I'd argue you'd get more economic benefit abolishing patents entirely (not just the software ones, I mean the ones on reproducing someone elses car or gas furnace). You pay a cost in a loss of investment valuation towards invention because it is less economically beneficial if you can't have a monopoly on your patented good, but you benefit economically by letting new inventions reach natural price equilibrium immediately, and the spread of new inventions would propagate more inventions, even without a major profit motive - you still benefit being "first out the door" on a new idea. Which we see all the time in software, and then run into this problem where first out the door has already made a bunch but is now suing me for trying to do something even remotely in the same problem domain because I see demand there, but I won't be able to meet it because I'm artificially locked out of that market.
That applies to all economic domains. Patents worked back when it was extremely hard to sell your goods to its entire market, because you were either distance limited, communication limited, or production rate limited. In the first two situations someone could just take your idea, set up half way across the country, and made all the returns.
Today, I can invent anything I want and have it on ebay overnight and ship it anywhere in the world. I can advertise on most major ad services if I want, with an audience of the entire first world. The only limiting factor for me is demand, but that just means I have to be safe when bringing inventions to market, but it is good for the economy overall because it means if I can't meet demand, someone else will pick up the slack.
It is still, like I said, advantageous to the first to market with an idea, enough so that I wouldn't predict much of a drop in novel ideas. Like I said, I would expect more if technology and designs were more open and people could cheaply iterate and extend past concepts more readily.
Being "first to market" only matters when you're building things like Facebook or Windows, where network effects are relevant. If you're making consumable or durable goods, being first to market is irrelevant. India will clone your drug within a few months of its release, but there is no way you'll make up all that capital investment by then.
Without patents, the rational thing to do is not invest any more in an invention than you can recoup in the short window before someone clones it and undercuts you on price. Moreover, it diminishes inventors and elevates manufacturers. The smart strategy in a world without patents is to build up massive overseas manufacturing capacity, because you can always quickly copy designs and then undercut the original designer with your manufacturing muscle.
'Andrewfong has a good point about independent invention being a defense. The idea of inventing something on your own only to have someone else claim they patented it is most of what bugs people about patents. In engineering circles where that is much less common, you don't have an anti-patent sentiment. When I was studying aerospace engineering in college, nobody I encountered perceived patents as anything but a good thing.
Mentioning the term "first to market" was unfortunate, but the key phrase in that sentence was "network effects", and Windows, Office, and Facebook all great examples of the advantage of network effects.
Yes, its only recently with software that patents have really come to hurt. Maybe that's because most engineering disciplines do not patent frivolously, or maybe that not many patents in these areas can generate so many billions in revenue.
(PS: Please don't use the term "India" to refer to certain Indian Biotech companies that reverse engineer patented pharmaceuticals developed in the US)
Not necessarily opposed, but there are a couple areas where this might be a net loss absent other adjustments. Pharmaceuticals would be the obvious one -- they require a large upfront research cost, copying is trivial, and the FDA approval process erodes first-to-market advantages.
Pharmaceuticals would be devastated. While there are externalities that need to be solved around our production of drugs, the patent system is a good thing overall for them.
No one spends $1 billion to make a drug if anyone can copy it simply.
Additionally there are international problems related to abolishing patents.
Ease of copying. It takes some effort to reverse engineer a car, and things like manufacturing processes are difficult to ascertain by just looking at the final product. In contrast, many pharmaceuticals are relatively simple to copy and manufacture once you know the chemical composition of a product.
If you prefer you can think of software. However software is protected by Copyright quite sufficiently so doesn't come up when talking about patents (well in this way).
But even in situations where pharmaceutical companies don't have patent protection, just providing a better product at lower prices to a larger, poorer market has proven to recoup costs just as well as charging $10,000 per dose on a patent drug.
(I saw quotes yesterday from the founders or presidents(?) of Merck and Bayer, which espoused both philosophies, and both claimed successes.)
I'm not entirely convinced that patents are necessary to ford the research and regulatory approval. Even in a market where generics are relatively trivial, there are ample opportunities for profit.
Let's stay: I am a pharmaceutical company, and you're a competing pharmaceutical company.
I invented miracle-drug and can now produce miracle-drug at 0.04$ per pill, can you can produce miracle-drug at 0.06$ per pill. You would think I should win because I can product the pill cheaper, but the full story is your very first miracle-drug pill costs you 0.06$ and my very first miracle-drug pill cost 1.5 billion dollars. I lose because I invented.
Yet you don't lose, because you can recoup that investment.
The alternative is to not make any money at all. As long as that drug produces you a net profit in the long run, which I imagine would fund additional research after recouping anyone investing in the project, then the fact someone else can also make money is irrelevant.
Think of it from the alt-companies perspective: X is sold at $0.06 a pill, but I could sell it for $0.04! There is demand, I can create supply, and everyone benefits except X.
But I don't buy that selfish interests wouldn't still invest heavily in medicine even if it is a risky investment - nobody considers the emotional fact that rich people do get sick, and are likely (in the absence of big pharma research) to directly invest to see the diseases they suffer or are concerned about cured or abated. Think of how kickstarter works - you throw money at a project that may or may not succeed, but it happens all the time because people want the outcomes regardless of the financial risk associated. Same could easily happen with pharma.
> just providing a better product at lower prices to a larger, poorer market has proven to recoup costs just as well as charging $10,000 per dose on a patent drug.
Unfortunately, it's not alway possible, there are sometimes very few people in the first place:
That applies to all economic domains. Patents worked back when it was extremely hard to sell your goods to its entire market, because you were either distance limited, communication limited, or production rate limited. In the first two situations someone could just take your idea, set up half way across the country, and made all the returns.
Today, I can invent anything I want and have it on ebay overnight and ship it anywhere in the world. I can advertise on most major ad services if I want, with an audience of the entire first world. The only limiting factor for me is demand, but that just means I have to be safe when bringing inventions to market, but it is good for the economy overall because it means if I can't meet demand, someone else will pick up the slack.
It is still, like I said, advantageous to the first to market with an idea, enough so that I wouldn't predict much of a drop in novel ideas. Like I said, I would expect more if technology and designs were more open and people could cheaply iterate and extend past concepts more readily.