Patents’ minimal impact on innovation

A small study from Stanford University and the University of California Hastings College of the Law has found patent licensing has little impact on innovation.

The study, based on 188 responses, by co-authors Robin Feldman from the University of California Hastings College of the Law and Mark Lemley from Stanford Law School surveyed 11 industries for whether patent licensing leads to what they called “markers of innovation”. These markers are formation of joint ventures, new products or new product features added with the technology they licensed, or whether the patent holder transferred any knowhow or anything else related to the patent license as a result of asserting that patent.

“With particular unanimity, respondents reported that licenses taken from NPEs [non-practicing entities, sometimes called patent trolls,] rarely led to any new products or features,” similar to when it involved university and practicing entity licenses.

At least three-quarters of respondents answered that when requests for a license or settlement led to a licensing agreement from these categories of patent holders, the technology they licensed led to new products or services 0 to 10% of the time. This was true in the case of competitors, product companies that were not competitors, and even universities.

All of respondents in both the computer and other electronics category and the combined life sciences category reported that when licensing or settlement requests led to licenses, the technology they licensed resulted in adding new products or features 0-10% of the time.

In conclusion, the authors found patents helped to weed out competitors rather than boost innovation.

“The evidence from our survey results suggests that some of the commonly asserted ways in which patents might encourage innovation – by facilitating new products or technology transfer – are more illusion than reality.”

However, another report, entitled, “The Economic Contribution of University/Nonprofit Inventions in the United States: 1996- 2013,” estimated that, during this 18-year time period, academia-industry patent licensing bolstered US gross industry output by up to $1.18 trillion, US gross domestic product (GDP) by up to $518bn, and supported up to 3,824,000 American jobs.

The report was commissioned by BIO, the world’s largest trade association representing biotechnology companies, academic institutions and state biotechnology centres, and authored by Lori Pressman, David Roessner, Jennifer Bond, Sumiye Okubo, and Mark Planting.

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