Rent Dissipation Theory Sample Clauses

Rent Dissipation Theory. A highly theoretical for how the authorities could limit wasting resources in the xxxx for patent protection was presented by Xxxx X. Xxxxx and Xxx X. Xxxxxxxxx in 1992111. According to Xxx and Xxxxxxxxx society benefits from innovation as long as the cost of an innovation is less than its total value to society. The difference between the macroeconomic benefit and the microeconomic cost of development is called “a rent”. The patent right, offered as a reward to the innovator, enables the innovator to reap the difference between the society surplus and his costs of development. However, the barrier to imitation offered by the patent right might induce several players to take part in the race for the patent reward: a race with only one winning patentee. The accumulated investment by the multiple competitors may be greater than the value of the innovation to society. The 103 Xxxxxx, Xxxxxx X., Xxxxxx, Xxxxxxx X.; On the Complex Economics of Patent Scope, 90 Colum. L. Rev. 839.‌ 104 Ibidem p. 878. 105 Ibidem p. 872. 106 Ibidem pp. 871-872.‌ 107 “Discrete invention”, “cumulative invention”, “chemical technologies” and “science- based technologies”, Ibidem pp. 880-885. 108 Ibidem p. 878.‌ 109 Ibidem p. 876. 110 Ibidem p. 916. 111 Xxxxx, Xxxx X., Xxxxxxxxx, Xxx X.; Patent Law and Rent Dissipation, 78 Va. L. Rev. 305. rent is dissipated by redundant investment in the innovation and the price charged for the final product, shielded by the patent right, becomes a cost to society.112 Three potential sources of rent dissipation are identified by the authors. First is the search for a pioneering invention. The broader patents awarded, the more competition for the solution protected. Second, in the race for an improvement, if the original technology “signals” follow-on improvements it might cause redundant investment in the search for modifications. The third is the waste from keeping inventions secret instead of disseminating them through the patent system.113 The rent dissipation theory predicts that only inventions of comparatively small value, signalling a large potential for improvement, will receive patent protection.114 Inventions with little potential improvement will not receive any patent protection because it does not prevent any race for development and patents granted to socially highly valued innovation would cause redundant investment at the conception stage. Nor would highly valuable inventions not signalling any improvement possibilities receive any pa...