On the Creation of Fundamental Knowledge: Finding the Right Balance Between the Public And Private Domains

Abstract

This paper addresses the issue raised by the proliferation of patents on research tools and enabling technologies. In a first section, we explore the reasons for this new phenomenon. In a second section, we consider the economic consequences of patenting fundamental knowledge (transaction costs and innovation blockages) as well as some consequences for the legal system. We also discuss the effects of patenting fundamental knowledge on the organization of scientific research. We conclude that the social costs imposed on the system are high because fundamental knowledge is by nature cumulative and generic, and probably higher than the expected benefits, due to the fact that private markets for basic knowledge function badly, even in presence of patents. In sections 3 and 4, the paper discusses various solutions including