>> The patent system was set up to be taken advantage of in this exact way Pheraps, but the question is should it be set up this way? Two justifications of the

>> The patent system was set up to be taken advantage of in this exact way Pheraps, but the question is should it be set up this way? Two justifications of the patent system are - inventors have more incentives, hence new ideas will emerge faster - when these new ideas/inventions emerge, the patent ensures that it is openly documented and hence, can be used by everyone after the patent expires. And the price that one pays for this is that noone can use the idea without a deal with the patent owner. Is the price worth the benefit? This depends on things like a) how easy it is to discover the idea Two extreme cases would be say , a cure for AIDS vs. one-click patent b) the existence and the power of non-patent incentives for the discovery of the idea Would the idea be discovered without patents? Ideas/inventions are discovered all the time simply because one is working on some problem and one needs new tools to solve it. The university system is also a strong alternative system of incentives. But, there will be holes in what these systems incentivize. c) how many things depend on the thing being patented? This is a kind of an amplifying factor. Say, there a huge number of systems which depend on an idea. If the idea could be discovered without the patent system, the economy loses a lot of value and on the other side if patents were what made the discovery possible, then the patent system has caused great gain. Software, where ideas are built upon each other at great speed is full of these amplifying factors. A patent on say, garbage collection or oop, if granted, would affect a huge number of systems.(though, probably this would have expired before the 90's, but consider more recent ideas like say, stm.) the the rapid growth of the computer industry in the current phase increases this amplifying factor. d) The negative effect of patents on the culture of open sharing of ideas. Precisely, because people are doing this without making money, there is little scope for licensing from the patent holder. And this culture has a lot of value, intrinsic, educational and economic. Abolishing patents would probably be bad,(unless we can make alternative systems of incentives work. prizes?) But the important point here, is that there are a lot of free parameters - the length of patent, limitations on licensing fees, the nature of things which could be patented(i have used ideas/inventions interchangeably, but this is a controversial issue) Deciding optimal values for these parameters is a complex task and it isn't clear how one should be doing this. For instance, the length of the patent, if decided in a market would probably vary with the field in which the idea applies. For some fields, the optimal parameter might well be 0.