• Prospect Development Theory: Patents enable the orderly exploration of broad prospects for derivative inventions.

The four theories are not necessarily mutually exclusive. The anticipation of a patent might stimulate an invention, and the holding of a patent might stimulate its subsequent development. But some versions of the theories are at odds. For example, one version of the disclosure theory assumes that inventions will occur without patents and that the existence of patents widens their use. That is quite the opposite of the most familiar version of the invention-inducement theory, which assumes that invention is motivated by the anticipation of patents.

In general, however, the theories differ in the assumptions that they make about the conditions under which inventions are made, developed, or commercialized. The assumptions are made about the following conditions:

  • The nature and effectiveness of means other than patents to induce invention and related activities.

  • The likelihood of a group of potential inventors to work on diverse and noncompeting ideas or to be focused on a single alternative or a set of closely connected ones.

  • The transaction costs of licensing an invention with and without patents.

  • Whether the multiple steps in the invention, development, and commercialization of a new technology tend to proceed within a single organization or several organizations tend to be involved at different stages of the process.

  • The topography of technological advance—how inventions are linked to each other both temporally and as systems.

We will examine those assumptions to show the strengths and weaknesses of all the theories.

INVENTION-INDUCEMENT THEORY

The theory that patents motivate useful invention is the most familiar theory of the benefits of patenting. Indeed, much discussion about the benefits of patents proceeds as though motivating useful invention were the only social purpose served by patents and patents always serve this purpose. In fact, as explained later, the situation can be much more complicated in many cases.

All versions of the invention-inducement theory presume either that if there is no patent protection there will be no invention or, more generally, that without a patent system incentives for invention will be too weak to reflect the public interest. In particular, they assume that stronger patent protection will increase the amount of invention.

Under what might be called the canonical versions of the invention-induce-



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