We've been discussing how patents can have a serious economic downside (as was recognized by Thomas Jefferson and James Madison as they designed the patent system). It appears that some researchers are trying to quantify just how much damage bad patents are doing to the economy. Against Monopoly points us to a blog post at Technological Innovation and Intellectual Property that discusses the results of a preliminary study (pdf file) that estimates a loss of $22.5 billion due to bad patents. The researchers admit that the findings are preliminary, but it does create an initial framework by which to look at the negative impact of bad patents on the economy. Among other things, the paper lists out the following ways that bad patents harm the economy:
  • Cause consumers to absorb monopoly prices over "inventions" that were already effectively common knowledge
  • Direct resources away from productive research and instead towards strategic accumulation of patents already filed over innovations already deployed
  • Divert resources to "defensive patenting" or securing offensive "blocking patents
  • Direct research away from areas of existing patents that should not have been granted
  • Direct resources toward acquiring and enforcing substandard patents and collecting royalties rather than other more-productive fields of economic activity.
We've seen all of these in action lately. And, of course, this doesn't even get into how much is thrown away in legal resources to litigate patents and defend infringement claims on patents that should not have been granted. Also, it's worth noting that the TIIP blog post reminds us that the author's own book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk comes out next month.

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