Against Intellectual Monopoly

studies that have examined this issue empirically
(see the table herein)." The executive summary: these studies find weak or
no evidence that strengthening patent regimes increases innovation; they
find evidence that strengthening the patent regime increases ... patenting!
They also find evidence that, in countries with initially weak IP regimes,
strengthening IP increases the flow of foreign investment in sectors where
patents are frequently used. The following table contains our compilation
of the principal characteristics of the studies examined.
    The studies by Arundel, Gallini, and Jaffe are actually surveys of earlier empirical work, each one of them focusing on particular issues, data
sets, or methodological approaches. In the abstract of the first, we read,
"The results suggest that there is little need to strengthen patent protection
since alternative appropriation methods are available and widely preferred.
Instead, stronger patent protection could be leading to undesirable `secondorder' effects such as the use of patents to block competitors."14 After
failing to find a single study claiming that innovation increased as a consequence of the strengthening of U.S. patent protection in the 1980s, Gallini
writes:

    Although it seems plausible that the strengthening of U.S. patents may have contributed to the rise in patent over the past decade and a half, the connection has
proven difficult to verify.... The explanation more favorable toward patents is that
recent reforms deserve some attribution for the dramatic rise in patents (and innovation), but sufficient time has not passed to capture this effect empirically. 15
    Pretty much for the same reason - that is to say, the absence of any
empirical evidence that more intellectual property and more patents mean
more innovations and higher productivity - Jaffe's opening punch line
is as follows: "Despite the significance of the policy changes and the wide
availability of detailed data relating to patenting, robust conclusions regarding the empirical consequences for technological innovations of changes in
patent policy are few."" He adds in the conclusion that "There is widespread
unease that the costs of stronger patent protection may exceed the benefits. Both theoretical and, to a lesser extent, empirical research suggest this
possibility."' 7

    Several of these studies examine or are influenced by the upswing in
patenting that occurred in the United States in the mid-1980s. That upswing
followed the establishment of a special patent court in the United States in
1982; it turned into an explosion in the roaring 1990s, paralleling the dotcom stock market bubble, but it did not stop after that bubble burst. In 1983
in the United States, 59,715 patents were issued against 105,704 applications;
by 2003, 189,597 patents were issued against 355,418 applications. In twenty
years, the flow of patents roughly tripled.
    Kortum and Lerner focus specifically on the surge in U.S. patents, and
make no claim as to whether this means more or less productivity growth. By
examining how the composition of patent applications changed, they argue
that this surge in patenting reflects increased innovation - not merely taking
advantage of greater laxity in patent laws. They also argue, though, that this
increased innovation was not due to changes in the structure of patent law
and intellectual property protection, but rather to a better management of
R&D expenditure at the firm level.
    Other studies look at natural experiments in other countries to find
evidence of a causal link between strengthening intellectual property rights
and either R&D spending or the rate of innovation. The conclusion of
Branstetter and Sakakibara is that the 1988 Japanese reform had no impact
whatsoever on Japanese R&D expenditure and innovation rate; that of
Baldwin and colleagues is that one can repeat for Canada what we have seen
to be true for the United States: innovation may lead to more patenting, but
more patents and stronger patent protection do not lead to more innovation.
Similar conclusions are drawn by Arora, claiming that increasing the patent
premium does not lead to more R&D expenditure, and by Levine and
Saunders, suggesting that the introduction of software patents has lead
mostly to more court litigation, not to more innovation. This is a hard
statement to disagree with in the days where half a dozen legal battles are
starting between