From my Mises blog post from 2009, with some updates:
Are Patents “Monopolies”?
JULY 13, 2009 by STEPHAN KINSELLA?
And see my comments (1, 2) on The Three Stages of Invention post, excerpted below:First, as to whether patents are monopoly grants–hell, even the feds admit this: “Section 154 and related provisions [e.g. Sec. 271] obviously are intended to grant a patentee a monopoly only over the United States market….” U.S. Supreme Court, Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). See also: King Instr. v. Perego, by the Court of Appeals for the Federal Circuit (“Congress made the policy choice that the “carrot” of an exclusive market for the patented goods would encourage patentees to commercialize the protected inventions so that the public would enjoy the benefits of the new technology during the patent term in exchange for granting a limited patent monopoly. In other words, the public expected benefits during “‘the embarrassment of an exclusive patent as Jefferson put it.’” Graham v. John Deere Co., 383 U.S. 1, 10-11 (1966).)
See also Engel Ind. v. Lockformer Co. (“We hold that the disputed royalties provisions do not inappropriately extend the patent monopoly to unpatented parts of the patented system”); Carborundum Co. v. Molten Metal Eq. Co. (.”)
And: Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947):.”
Brenner v. Manson, 383 U.S. 519 (1966):.
Diamond v. Chakrabarty, S.Ct. (1980), Brennan’s dissent:.
Now you can argue that patent holders do not necessarily have “monopoly power” (see The Importance of Patents for Economic Development – 1999, by Prof. William Hennessey), but as Rothbard et al. have pointed out, the government’s concept of monopoly is flawed; the only issue that matters is whether there is a legal monopoly granted. See, e.g., Hoppe, A Theory of Socialism and Capitalism, ch. 9, pp. 185-86:
The monopoly problem as a special problem of markets requiring state action to be resolved does not exist..
See also Rothbard, Man, Economy, and State (with Power and Market): “The only viable definition of monopoly is a grant of privilege from the government.”.
See also Arnold Plant,areas, while artificially restricting research in the nonpatentable areas.
Update: See “Ideas Need Protection: Abolishing Intellectual-property Patents Would Hurt Innovation: A Middle Ground Is Needed,” by William F. Shughart II, a senior fellow with the Independent Institute, The Baltimore Sun (Dec. 21, 2009):.
Update: It is interesting to note that one of the first patent statutes was England’s Statute of Monopolies of 1623.
Update: New York Law School professor Beth Noveck, quoted in an article on improving the U.S. patent system, admits: “A patent is a pretty significant monopoly, so we want to make sure we are giving it to the right people.”
Update: See my post IP Rights as Monopolistic Grants to Overcome the Public Goods Problem.
Update: As I note in Canada’s Founders Debated Justification for Patents, Canadian Sen. Jean-Charles Chapais, the agriculture minister, in introducing legislation for a Canadian patent law in 1869, readily admitted the monopoly nature of patents:
It must be remembered that a patent is a kind of monopoly, though he did not mean to say that the word monopoly should be taken in its fullest sense, but nevertheless it is a monopoly, because it gives to a man the right of manufacturing or vending alone, an article useful to the public; certainly there was great reason for granting this monopoly...
See also Alex Tabarrok, Launching the Innovation Renaissance (which I discuss here):
Innovators need time to recoup their sunk costs, but why should every useful, non-obvious and novel idea be granted a 20-year patent? Maximizing innovation requires treating different industries differently. The idea for one-click shopping does not have the same sunk costs of research and development as a new pharmaceutical, and the former does not need and should not be given the same monopoly rights as the latter. [Tabarrok, Alex (2011-11-21). Launching The Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast (Kindle Locations 241-243). TED Books. Kindle Edition.]
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Update: “A patent is an obvious monopoly; the patentee has exclusive rights and, where patented processes are involved, conditions are necessarily monopolistic. This influence has many ramifications. Not merely does it directly protect the manufacturer of patented articles; it also permits the creation of a whole network of tying contracts, forced joint supply, resale price maintenance and other trade practices, not particularly conspicuous in themselves but cumulatively highly conducive to the consolidation of monopolistic conditions. Indeed it is so important an influence that it is no exaggeration to say that special lines of expertise exist, not to forward the progress of invention but merely to devise variations in productive processes permitting the continuation of this form of monopoly power.” ~ Lionel Robbins (1939)
See also:
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