Author(s): Robert P. Merges
Abstract: This Review Essay will appear in the Journal of Economic Literature. It covers two books: The Democratization of Innovation by Zorina Khan, and Knut Blind, et al., Software Patents. The Khan book argues that a wise intellectual property policy – in particular, a highly “democratic” legal order that effectively tapped the creative talents of all strata of American society – contributed significantly to American economic development between 1790 and 1920. The Blind et al. volume deals with contemporary European policy toward software patents, and aptly describes the prevailing European preference for a modest level of patent protection in this important industry. Taken together, the books raise fascinating historical and comparative issues. Khan describes how policymakers shaped nineteenth century U.S. patent law to promote economic development; her interweaving of legal history and economic data provides a very fine summary of this crucial period of economic history. Blind and coauthors also draw on extensive empirical data in their book, describing a large survey of European software companies. These companies’ experiences with and attitudes toward patents are painstakingly summarized. The picture that emerges shows an interesting contrast with the very pro-IP attitudes that Khan describes (and largely champions). European software firms are largely content with the middling level of patent protection currently available in their home region; they show a fairly uniform resistance to the stronger patent protection offered for software in the U.S. This Review Essay explores how these attitudes diverge with those in the U.S., whose historical origins Khan chronicles so well. I then take issue with Khan’s summary of the “benevolently” low protection for copyrighted books in the nineteenth century. I also tease out interesting evidence from the Blind et al. volume that some European software firms are figuring out ways to deploy patents for strategic advantage, despite the consensus there on the limited utility of patent protection in the industry. I conclude that these books serve as valuable roadmarkers for those interested in studying the economic effects of intellectual property rights. Their mix of theory, history, and empirics points the way to a more sophisticated understanding of this important field.
Keywords: patent, intellectual property