produced by universities comes in several forms,
76 Spring Printemps 2002
intellectual property and innovation in the knowledge-based economy
e.g., delayed or partial publication and communication, se-
crecy and patents. A signicant form is the exclusive licence
(new knowledge is sold exclusively to one rm). When there
is nothing left but exclusive bilateral contracts between uni-
versity laboratories and rms, we have forms of quasi-in-
tegration that undermine the domain of open knowledge.
As well developed by Argyres and Liebeskind,
17
univer-
sity institutional mechanisms have been designed to develop
and protect the intellectual commons, not to exploit it.
Weakening these institutional mechanisms to any signicant
degree may rob the university of its unique identity and func-
tion as a social institution, and end with its capture by private
interests. As a matter of illustration, Mowery et al. note
that in the United States new laws authorizing universities
to grant exclusive licences on the results of research nanced
by public funds (especially the Bayh-Dole Act) are based on
a narrow view of the channels through which public research
interacts with industry. In reality these channels are multiple
(publication, conferences, consultancy, training, expertise)
and all contribute to the transfer of knowledge, while the
incentives created by such laws promote only one channel
(patenting and licences), with the risk of blocking the
others. The authors conclusion is unambiguous: The
Bayh-Dole Act and the related activities of U.S. univer-
sities in seeking out industrial funding for collaborative
R&D have considerable potential to increase the
excludability of academic research results and to
reduce the knowledge distribution capabilities
of university research.
18
Institutional diversity in danger
A further cause for concern is the
fact that the diversity of institu-
tional arrangements are being
undermined. The various institu-
tions, be they public, private or a
mix of the two, each fulls spe-
cific functions and some
strong complementarities
exist between them. However,
the space for public research is shrink-
ing, and functions which were assumed by open
science are no longer assumed at the same level.
Excessive privatization may undermine the long-term
interests of industry itself (which will benet from less public
knowledge, less training and screening externalities). Further-
more, the scenario of a pure functional substitution (the
private sector would simply carry out the functions that were
formerly assumed by the public sector) is wrong. We know
that private companies will never fund the same type of basic
research that the public sector abandons.
19
Similarly, the need
for scientic training could be satised only very partially by
market-based institutions. As argued by Cohen et al.,
20
the
spillovers from the downstream r&d conducted by rms
engaged in basic research are not likely to fully substitute for
the information ows initially blocked for several reasons.
First, rms will try to restrict spillovers to retain proprietary
advantage. Second, there will typically be considerable lags
between the time the rm receives the privileged informa-
tion and the time information spills over to the other rms.
Economic studies on the U.S. model reveal, thus, a degree
of concern. We note one of the conclusions of Cockburn
and Henderson: policies which weaken these institutions
[of open science], make public sector researchers more
market-oriented, or redistribute rents through efforts to
increase the appropriability of public research through
restrictions in the ways in which public and private sectors
work with each other, may be therefore counter-productive
in the long run.
21
This is a strong conclusion that prompts
us to scrutinize this new model without being blinded by
the brilliance of its undeniable short-term performance.
NEED FOR NEW POLICIES
In the knowledge economy:
good fences do not make good neighbours
As Paul David claims, good fences make probably good
neighbours where the resource is land or any other kind of
exhaustible resources.
22
But simple considerations of the
public goods nature of knowledge suggest that this is not
so when the resource considered is knowledge. Knowl-
edge is not like forage, depleted by use for consumption;
data-sets are not subject to being over-grazed but, in-
stead, are likely to be enriched and rendered more accu-
rate, and more fully documented the more that re-
searchers are allowed to comb through them.
Thus, the shift toward a new policy mix is raising
many problems and may lead ultimately to major social
losses. In most research elds, creative discovery
comes from unlikely journey through
the information space.
23
If too
many property rights are assigned to
the micro-components of the informa-
tion space, travelling through it proves to
be extremely costly, even impossible, because
at every point the traveller must nego-
tiate and buy access rights. We are
facing here a great paradox that iprs,
which are traditionally used to support the
exploitation of knowledge, are becoming ulti-
mately a way to shrink the knowledge base.
Of course, the new system of knowledge produc-
tion generates its own regulation, which can bring about a
certain equilibrium in some instances. We can list four
classes of solutions, dealing with the various problems devel-
oped below.
1. Mechanisms are devised to support, in certain circum-
stances or for certain classes of economic agents, the fast
dissemination and free exploitation of private knowledge.
There are three main mechanisms:
Compulsory licensing (compulsory diffusion of private
knowledge for the general interest).
The State or international foundations buy patents to
put them back in the public domain. To illustrate this
mechanism Kremer
24
uses the historical case of
Daguerre, the inventor of photography who neither
77 isuma
intellectual property and innovation in the knowledge-based economy
exploited his invention nor sold it for the price he
wanted. In 1839 the French government purchased the
patent and put the rights to Daguerres invention in the
public domain. The invention was developed very fast!
