AN ECONOMIC REVIEW OF THE PATENT SYSTEM
STUDY OF THE SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS
OF THE
COMMITTEE ON THE JUDICIARY UNITED STATES SENATE EIGHTY-FIFTH CONGRESS, SECOND SESSION
PURSUANT TO
S. Res. 236
Study No 15
Printed for the use of the Committee on the Judiciary
24411
UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1958
FOREWORD
This study was prepared by Fritz Machlup, Department of Political Economy, Johns Hopkins University, for the Subcommittee on Patents, Trademarks, and Copyrights as part of its study of the United States patent system, conducted pursuant to Senate Resolutions 55 and 236 of the 85th Congress. It is one of several being prepared under the supervision of John C. Stedman, associate counsel of the subcommittee.
The patent system has, from its inception, involved a basic economic inconsistency. In a free-enterprise economy dedicated to competition, we have chosen, not only to tolerate but to encourage, individual limited islands of monopoly in the form of patents. Almost 3 million of these have issued in the course of United States industrial history. This inconsistency has been rationalized in various ways. It is pointed out that the patent monopoly is limited both in scope and time; that this monopoly is more than balanced by the inventive contribution; that patented inventions are not actually monopolistic in fact because they are subject to competing alternatives and substitutes; that such monopoly as does result is unobjectionable because the public is deprived of nothing it had previously possessed; and so on. Such explanations may render the conflict less serious, but they do not resolve it.
These unresolved issues have never caught the attention of economists, especially the modern ones, to the extent that one would expect. Professor Machlup is a welcome exception. In the present study, he has not only brought together, in well-edited and analytical fashion, the economic contributions of more than a century of thinking on the subject, but he has contributed his own penetrating and original analysis of the subject. The result is a highly readable review of the economic aspects of the patent system that adds up to a major contribution to the literature and thinking in this field.
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