On Tue, Feb 13, 2001 at 09:15:02AM -0800, Lisa & Ian Murray wrote:
>
> Although, according to Fortune 500 annual, among the most profitable. As an
> aside, I came across this while looking into the compulsory licensing issue:
>
> From: <http://www.ftc.gov/opp/global/GC112995.htm> [Effects of government
> inaugurating CL on Corps.]....
>
> ....
> So with that, I'd like to start by introducing Mr. Scherer, who is a Larsen
> Professor of Public Policy and Management at the John F. Kennedy School of
> Government at Harvard. He has also taught at Princeton University, the
> University of Michigan, Northwestern University, and Swarthmore College.
>
> >From 1974 to 1976 Professor Scherer was the chief economist here at the Federal
> Trade Commission. Professor Scherer's research specialties are industrial
> economics and the economics of technological change, and he has written numerous
> books on these topics.
>
> Professor Scherer is on the editorial boards for both the Journal of Economic
> Literature and the Review of Economics and Statistics. Among other things, he is
> also the past President of the Industrial Organization Society and the
> International Joseph A. Schumpeter Society.
>
> Welcome back, Professor Scherer.
>
> MR. SCHERER: Well, thank you very much, Madam Chairman. It's a pleasure to
> return to the scene of my former crimes. Actually, this is a voyage of
> rediscovery, not only because I was at the Federal Trade Commission 20 years
> ago, but it really returns me to my very early days of scholarship.
>
> I'm reminded of something that Learned Hand said when testifying in 1957 before
> the Senate Committee on the Judiciary, it had a Subcommittee on Patents then.
> They were having a big set of hearings on the patent system, and Learned Hand
> prefaced his testimony by saying: I know very little about anything but least of
> all about patents.
>
> Well, I feel very much like Learned Hand. I've been looking at patents now for
> about, a little more than 40 years. My undergraduate senior thesis was on the
> atomic energy patent laws and economic progress.
>
> And I guess that put me in a framework such that when I was a student at the
> Harvard Business School and a group of us were required to write a long report,
> a book-length report on some subject, we decided to take a look at the
> compulsory licensing of patents under antitrust decrees.
>
> I guess what triggered our interest was a statement, an editorial in the Wall
> Street Journal immediately after the announcement of consent decrees against
> AT&T and, I believe in the same week, IBM.
>
> Those consent decrees put out for compulsory licensing at, essentially for past
> patents, zero royalties, some 9,000 patents, including basic computer patents
> and the basic semiconductor patents.
>
> The Wall Street Journal editorialized as follows: "So it may turn out that these
> are dangerous victories the government boasts about. The settlements in these
> cases indicate a belief that everybody's patents should be everybody else's. But
> this is a philosophy that strikes at incentive. New ideas and new inventions may
> be lost. Such government victories may turn out to be far more costly for the
> nation than for the companies."
>
> And there was much other similar editorialization at the time about these
> antitrust decrees. Actually in more than 100 antitrust decrees during the 1940's
> and 1950's compulsory licensing of patents had been ordered. There is a very
> good Senate Judiciary Committee report on this which I cite in my testimony
> outline.
>
> Well, we at the Harvard Business School were very much fascinated by this
> question; and we undertook a major research project -- as much as nine students
> could do -- to find out exactly what was the impact of these antitrust
> compulsory licensing decrees on investment in research and development.
>
> Among other things, we went out and interviewed 22 companies, and we added to
> that 69 questionnaires about various aspects of company patent policy and their
> susceptibility to compulsory licensing. We also did a very large statistical
> analysis and came to a number of conclusions that, at least at the time, given
> the way the patent system was being viewed by most scholars, were, to us, mind
> boggling.
>
> One of our conclusions was that patents just weren't very important in large
> corporations' research and development decisions.
>
> Of 91 respondents, only 7 accorded high significance to patent protection as a
> factor in their R&D investments. Most cited patents as the least important of
> considerations.
>
> Most of them said that what was really important in their research and
> development decisions was the necessity of remaining competitive, the desire for
> efficient production, and the desire to expand and diversify their sales.
>
> A lot of the companies in our sample had, in fact, been subjected to patent
> compulsory licensing decrees. And the vast majority of them said that the
> decrees had had, at most, a very, very minor negative impact on their R&D
> investments.
>
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu