The evolution of patent policy: redefining inventiveness

Abstract

Economists assume patented inventions contain new knowledge which creates the spillover benefits providing dynamic efficiency gains to offset the static efficiency losses of the monopoly grant. Unfortunately this assumption is out-of-date. A minor difference in design is now taken as sufficient inventiveness to merit a monopoly. This paper discusses the difference between economic and legal approaches to determining if an 'invention' merits a monopoly. It presents detail on the policy rules determining patent grant and investigates the legal decisions underlying these. The legal focus on whether an invention is 'obvious' - rather than whether it is 'inventive' allows courts to avoid the question of whether the 'invention' embodies any new knowledge or know-how. As a consequence the key economic principle underlying patent policy is ignored in decisions about the grant of patents for specific 'inventions'.