"* Natural experiment: When software patents were affirmed, patenting increased, but innovation didn’t. * For some industries, on average, the standard logic of patents may be correct. In others, patents may harm innovation. * What makes some industries (e.g. software) different? Innovation is sequential, and research efforts are complementary. [Is that different than other industries?] * Standard logic: Patent holder can license to others, e.g. to subsequent innovators. So if use of a patent innovation is socially beneficial, the patent holder will license it and make money from it. Problem: patent holder is a monopolist — no competition — license fee will be too high. [Also: transaction costs?]"
Source: http://www.gavinbaker.com/2009/01/12/liveblog-tacd-ip-patents-and-innovation/


