Federal Reserve Bank of St. Louis argues the economic case for scrapping patents

The Federal Reserve Bank of St. Louis has released a working paper arguing the economic case for abolishing intellectual property patents, with debate around patent reform in the US heating up as a result of the smartphone patent wars.

According to The Atlantic, the working paper was authored by economics professors Michele Boldrin and David Levine from Washington University in St. Louis.

In the working paper, Boldrin and Levine argue:

“A closer look at the historical and international evidence suggests that while weak patent systems may mildly increase innovation with limited side-effects, strong patent systems retard innovation with many negative side-effects.”

“Both theoretically and empirically, the political economy of government-operated patent systems indicates that weak legislation will generally evolve into a strong protection and that the political demand for stronger patent protection comes from old and stagnant industries and firms, not from new and innovative ones.”

“Hence the best solution is to abolish patents entirely through strong constitutional measures and to find other legislative instruments, less open to lobbying and rent-seeking, to foster innovation whenever there is clear evidence that laissez-faire under-supplies it.”

Boldrin and Levine’s argument echoes many of the key points made by James Allworth in a recent LeadingCompany article examining the recent patent infringement lawsuit by Apple against Samsung, in which Samsung was ordered to pay over $US1 billion in damages.