An Economic Review of The Patent System by Fritz Machlup

Author:Fritz Machlup
Language: eng
Format: epub

F. COMPETITIVE RESEARCH, WASTE, AND SERENDIPITY

Not only is research in general competitive with other economic activities, but research on particular problems and in particular fields is competitive with research on other problems and in other fields. This needs to be mentioned chiefly because in recent years another concept of “competitive research” has received increased attention: different firms and different research teams competing with one another in finding solutions to the same research problem in the same field.

Competition among rival firms which takes the form of a race between their research teams—a race, ultimately, to the patent office—may have various objectives: (a) To be the first to find a patentable solution to a problem posed by the needs and preferences of the customers—a better product—or by the technological needs and hopes of the producers—better machines, tools, processes; (b) after a competitor has found such a solution and has obtained exclusive patent rights in its exploitation, to find an alternative solution to the same problem in order to be able to compete with him in the same market—in other words, to “invent a round.” the competitor’s patent; and (c) after having found and patented the first solution, to find and patent all possible alternative solutions, even inferior ones, in order to “block” competitor's efforts to “invent around” the first patent.

These forms of “competitive research” were described and discussed by antipatent economists during the patent controversy of the 19th century. Concerning the first form, there was much complaint that other inventors who discovered practically simultaneously “the same utility,” but were not the first in the race to the patent office, had to forego their “natural privilege of labor” and were barred from using their own inventions.230 The fact that there was competition in making new inventions was found to be healthy. But that he who lost, the race to the patent office should be barred from using his own invention, and should have to search for a substitute invention, was found to be absurd.

What may appear absurd to a disinterested observer, or unjust and unfair to one. who lost the right to use the fruit of his own labor and investment, must to an economist appear as sheer economic waste. Of course, one may regard this as an incidental expense of an otherwise beneficial institution, an unfortunate byproduct, an item of social cost, which, perhaps, is unavoidable and must be tolerated in view of the social advantages of the system as a whole. However, from merely defending the need of “inventing around a patent” as a minor item of waste, the discussion has recently proceeded to eulogize it as one of the advantages of the system,231 indeed as one of its “justifications,”232

The advantage is seen in the additional “encouragement” to research. If the competitors were given licences under the patent of the firm that won the race, they would have to pay royalties but would not be compelled to “invent around” it. Exclusivity, however, forces some of them to search for a “substitute invention.

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