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"A Patent Success Story"

Patent attorney Dennis Crouch writes on his generally excellent patent law blog Patently-O:

Today I am truly proud of the patent system. The block-buster drug Zocor (simvastatin) has transitioned off-patent and into the world of generics. Unlike other areas of IP law, patents really are valid only for "limited Times" and when those years have passed the property right evaporates — leaving the inventions "free as the air to common use." (In the words of Justice Brandeis).
There is no question that patent rights played a major role in providing incentive to Merck to develop and test Zocor and to push it through the difficult FDA approval process. The incentive worked, Merck recouped its investment, and now generic versions will be sold at an unbelievably low price that is very near its production costs.

I submitted the following comment to his blog:

Dennis: I am curious as to your view on the following. The standard justification for the patent system (and one you implicitly endorse) is the idea that the system provides incentives that encourage innovation that benefits the public.
Would you agree that according to this standard, the patent system is a "good thing" only if its benefits "outweigh" its costs? (I have written on this here: There's No Such Thing as a Free Patent.)
If so, your praise here of the patent system must presuppose that the benefits you point to in this case are clearly greater than the costs of having a patent system, right?
If you do, could you explain why you think this is the case? How great are the costs of the patent system, for example, and how great are its benefits, and what is the "surplus" or excess? In other words, how do you know there is a surplus?
I am not writing here to challenge you, but just out of curiosity. I'm a practicing patent attorney too and it's not obvious to me what the costs or benefits of the patent system are, but it seems obvious that there are significant costs. So it seems to me that it might well be that the costs exceed the benefits. You and other patent attorneys always seem sure that the benefits far exceed the costs (that is, when it is even acknowledged that there are costs). I am just curious what makes you so sure of this.

He seems to basically concede my point in his reply,

Certainly, my little anecdote here does not prove anything and there are dozens of questions that must be analyzed before we would could determine whether the patent grant on simvastatin was an overall public good. And, the question of over incentives is not trivial or one that should be quickly brushed aside.

Stephan Kinsella

Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers.

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