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Friday, October 08, 2010

SBE Council’s IP and the Economists #2: Monopoly?

In the policy world and in academia, a fundamental error persists when it comes to a patent or copyright being viewed as a government grant of monopoly. Nothing could be further from the truth.

While patents and copyright protect IP, nothing stops competitors, innovators, creators and inventors from working to create a product or work that competes with the patented or copyrighted product. For example, if one pharmaceutical firms comes up with a drug that treats disease A, that in no way stops another manufacturer from coming up with another, perhaps better, treatment for disease A as well.

In his book The Fire of Invention: Civil Society and the Future of the Corporation, philosopher-economist Michael Novak observed:

Monopoly belongs to the language of domination over competition, but copyright belongs to the language of private property and establishes a right to enter into markets. The point of a monopoly is to extinguish competition, but the point of protecting the copyright of authors is to ignite competition. The recognition of copyright increases the number of competitors; its aim is the opposite of monopoly… [C]ritics further forget that existing patents and copyrights often inspire new rounds of competition to ‘go around’ the existing claims, with the hope of launching more successful creations. This is especially true in medical and pharmaceutical research. Patents and copyrights do not end competition; often, their success inspires it in surrounding areas.”

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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