| Abstract: | The economic arguments for patents are that: (i) they are a necessary incentive to inventive industry; (ii) they are a sufficient stimulus to technological innovation and investment; (iii) the monopoly privileges granted to the patentee are compensated for by the disclosure of technical information to society. The paper shows all three propositions to be of dubious validity in the developing-country context. At least five-sixths of patents in developing countries are in foreign hands, mainly transnational corporations, and thus bear no relation to the flow of domestic inventive activity. At least 95 per cent of patents in developing countries are never used and serve as a block to domestic production while increasing the market power of foreign corporations. Those patents actually in use impose substantial costs both through ‘transfer-pricing’ and restrictive clauses in licensing agreements. Finally, technical information in patent documents is of limited value to developing countries and could in any case be obtained cheaply in the absence of patents. |
