Measuring Intellectual Property ‘Strength’ and Effects: An Assessment of Patent Scoring Systems and Causality | Author: W. Lesser

Measuring Intellectual Property ‘Strength’ and Effects: An Assessment of Patent Scoring Systems and Causality | Author: W. Lesser

Intellectual property rights legislation, and particularly patent law, is roundly supported as well as condemned across the globe. The adoption of the Trade- Related Aspects of Intellectual Property Rights (TRIPS) agreement in the 1990s both expanded the scope of minimal protection as well as the controversy. One factor contributing to the strength and disparity of those opinions is the limited evidence of its actual economic effects. A central and unresolved issue is the question if stronger patent systems enhance national economic growth, or if growing countries necessarily evolve the institutions associated with stronger patent rights. In short, which way does the causality flow? Underlying the approach to resolving that issue are measures of the relative ‘strength’ of patent systems across countries, called patent ‘scores’ or ‘indexes.’ This paper contributes to an understanding of both these dimensions, beginning with an examination of the ten available patent indexes. Emphasis of the analysis is on developing countries where the controversies are sharpest and the range of protection greatest.

The available indexes are closely correlated, often statistically inseparable. The number of available indexes can be reduced with little loss of information. The assessment of patent indexes does enable the identification of the three distinct components of those indexes, joining/compliance with international conventions, strengthening the national patent office, and enhancing enforcement. By analyzing countries at different stages of economic development, it is apparent that they follow a similar progression in enhancing patent law.

Countries which expedite the process tend to grow fastest, indicating that strengthened patent systems lead and not lag growth. Major enhancements are not realized until after improvements in governance efficiency, a substantial component of which is curbing corruption. TRIPS mandates enforcement processes but not outcomes, giving member states considerable discretion. The pivot point comes at median middle income countries. Data envelopment analysis is used to measure comparative effectiveness of generating national income through patenting. Low income countries can enhance patent efficiency by two to eleven percent compared to the most efficient. A number can make relatively low cost enhancements through the adoption/implementation of international intellectual property agreements. In addition, adoption of these steps signals the intent to protect innovation investments. Middle income countries, more efficient as a group, have a large potential scope of improvement, up to fifty percent, but mostly by the difficult task of enhancing governing efficiency/reducing corruption. It is hoped the results of this analysis will provide additional incentives to undertake that process.

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