The economic benefits of the patent system are the main theoretical basis for the existence of the system.

1 Traditional patent theory believes that the patent system is conducive to encouraging invention and creation, promoting economic development and technological progress.

[1] For example, the Patent Law Investigation Committee organized by the British Department of Trade and the United States Patent Committee 3 have all promoted the positive role of the patent system without reservation.

Accordingly, China’s Patent Law has been revised many times since its promulgation in 1984 to continuously strengthen the protection of patents.

Article 1 of the "Patent Law of the People's Republic of China" revised in August 2000 stipulates: "In order to protect the patent rights of inventions and creations, encourage inventions and creations, facilitate the promotion and use of inventions and creations, and promote scientific and technological progress and innovation

, This law is specially formulated to meet the needs of socialist modernization proposals.” However, this optimism about the patent system may be difficult to agree with among economists.

This article analyzes the pros and cons of the patent system from the perspective of economic costs and benefits, and points out that while the patent system may encourage development and creation, it has serious limitations.

[2] This article aims to analyze the potential positive and negative impacts of the patent system, in the hope that more legislators, law enforcers and scholars can more comprehensively evaluate and measure the patent system from the perspective of cost and benefit, and realize that my country’s patent law overprotects patents. limitations of rights.

The cost-benefit ratio of the patent system, that is, whether the patent system promotes or hinders technological progress and economic development, has always been a controversial topic, and there is no conclusion yet.

Supporters of the patent system believe that the patent system will produce a large number of economic benefits, that is, the patent system can stimulate more inventions and creations, [3] thereby adding unprecedented new products or new methods to society.

This theory believes that invention and creation itself is a kind of social wealth and its realization should be encouraged.

However, the creation of inventions and other intellectual property rights requires the investment of a lot of manpower and material resources.

At the same time, after an invention is published, it is easy for others to imitate and plagiarize it.

Therefore, without the protection of intellectual property rights, other competitors will be able to imitate at very low cost.

This will create a "free-riding" or "externalization" problem, in which a few inventors bear huge research and development costs, and other competitors can use and copy the inventor's scientific research results almost free of charge.

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[4] This situation will affect the inventor's ability to obtain profits from his invented technology, lead to the externalization of benefits, and may damage the enthusiasm of individuals or enterprises to invest resources in scientific research and creation.

Therefore, each enterprise will be unwilling to invest in scientific research funds based on its own interests. Instead, it will wait for others to invest in scientific research activities and obtain results before counterfeiting them.

As a result, no enterprise is willing to engage in scientific and creative activities, which may eventually reduce inventions and creation, and thereby reduce social wealth.

However, the market itself cannot solve this "free rider" problem and requires government intervention.

First of all, the main role of the patent system is to encourage companies to invent and create, specifically by stimulating companies to increase their research and development investment (R&D).

7 However, the role of the patent system may be very limited for scientific research investment by governments and non-profit institutions.

This type of scientific research investment is rarely affected by the patent system, because government agencies and non-profit organizations mainly consider the country's economic and social development needs when investing in scientific research, and are rarely driven by the interests of patent monopoly rights.

In practice, many inventions and creations are produced by research funded by the government and other non-profit institutions8. This part of scientific research investment is generally not affected by the patent system.

For example, the patented drug d4T (Stavudine) for the treatment of AIDS produced by Bristol Myers Squibb (BMS), a large multinational pharmaceutical company, was obtained by the Michigan Cancer Research Foundation using a national research fund; this drug is very effective in the treatment of AIDS.

The function was discovered and patented by Yale University.

In 1988, the school licensed BMS to produce the patented drug.

[9] ddI, another patented drug for the treatment of AIDS produced by BMS, was an invention of the National Institute of Health in the United States, and was licensed to BMS for a 5% patent royalty.

[10] Under these circumstances, inventions and creations are little affected by the patent system.

Second, even for private inventions (individuals and commercial organizations such as companies), the patent system is not the only way to encourage investment in scientific research.

In addition to the patent system, there are many other factors (such as market leadership, confidentiality measures, etc.) that can encourage invention and creation.

In other words, the creation of inventions does not entirely depend on the stimulating effect of the patent system.

For example, a study in the UK showed that only a small number of inventions rely on patent protection, and the impact of the patent system varies by industry.

For example, patents have little impact on complex engineering technologies, but have a greater impact on industries such as chemical and pharmaceutical industries.

This may be because complex engineering technologies are easier to adopt confidentiality measures and are therefore less affected by patent protection. On the contrary, in industries such as chemical and pharmaceutical industries, patented technologies are easily counterfeited and it is difficult for technology owners to keep them secret, so patent protection is more important.

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American scholar Levin also pointed out that confidentiality and market leadership are more important to protect new inventions than patent protection.

[11] These research results are agreed to a certain extent by the results of a recent Australian empirical study, [12] and are also supported by some empirical evidence.