Long abstract

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Patents play an increasingly important role in innovation and economic performance. Between 1992 and 2002, the number of patent applications filed in Europe, Japan and the United States increased by more than 40%. The increasing use of patents to protect inventions by businesses and public research organisations is closely connected to recent evolutions in innovation processes, the economy and patent regimes. Scientific and technological advances have created new waves of innovation, notably in information and communications technology (ICT) and biotechnology, and innovation processes themselves have become centred less on individual firms and more dependent on interactions among global networks of actors in the public and private sectors. Shifts in the legal and regulatory framework of patent regimes have resulted in more expansive domains of patentable subject matter (patent regimes in many countries now include biotechnology and software), and more robust and more valuable patents.

Changes in patent policy in OECD countries over the past two decades have fostered the use and enforcement of patents with the aim of encouraging investments in innovation and enhancing the dissemination of knowledge. Despite these reforms, few systematic economic evaluations have been carried out to better inform policy choices. To what extent have changes in patent policies over the past two decades been beneficial to innovation and technology diffusion? What particular aspects of patent policy in OECD countries can be seen as successful, or have failures occurred? These questions are central to this report, which covers a range of areas, and highlights some unresolved issues that policy makers should address in the near future:
• Markets for technology are increasingly important for the circulation of knowledge. Patents play a pivotal role in the development of technology transactions. Governments need to improve their knowledge of the functioning of markets for technology and the effect of such markets on economic performance in order to support their development in the most socially beneficial directions.
• Encouraging patenting by public research organisations (PROs) has led to increased commercialisation of inventions derived from publicly funded research   hence generating greater benefits to society   but may have made it more difficult for researchers to access certain types of basic science. Governments should ensure access to basic inventions, for instance by monitoring patenting and licensing practices at PROs, and by reinstating and clarifying the exemption for research use, which is now being restricted.
• In biotechnology, the surge in innovation, notably by start-ups, benefited greatly from the possibility of obtaining patent protection, which attracted the capital needed in this area. In certain upstream fields, such as genetic material or genetic testing, there are cases where patents might still impede access to technology. The quality (novelty) and breadth of patents in these areas need to be reviewed. Governments should explore ways to encourage alternative means of disseminating knowledge, such as the public domain, and to improve the diffusion of patented inventions, e.g. through the promotion of patent pools and the publication of licensing guidelines.
• Software and services are new subject matter for patents, although to a different extent across countries. The impact of patents on innovation and diffusion in this area has yet to be systematically evaluated, and such evaluation is sorely needed. The quality and breadth of software patents also need to be monitored, and patent offices should keep up their efforts to systematise their experience and knowledge base. The role of patents in the expanding world of open source software also needs to be evaluated. 

Economic evaluation suggests that there are further possible directions of change for patent regimes that are worth exploring. Possible avenues for economic-based reforms of patent regimes include introducing a more differentiated approach to patent protection that depends on specific characteristics of the inventions, such as their life cycle or their value (as opposed to the current uniform system); making patent fees commensurate to the degree of protection provided; and developing alternatives to patenting, such as the public domain. In the near future, the patent system will be facing even greater challenges than those it has confronted in the past two decades, including increased globalisation, the overwhelming use of Internet as a vehicle of diffusion, and expanded innovation in services. Well-informed and more global policies will be needed to prepare the patent system to meet these new challenges, so that it can continue to fulfil its role of encouraging innovation and technology diffusion.