Optimal Patent Regimes in a Globalized World: Lessons for Canada

CIGI Paper No. 120

March 16, 2017

Patent regimes have been strengthened across the globe. This paper discusses the theoretical case for strong national patent regimes in the context of a globalized world. The national treatment of foreign inventors gives countries an incentive to free ride, and while this can be overcome through patent rights harmonization agreements, these present coordination challenges. In particular, while more innovative countries will benefit from harmonizing on a higher level of patent rights, less innovative countries will prefer a lower common level. These insights are applied to Canada, where both theory and empirical evidence suggest that Canada’s patent regime is doing little to promote domestic innovation, while generating significant deadweight losses for the economy. The conclusion is that Canada’s interests would best be served by a weaker national patent regime, subject to its current international obligations. Moreover, any future agreements that increase such obligations would ceteris paribus not benefit Canada.

About the Author

Joel Blit is a CIGI senior fellow and an associate professor of economics at the University of Waterloo, where he chairs the Council on Innovation Policy.