Ramsey pricing rule suggests price discrimination
between users whose demands are inelastic and those
for whom the quantity purchased is extremely price-
sensitive. The former class of buyers therefore will bear
high prices without curtailing the quantity purchased of
the goods in question, whereas the low prices offered to
those in the second category (e.g., scholars and univer-
sity-based researchers) will spare them the burden of
economic welfare reducing cutbacks in their use of the
good.
25
2. Granting non-exclusive licences, presumably with mini-
mal diligence or exclusive licences with diligence, offers
a partial solution to the problem of licensing knowledge
produced by publicly funded research programs in
universities.
3. Cross-licensing mechanisms may be a way out of the
anti-commons trap. Transactions costs can be reduced
through mutual concessions and through the trading of
rights (for example, within a consortium). However, this
is a solution that can only work with a small number of
companies. In that regard, the rapid growth of new kinds
of firms does caution against over-confidence that the
anti-commons problems can be surmounted. For exam-
ple, the computer hardware industry had few problems
with its cross-licensing arrangements, until new kinds of
semi-conductor companies arose.
4. There is a great deal to be done in terms of the ways in
which patent offices enforce patent requirement (i.e.,
make their assessments of utility requirement, non obvi-
ousness, patent scope). One should note however that
hybrid and complex objects such as genes, dna
sequences, software, databasesgenerate a lot of uncer-
tainties about what ipr policy is appropriate, making the
tasks of patent offices very difficult. It is difficult to
provide non-ambiguous and clear answers to the ques-
tion whether these new objects should be privately appro-
priated; and if yes, what class of ipr should be used.
However, the main policy challenge is far beyond the
implementation of those partial solutions. It deals with the
achievement of the right balance in the joint deployment of
the three institutional devices. With such a balance, the
system can be expected to nd quite naturally the proper
appropriability mechanism for each kind of knowledge
(whether the knowledge is highly cumulative or is more like
a nal product or like a consumption capital). However,
meeting such a challenge is strictly dependent upon restor-
ing some large public and private funding to the patronage
system. The reinforcement of the patronage system has to be
combined with the provision of some kind of intellectual
property aiming at protecting a good from private appropri-
ation (something like a general public licence used to protect
open software). A large room for policy thinking deals,
nally, with the creation of new categories of intellectual
property such as that of the common good. The latter is
proposed by lawyers who think that some new complex and
hybrid objects (like genes) do not t in the usual categories of
private-public goods and propose to work on a new cate-
gory: the common good. Under a common good regime,
innovation dees patrimonial and commercial appropriation.
The private company that is in possession of it for industrial
exploitation is not the owner of the good but serves as a sort
of manager. Such a regime would allow for the emergence of
an industry while avoiding private and exclusive rights.
Understanding what a strong
patent systems actually means
The arguments developed here may create the impression
that we are pleading for shifting towards a weaker patent
system. Before saying that, one needs a more precise den-
ition of what is a strong (and a weak) patent system. The
idea of strong has not necessarily to be related with the
exclusionary value of patent. In fact, many of the solutions
proposed are weakening the exclusionary value, while
strengthening the system as a whole. Compulsory licens-
ing, Ramsey pricing rule, narrower patent, new common
goods regime and licences with diligence are actually means
to diminish the private value of individual increments to
the privately owned knowledge base, even though they may
raise its social value. Approaching that problem dictates
that we make more attractive the forms of intellectual prop-
erty protection that require detailed disclosure and generate
informational spillovers. This can be done by educating
people that all these various solutions, in fact, contribute
to the strengthening of the system by reducing legal uncer-
tainties and the probability of legal conicts and litigations,
and thus increasing the condence of agents to the system.
Reinforcing the protection of IP, which is a matter of
institutional and legal adjustments (in the sense of unifying
patent doctrine for minimizing ambiguities and uncertain-
ties in patent suits or of decreasing the cost of patent appli-
cation or improving enforcement conditions) aiming at
increasing legal certainty, does not mean reinforcing the
exclusivity value of patents, which impedes knowledge
dissemination and the collective progress of industries. And
actions and policy recommendations aimed at reducing the
exclusion value of patents are compatible with this version
of what a strong system of iprs is.
Dominique Foray is Principal Administrator at the Center for Education,
Research and Innovation, OECD. This paper has beneted immeasurably from
previous and present collaborative projects with R.Cowan, Paul David,
Bronwyn Hall, Jacques Mairesse and Ed Steinmueller. Insightful discussions
with them as well as the remarks of participants to the EC STRATA workshop
on IPR aspects of integrated Internet collaborations (Brussels, January 22-23,
2001) have contributed substantially to improving the exposition.
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