Do patent promote or retard innovation

It is axiomatic in some circles that stronger patents are the key to greater innovation (see for example my posting on EU Innovation Scorecard). The counter to that claim might be found in a recent Wall Street Journal story – “How a University’s Patents May Limit Stem-Cell Research”:

When executives at Carlsbad, Calif.-based Invitrogen Corp. chose to locate their stem-cell research in Asia recently, they blamed the patents. And today, a California watchdog group, the Foundation for Taxpayer and Consumer Rights of Santa Monica, says it will ask the U.S. Patent and Trademark Office to overturn three patents awarded to James A. Thomson, the Wisconsin researcher who first isolated stem cells from human embryos in 1998.
The broadly worded patents, which cover nearly any use of human embryonic stem cells, are held by the Wisconsin Alumni Research Foundation, a nonprofit group that handles the school’s intellectual-property estate, managing a $1.5 billion endowment amassed during 80 years of marketing inventions.
John Simpson, an official at the foundation bringing the challenge, says WARF’s efforts to enforce its patents are “damaging, impeding the free flow of ideas and creating a problem.” Mr. Simpson’s group got involved in the dispute earlier this year after Wisconsin officials said they would demand a share of state revenue from California’s voter-approved stem-cell initiative.

One of the characteristics of knowledge (as described in the endogenous growth theory – or New Growth Theory) is that it is self-perpetuating: knowledge begets more knowledge. But the process only works if knowledge is shared — and a balanced patent system is key to that sharing. Which is why we need patent reform legislation — legislation that is unfortunately stalled. Given it is July of an election year, it is doubtful that anything will come out of this Congress. I can only hope that next year Congress will make patent reform a top priority.

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