Do Patents Slow Down Innovation?

I had a very interesting meeting yesterday with an MIT Professor who I’ve known for a long time.  He is anti-software patent, as am I.  However, he suggested something I hadn’t really spent much time thinking about, namely that patents slow down innovation.  Some very credible folks have been talking about this for a little while, including James Bessen and Michael Meurer in their excellent book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk

In my conversation Friday, I heard a very interesting example.  Regularly, patent advocates tell me how important patents are for the biotech and life science industries.  However, there apparently is academic research in the works that shows that patents actually slow down innovation in biotech.  The specific example we discussed was that there is increasing evidence that when a professor or company gets a patent in the field of genetics research, other researchers simply stop doing work in that specific area.  As a result, the number of researchers on a particular topic decreases, especially if the patent is broad.  It’s not hard to theorize that this results in less innovation around this area over time.

I’m just starting to read some papers about this stuff, including those by MIT Professor Fiona Murray.  If you are interested, Stuart Macdonald’s paper When means become ends: considering the impact of patent strategy on innovation frames the discussion nicely.  And Stephan Kinsella’s excellent essay Reducing the Cost of IP Law absolutely nails this.

I’m still obsessed with my mission to “abolish software patents” especially after receiving yet another email from a new startup that claims to be a “Patent Insurance Company.”  A number of these have popped up recently in the past few years, including several that are funded by VCs.  Their pitch is that you pay them an annual fee, license any patents you have to them, and they will “protect you” against any patent litigation.  Whenever I hear this pitch, all I can think about is Al Capone walking the streets of Chicago going door to door offering “protection” to all of the local businessmen if they will pay his vig every week.