This book proposes an approach to the patent-competition interface for developing countries. It puts forward a theoretical framework after canvassing relevant policy considerations and examines the many reasons why patent protection is not essential for generating innovation incentives in developing countries. These include the tendency of the patent system to overcompensate innovators, the availability of other appropriation mechanisms for innovators to monetize their innovations, and the lack of appropriate technological capacity in many developing countries to take advantage of the incentives generated by the patent system. It also argues that developing countries with a small population need not pay heed to the impact of their patent system on the incentives of foreign innovators. It then proposes a classification of developing countries into production countries, technology adaptation countries, and proto-innovation countries and argues that dynamic efficiency considerations
take on different meanings for developing countries depending on their technological capacities.
For the vast majority of developing countries bereft of meaningful innovation capacity, foreign technology transfer is the main vehicle for technological progress. The chief dynamic policy consideration for these countries is hence incentives for technology transfer instead of innovation incentives. There are three main means of voluntary technology transfer: importation of technological goods, foreign direct investment, and technology licensing. Competition law regulation of patent exploitation practices interacts with these three means of technology transfer in different ways and an appropriate approach to the patent-competition interface for these countries needs to take these into account.
Distilling all these considerations, the book proposes a development stage-specific approach to the patent-competition interface for developing countries. The approach is then applied to a number of patent exploitation practices, including unilateral refusal to deal, patent tying, excessive pricing for pharmaceuticals, reverse payment settlements, and restrictive licensing practices.
Industry Reviews
In this illuminating monograph, Thomas Cheng offers valuable and nuanced insights into the significance of the patent-competition interface in developing countries. He skillfully explores the different trade-offs and technological capacities that characterize developing countries, and the way these ought to affect policy choices and implementation. A significant and detailed contribution to our understanding of the role of innovation and technology in developing countries, and the means to optimize them. * Ariel Ezrachi,, Slaughter & May Professor of Competition Law, University of Oxford *
Patent policy is supposed to incentivize innovation and commercialization of new goods in return for a period of exclusive use, which could support monopoly power. Competition policy is aimed partially at offsetting this power to safeguard the interests of consumers. This inherent tension has long been evident in rich and technologically advanced countries. However, few scholars have analyzed the relevant tradeoffs in developing economies, where innovation and purchasing power are fundamentally different. Thomas Cheng's book is a comprehensive and novel treatment of these complex issues, combining deep legal scholarship with a sound understanding of economic incentives to craft a rich and nuanced approach to this vital, yet so far neglected, policy frontier. This is a landmark volume, which should be read closely by all scholars in intellectual property, competition, and innovation economics. * Keith E. Maskus, Professor of Economics, University of Colorado Boulder *
