[praxeologist]

>This is exactly what the patent system was made for; so the little guy could have an incentive to invent

I think this is completely false despite it being "common wisdom". I've challenged people who say this to provide some sort of evidence that patent systems aid innovation and seen none that was anywhere near convincing so far.

Nobody so far has so much as ventured an answer except one person who pointed to a study that measured innovation solely by the increased use of patent systems in countries where the regime of legal monopolies strengthened over time. I see that as evidence of the insidious nature of patent systems if anything, but to each his own I guess. Got anything?

[logfromblammo]

In theory, there is no difference between theory and practice.

In practice, there is no legal construct that cannot be employed to the advantage of the party that can hire better lawyers. In the battle of ironclad patent versus fully funded legal war chest, the latter wins.

The implication of my post, in context, was that the patent system does not accomplish that idealistic purpose. And indeed, the article itself says that most actual innovation avoids patents. I interpret this as the network of innovators recognizing the flaws in the system and routing around them.

[throwawaykf05]

> I've challenged people who say this to provide some sort of evidence that patent systems aid innovation and seen none that was anywhere near convincing so far.

You've been challenging people who haven't looked enough :-) For one, Kenneth Sokoloff (mentioned in TFA) authored some of the highest cited studies that show the benefits of patent systems.

You are right that measuring the effect of patents on innovation in terms of patents is somewhat circular, but economists have long realized this. There are now tons of historical and empirical studies showing increased patenting being correlated with improved metrics of innovation as measured by various proxies such as R&D expenditure, diversity of industries doing research, VC financing for startups, employee growth, and even economic well-being. Of course, there are costs of the patent system as well, and various studies that attempt to quantify those.

Instead of pointing to dozens of individual studies, it'd be easier to point you to this meta-study that references a number of those other articles:

"RECENT RESEARCH ON THE ECONOMICS OF PATENTS", Bronwyn H. Hall and Dietmar Harhoff (Google for PDF)